The Joneses are broke!

(originally published 2/23/2016 on my personal LinkedIn page)

Theodore Roosevelt once said that “Comparison is the thief of joy.”  If this was true in Teddy’s day, I can’t help but to wonder what he would think of our modern version of “keeping up with the Joneses.”   It was bad enough when grocery store tabloids and Robin Leach provided occasional looks into the lifestyles of the rich and famous.  Today we have 24 hour reality TV networks and Facebook showing a nonstop, touched-up, fantasy version of your closest friends’ day-to-day lives.  It has gotten easier and easier to fall into the trap of feeling like everyone you know is doing better than you are.

Keeping up with the Joneses in this day and age has measurable effects on society.  People who bought houses they could not afford contributed to the housing bubble that peaked less than ten years ago.  Every year, more and more people choose to lease expensive luxury cars, or commit to longer and longer auto loans, in order to be seen driving something that may be beyond their true financial means.

If “The Joneses” represent what is typical in American society, we should take a closer look at what typical means.  The most recent Federal Reserve report on the Economic Well-Being of US Households sheds a startling light on what it means to be the average American household.  The study found that 47% of respondents could not cover an emergency expense costing $400, or would have to raise the money by selling something or borrowing.  Over half of non-retirees in the study with self-directed retirement accounts were either “not confident” or only “slightly confident” in their ability to make the right investment decisions.  These examples are only the tip of a disconcerting iceberg.

It is easy to fall into the trap of trying to keep up with the Joneses.  For many, this leads to living right up to or beyond the ceiling of what their income will allow.  A certain “lifestyle inflation” may have taken hold, when your saving habits are shrinking or your debt is growing, just so you can be proud of having the latest version of your smart phone.

I have the privilege of working with some very extraordinary and successful individuals, and my time around them has come with a free education of sorts.  One important lesson learned is this.
If you do what everyone else does, you can only have the life that every one else has.

Don’t be like the nearly half of Americans who can’t afford a $400 emergency.  Start saving up an emergency fund!  Don’t be like the nervous half of non-retirees in self-directed retirement accounts.  Go get some direction from a professional!  Don’t live beyond your means.  Don’t try to keep up with the Joneses.  The Joneses are broke!