You may have heard the phrase “Keeping up with the Joneses.” What it basically means is trying to measure your own success by that of others. It is a form of peer pressure.
When it comes to finances, trying to compare how you are doing compared to what others are doing is common. However, this presents many problems.
The most obvious problem is … who’s to say they’re doing enough!? From this article titled “Saving to Keep Up With the Joneses” by Carolyn T Geer: ” ‘The majority of the American public is driving off a cliff financially.’ says Mr. Fellowes. ‘They’re just driving at different speeds.’ ” This sentiment reflects many studies that most people are simply not doing enough for their retirement, let alone other goals.
This means trying to compare yourself to others financially sets the bar way too low!
Another problem is succumbing to peer pressure. This is kind of like the high school approach to planning where you try to fit in without having any perspective at all on how you may be different … and that different is okay.
A better approach than comparing yourself to others? How about actually determining your own specific situation and customizing your financial plan to YOU? Once you have done this … it is liberating because you have your own benchmarks and don’t need to know how anybody else is doing. What they’re doing doesn’t matter anymore since what you are doing does.
As an example why keeping up, or trying to compare yourself to, others … relating to retirement planning http://www.fool.com/investing/general/2013/07/15/this-is-what-poor-retirement-planning-looks-like.aspx are 6 Scary Reasons to do Retirement Planning.
Defining your success relative to someone else is not as fulfilling as defining it based specifically on your own circumstances and potential.
By Kitces: “The Happiness Spending Threshold And What It Really Means To Live Within Your Means”
https://www.kitces.com/blog/live-within-your-means-recommended-happiness-spending-threshold-75000/