It's common for individuals to compare themselves to others, sometimes unconsciously, when chatting with friends or scrolling through social media. This comparison often extends to an individual’s financial circumstances, encompassing factors like income, homeownership, lifestyle choices, and overall wealth status. When pictures of lavish holidays flood your feed while you're managing your monthly budget, it’s natural to wonder how others in the same age bracket are affording such luxuries. This comparison does not always have to have a negative impact; instead, it could be a chance to gain insights and drive you to new financial goals.
Social comparison theory attributes our tendency to gauge our progress, success, and happiness against others’ achievements. While it serves to give us a sense of the norm within our circles, the extensive use of social media has taken comparison to a global scale, making us privy to success stories from around the world. These curated highlights often lack context, causing us to juxtapose our unedited reality against meticulously staged successes.
The era before social media was marked with financial comparisons confined to regular contacts like neighbors, coworkers, and family friends. Now, with how millions of others live at our fingertips, the urge to attain more, akin to the crowd, increases. But these social feeds are curated to only display the best moments, often leading to unwarranted feelings of being behind.
Constant comparison on social media risks distorting your perception of your progress. It can shape your outlook from internal to external, diminishing your satisfaction even when you're doing fairly well. When this comparison gets competitive, it can negatively impact your financial condition and spending habits, leading to something known as lifestyle creep.
Lifestyle creep, or the tendency to upscale expenditures as your income increases, can occur when you feel pressured to match others’ spending habits. This could lead to pursuing financial goals that may appear impressive yet don't align with your values.
The emotional aftermath of constant comparison can also be detrimental. Chronic feelings of inadequacy, shame, or anxiety can arise, even in those who are financially stable. Comparison devoid of context can lead to feelings of insufficiency and lessen our confidence in managing our money successfully.
Yet, comparison isn't fundamentally harmful. Used thoughtfully, comparing your finances can offer perspective, assist in identifying healthy habits, and motivate you to improve. Three effective strategies to ensure a healthier approach to comparison are:
1) Reframe your observations as insights and not a measurement of your worth. Use objective benchmarks as a yardstick that offers real context based on age, income, and life stage. Track your progress over time to measure your financial growth, rather than comparing your current finances to others’.
2) Prefer progress-based and values-based benchmarks. They emphasize growth aligned with your personal goals. Instead of comparing yourself to others, question whether you’re inching closer to your ideal goals. This can turn comparison into motivation instead of a source of discouragement.
3) Ask if what you want aligns with your true desires, rather than whether you’re keeping up with others. Clearly defining your financial priorities can help curb the impulse to compare yourself to others and will assist you in focusing on what truly matters. When you’re committed to your own financial milestones, you'll foster an internal motivation more enduring than external validation.
Reframing the comparison narrative can be beneficial for our financial journey. Using it as a source of motivation rather than a measure of worth allows you to stay rooted in your own values while drawing encouragement from others’ achievements. Recognizing and appreciating your progress, while remaining open to new possibilities, can help you gain a healthier and more empowering measure of financial progress.