The Importance of Being Realistic About Your Finances

The Importance of Being Realistic About Your Finances

The term “keeping up with the Joneses” has been used for years to describe the desire to match the lifestyle of the people around you. While this expression historically referred to neighbours and close friends; today keeping up with Joneses means keeping up with the whole world…and we have social media to thank.

Morningstar’s study in 2018 on, “The Comparison Trap”, dove into humans drive to compare, noting that researchers have found that where a person appears and believes they stand relative to others has a much larger effect on happiness than their actual income and net worth. This is in line with research that has found time and time again that social media is only decreasing the feeling of life satisfaction and well-being. These factors can significantly impair our ability to set realistic goals for ourselves, especially when it comes to finances.

It is important to remember that you are only seeing the part of peoples lives that they are choosing to share with you. The trips, cars, and objects that flood Instagram can make it easy to have feelings of inadequacy.

However, people’s social media lives are rarely followed by credit card bills, bank account statements, or pay stubs. This is why it is so important to be critical of what others are presenting to you and to stay realistic about your own situation.

The reality is that the majority of Canadians are living on a budget. Multiple trips a year and having expensive “stuff” isn’t attainable for everyone. So how do you combat that constant desire to compare? Instead of comparing yourself to those who can afford that life, try comparing yourself to those who are worse off than you.

Taking a moment to recognize everything that you do have. A little comparing on the opposite end of things will help you come to terms with the types of things that you can and should strive for. Maybe one trip a year and retiring at 60 instead of 65 would be a realistic (but great!) goal to work towards each year, rather than mindlessly spending because you feel like everyone else is.

Make a conscious effort not to let yourself get caught up in the seemingly glamourous lifestyles of others. You never truly know another person’s situation and things may not be as easy as Instagram makes them seem. The only life you can control is your own, so be sure to stay realistic and make sure you manage your finances in a way that gets you where you want to be; not where social media makes you think you should be. Creating a financial plan with your advisor will help you map out your goals so you can realize your dreams.

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