… see what others are spending.
And that is a problem.
Due to our envy bias we do pay more attention to how our friends and neighbours spend compared to how they save.
Well, comparing with friends might be a bit understandable. But comparing with your neighbours is rather irrational and random.
You do not need to earn other people’s approval. Who told you that this would be important in life?
Why do you still do it?
- Social Comparison Bias
- Attentional Bias
- External validation where you put more weight on how we are seen in others’ eyes than how you evaluate yourself.
Just a thought: Would you prefer to be considered the best lover in the world and know privately that you’re the worst — or would you prefer to know privately that you’re the best lover in the world, but be considered the worst by others?
Let that sink in for a while.
Are you guided by an outer scorecard or your inner scorecard?
Now back to your neighbours and friends: Have you ever asked yourself what goes on under the hood of those people that you envy so much?
Would you still really want to be like them, once you knew how hard they worked to achieve what they are projecting to the outside world, or how unhappy they are? Or how their private life is hardly existent because they are constantly in the limelight with every step they take, or how they struggle to get to sleep at night because they are under such huge debts, trying to impress the world around them?
Anyway, rest assured that trying to keep up with people that make more money than you is a never-ending game because there will always be people willing to outspend you.
Always wanting more, in order to keep up with whoever has more, makes millions of people perennially unhappy and causes the lack of wealth in the lives of many.
Because spending just results in stuff while building wealth is literally the absence of stuff.
Remember, we all would like to live like millionaires but very few of us want to save like millionaires.
If you don’t prioritize your spending habits, you’ll never be able to save enough to get ahead.
And don’t fall into the trap that not spending equals saving. Not spending is just half of the necessary steps it takes to save money. You’ve got to complete the job. You need to actually save that money.
The best way is to automate your savings. For example with a regular savings plan into ETFs.
A great way to make it habitual without running the risk of decision fatigue.
“Nothing in this world can so violently distort a man’s judgment than the sight of his neighbour getting rich.” — J.P. Morgan