The biggest issue in America today isn’t who’s occupying the White House or whatever other “catastrophe” is up next on the media’s docket. It’s an issue that hits much closer to home for most people. The fascinating aspect of it, though, is that most people don’t even realize it’s affecting them.
I’m talking about the phenomenon of keeping up with the Joneses.
I assume you know what this phenomenon entails, but if not, let me give a brief example.
Mr. and Mrs. Mike Smith live in an upper-class neighborhood and make what most would call a decent living. They have two kids and drive one 3-year old Honda and one 5-year old Toyota. Over the past few months, both Mr. and Mrs. Smith have noticed that two of their neighbors have recently purchased a 7 series BMW and a Mercedes Benz E class. Shortly after, they start to hear other neighbors softly mention those “nicer” cars “owned” by those “well off” neighbors. Then, even their kids start to mention the neighbors’ kids getting driven around in nicer cars than theirs. Before you know it, Mr. and Mrs. Smith have traded in their 5-year old Toyota and have a new Lexus parked in their driveway. Never mind the fact that those funds were supposed to be for their kids’ college fund. It’s all about appearances, right?
There are too many frustrating aspects of the above scenario to mention in one post, but you can be sure we’ll get to them in time. The most crucial aspect of this phenomenon is that it repeats itself over and over again. Neighbor 1 gets a new car/boat/watch/kitchen remodel. Then neighbor 2 gets a new SUV/ATV/pool. Then neighbor 3 gets a new car/bathroom remodel/house addition. And so on and so forth.
People that fall into this cycle either fail to realize how it’s eroding their wealth, or put on the blinders in order to avoid dealing with the fact that it is eroding their prospects for a fully funded retirement, among other things (including happiness!).
If you’ve found yourself in this predicament, I have some questions and thoughts you may want to consider.
- Has that new car/boat/watch made you any happier? If the purchase was over 2 months ago, do you still feel the same way today that you did the day you made the purchase?
- Do you want to teach your kids that material possessions are important? Even if you think they aren’t noticing your actions compared to those around you, they are. Believe me, they are.
- Have you considered that the people you see driving fancier cars or going out to restaurants on a weekly basis are actually not well off but are buried in mortgage/car/credit card debt?
- Have you considered that maybe those people just received a windfall of some sort and decided to buy the car/watch/boat that they’ve always wanted/saved for?
- Have you considered the fact that most millionaires in this country are not those driving around in the most expensive cars or wearing the most expensive clothes or eating at the fanciest and most exclusive restaurants? If you don’t believe me, read The Millionaire Next Door by Thomas Stanley and William Danko. It will change the way you think about your probably misconstrued vision of others.
Let me know if you find yourself focused on keeping up with the Joneses or focused on keeping up with your savings!