Saturday , 22 October 2016

Don’t Obsess About “Keeping Up With the Joneses” – Outsmart Them Instead! Here’s How!

If you are hoping to live a happier, fulfilled life without money stress, you may not want to obsess with the Joneses. You can outsmart them by making better choices. HERE are several ways you can likely beat the Joneses and improve your financial health.

The above edited excerpts, and those below, are from an article* by originally entitled Beating The Joneses. It can be read in its entirety HERE.

(Who exactly are the original Joneses? Go HERE for the answer.)

Stay Ahead Of The Joneses – Here’s How

  1. Watch the Joneses closely and consider the opposite route.
    • If your neighbor goes out and buys a brand new luxury car with the latest sports package, instead of drooling over it and rushing out to buy one for yourself, consider
      • keeping your existing car in good shape so that it can last even longer,
      • downsizing if your family has more than one car or even consider ride sharing programs or public transit.
    • The median car price in 2015 is around $32,000 compared to the median household income of roughly $52,000. Spending a substantial chunk of your gross income on a car won’t help your finances.
  2. Buy an affordable house.
    • Think about how differently our grandparents lived when they were our age. Typically that generation had more people living together in smaller houses. It’s important to questions whether you really need to stretch yourself financially to get that bigger house and keep in mind the more space you have, the more maintenance you’re responsible for, not to mention higher property taxes to pay.
  3. Spend within your means.
    • The Joneses are great at racking up debt.
      • Instead of using credit cards and loans to make purchases, try using cash instead. You can’t spend what you don’t already have when you use cash. Studies have shown that people typically spend 12-18% more when paying with credit cards versus cash. This is true even at inexpensive restaurants such as McDonald’s where people spend $7 on average with credit cards versus $4.50 with cash.
      • If you want to spruce up your wardrobe, use cash and skip the expensive luxury brands that the Joneses go for.
      • Purchase generic products instead, there are plenty of ways to look stylish for a fraction of the price of designer goods.
  4. Avoid entitlement.
    • Using “I deserve to have xyz” as justification for purchases is dangerous for your finances. Get out of the mindset that you’re entitled to anything that other people have.
    • Reap what you sow and distinguish between necessities and conveniences. Do you really need the latest cellphone when an older model works just fine? As one saying goes, “Don’t Compare Your Beginning to Someone Else’s Middle.”
    • Forget about what may seem better over the fence and do things your own way. The more you focus on achieving your own goals, the less you’ll care about what others may have that you do not.
  5. Commit to financial goals.
    • The Joneses are too focused on looking good versus looking at their finances.
    • Protect your financial future and well being by setting specific goals.
      • invest early,
      • save for retirement,
      • plan your ideal asset allocation by age,
      • teach your kids about investing,
      • increase your retirement contributions and
      • continue to explore how you can save and invest more wisely.
  6. Focus on non-material values.
    • Don’t forget that feeling satisfied comes from within not from how many things you have. If you look back on your life, chances are the most memorable moments were experiences outside of a shopping mall. Most material things depreciate over time while experiences tend to appreciate in value.
  7. Join a personal finance or investing group.
    • Having discussions with people who have similar interests can be encouraging. Take part in personal finance discussions and surround yourself with people focused on more than watching the Joneses.
  8. Practice stealth wealth.
    • When you start making better choices and are able to grow your wealth, keep it hidden. Stay under the radar even if you surpass the Joneses. You may even end up helping other people from trying to keep up with you.

The temptation to keep up with the Joneses continues. With social media and reality TV, showing off material possessions may appear to be the status quo but savvy investors know that keeping up with the Joneses can be a losing battle. Instead, beat the Joneses by learning from their mistakes.


Related Articles from the munKNEE Vault:

1. Avoid the “Toy Trap” – Being “Rich” Is A State of Mind

Many a retiree, or near-retiree, has overspent on cars, boats, homes, and a surgically enhanced trophy wife or two. We also all have friends who’ve fallen into the “toy trap” of buying things they don’t need, with money they don’t have, to impress people they don’t particularly like, in the mistaken belief that “He who dies with the most toys wins.” That being said, is there room in 2014 for a return to financial modesty—room to reject the toy trap? I say yes! Here’s our 5-step guide to doing just that.