We are continuing our journey of learning how to better steward our two most precious resources – money and time.
In one of my previous articles, “What’s Your Identity?“, I hit on the importance of knowing your identity to lay a strong foundation for how you think about money.
With that foundation intact, this article focuses on protecting our time and money from the thief of joy—Comparison.
Comparison leads to unrealistic standards, dissatisfaction, and feelings of inadequacy or unwarranted superiority. It may create unnecessary pressure to meet specific standards, impacting your financial decisions and overall well-being.
Maybe this still sounds a little fuzzy….
If I were to ask you, would you be happier making an annual income of $100,000 or $50,000? That’s easy: $100,000, right?
But what if we updated these questions with some relative numbers (below) – now, what would you choose?
- Option 1: Earn $50,000 annually while everyone else earns $25,000
- Option 2: Earn $100,000 yearly while everyone else earns $200,000
This precise example was an experiment conducted at Harvard years ago. A Harvard experiment tested this, keeping all other things constant (economy, currency, etc.)
More money means more for you and your family. It still seems like a no-brainer pick, right? $100,000 provides many more options than $50,000 – yet 52% of the people in the experiment chose to have less money to stay ahead of others.
Let’s consider the gravity of what these 52% decided:
- They were willing to accept half as much money to do better than their neighbors
- These people cared more about the perception others have of them versus their relative prosperity.
It is challenging to look at our economic standing on a stand-alone basis. We tend to be relative thinkers – meaning we only think we are as good as those around us.
I’ve personally found this to be true. The other day, I was driving my 2022 Yukon Denali (which I love and feel fortunate to have) when I saw a new black Rivian – and immediately, I went into daydreaming mode – thinking, “I want that!” coveting this
That’s not the best example, but it illustrates what social comparison does to us. My contentment with my Denali vanished when I compared what I had with someone else.
Author Morgan Housel discussed social comparison in his book, The Psychology of Money. He said, “Social comparison is a battle that can never be won, or the only way to win is not to fight to begin with – to accept that you might have enough, even if it’s’ less than those around you.”
I know I’m being Captain Obvious, but comparison brings more unhappiness than true abundance. Unless we interrupt our thinking and stay vigilant with the dangers of comparison, we run the risk of basing our well-being on how others are doing around us. We are also vulnerable to the trap of thinking luxuries are necessities simply because of what others around us own.
So, how do we avoid the comparison trap? Try these three exercises:
- Pay close attention to your associations and focus on spending time with people you admire. For example, I love being around generous people because I tend to be more generous simply by being around them.
- Use your financial plan and values to drive all spending decisions. Here’s a quick exercise to assess your work in this area. Review your transactions for the last 30 days and mark which aligned with your plan and values. Please note the transactions that did not align so you can be aware of them in the future.
- Avoid external comparisons by focusing on gratitude. An easy way to do this is to take time each morning or evening to journal about three things you feel grateful about. I’ve found this exercise provides more abundant thoughts than any spending can do.
This intentionality will keep you on the path to a more abundant life.
The content of this article is developed from sources believed to provide accurate information. The information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. All expressions of opinion are subject to change. This content is distributed for informational purposes only, and is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products or services. Past performance is not a guarantee of future results. Index performance does not reflect the expenses associated with the management of an actual portfolio.
