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Keeping Up with The Joneses: A Fast Lane to Financial Fatality

Category : Personal Development, Personal Finance, Smart Investment Ideas

Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like. — Will Smith

Keeping up with the Joneses shows its ugly head with new avatar in every generation. It’s got a face lift now under the new name — circle of friends. 

I went to lunch with a close friend of mine at work. Our conversation swiftly turned into my favorite topic — how countless celebrities screwed their financial future after earning millions by filing for bankruptcy.

Only those celebrities know how to lose millions.  Albeit, it’s their esoteric turf, I was surprised by the rationale my friend used to explain the financial demise of this elite group of people.

Friend: Do you know that Evander Holyfield is at brink of bankruptcy filing? His mansion has been foreclosed. He owed $14 million to the bank. He owes over $200K to uncle Sam, and over $300K in child support.

Me: Wow! He is a poster child of how not to keep up with the Joneses. How can you lose several hundred million dollars? You have to be a money fool to lose millions of dollars.

Friend: Well, even celebrities have to keep up spending to be within their circle of friends. We all are social creatures.

Me: Aah, circle of friends. Sounds like a new name for the same bad habit of spending what you don’t have. No wonder that luxury malls are thriving while K-mart and Sears stores are rare to find.

Friend: If you are a rookie basketball player  making $500K  a year, and if you play with Kobe Bryant, you still have to spend to be in Kobe’s circle.

Me: Why? Why can’t you practice while Kobe is partying? He is a star, and you have yet to become a star. What’s wrong with this picture?

Friend: You have to show that you are a team player.

Now, that’s an anecdotal example of how keeping up with the Joneses has become a fast lane to financial fatality not just for the celebrities but also for many of us who are trying to display success without achieving it.

Every dollar spent to keep up with the Joneses dies a premature death. Instead, if you nurture that dollar by investing in its future, it will become a faithful guard of your retirement. It’s that simple.

You don’t have to show off to anyone, or to prove anyone that you are worthy of their company.

Showing wealth off isn’t the backbone of our guiding purpose; showing wealth off is the biggest drag on our guiding purpose.

One of my heroes, Warren Buffett’s life is a living proof of how not to live like Joneses even when you are filthy rich. How do you rationalize the richest man on the earth still living in a small 3-bedroom house that he purchased fifty years ago? Warren Buffett never travels in a private jet despite the fact that he owns the largest private jet company.

His character and way of life speak volume about his greatness. This is the man who spent his personal time investigating a $4 line item on his tax return to hunt down the specifics of it while giving away billions of dollars to Bill Gates foundation.

It is rare to find the richest man on the earth living without luxuries that we want to possess even by mortgaging our future. He has demonstrated that while valuing the worth of money is vital for our ingenuity and success, money shall never become the object and end all of our motivation.

I’m an avid admirer of simplicity, but I’m an even bigger fan of the man who has mastered the greatness by living and breathing simplicity amid an ocean of wealth. Now, that’s the celebrity your want to follow and learn from. Do you agree?

Wealth is a tool of freedom, but the pursuit of wealth is the way to slavery.  – Frank Herbert

Elsewhere:

Keeping Up With The Joneses In The Digital Age @ Modestmoney

Go beyond keeping up with the Joneses @ Barbarafriedbergpersonalfinance

Will Smith Shares his Secrets to Success @ Accelerateme

Photo by: Oldskulpphoto

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Comments (40)

I love the fact that Warren Buffett still lives in the same house he did many years ago! He lives like many rich people should, modestly, so that they won’t ever have to worry about money again. Granted he could live a lot more extravagantly and still not have to worry…

That’s the key. He doesn’t have to live modestly. He has billions of dollars, yet he takes time to get $4 refund from IRS.

Warren Buffet is an awesome role model. I’m in the middle of reading a book about his investing strategies and he really is brilliant I might have to follow it up with reading one more about his life in general.

While it can be tempting to try to keep up with the spending of your friends, you need to put your own financial future first. If your friends don’t respect that decision, you might be better off finding a new circle of friends. It’s like the saying that you are the average of your 5 closest friends. If they all recklessly blow their money, you likely will too.

I like your thoughts about friends. It’s true that your friends influence you a great deal.

Shilpan,

Great article, and so true!

If you drive through any nice neighborhood in the US (and most other countries, I suspect) you’ll see the nice homes festooned with high dollar landscaping, and luxury vehicles in the driveway.

What too many people fail to realize is that many of these people are not rich, but rather renting their lifestyles. They are mortgaged to the hilt. They lease those nice cars, have at least one mortgage on that nice home, and send they’re kids to private schools.

Why do they do all of this? Because they feel thy have reached that station in life where they are supposed to live like that. Unfortunately, most make that jump quite prematurely, and are only a small setback away from getting cought up in a much larger one.

I do disagree with Buffett travelling on commercial airlines though. He is significantly undervaluing his time by doing so. Time is the one resource that rich and poor alike have the exact same amount of. He should use his financial resources to conserve that which he can never make more of….time.

Have you seen that ad that shows a guy who says, “I own a big home and nice life but I am in debt up to my eyeballs.”?

A beautiful article, thank you. Though we each bear responsibility for our own actions and values, I think the explosion in the volume and psychological sophistication of advertising partly underlies runway acquisitiveness, the glorification of materialism, and a corrosive culture of money that dominate at least US society. Sadly, we judge people not by who they are but rather by what they are (e.g., rich, famous)

A great perspective, Kurt. “Sadly, we judge people not by who they are but rather by what they are ” — you are right on the money, my friend.

Shilpan,

I went through a number of years in my life when I did spend a lot of money on…great holidays/materialistic objects.

Not necessarily to keep up with the Joneses but because I liked materials.

Now wiser (and older), I’m no longer do that. I don’t need a new car every year. I don’t need to fly to some exotic beach.

I suspect our thoughts on this sort of thing changes with age!

Andrew

So true, Andrew. As you’ve mentioned, we all go through that phase in our lives to enjoy possessions. And, I also agree that, with age, we get wiser.

I love reading about wealthy peoples’ attitude to money. It often seems to be the case that the very weathy don’t seem that bothered about cash. I think thats what makes them brave and take risks to make more cash.

Agreed. For successful people, money is not the driver. It’s their passion to pursue whatever they enjoy most. So, they tend to take more risk.

It’s quite amazing how much people try to keep up with their friends. It’s actually difficult for us to hang out with people because many of the settings require spending money. Some of our friends have “movie nights” during the weekday but I’m not too keen on giving up my weeknights (as I work half of them).

If I was on a NBA team, it would be a really big challenge. Many of your teammates would want to go out to the clubs, visit high-priced dining places, and rack up more bills than you’d know what to do with. I’d be the dude sitting at home, reading a book, and relaxing. lol. I probably wouldn’t fit in well.

That’s the point my friend made about NBA players. It’s hard for a rookie player to keep company with the likes of Mr. Bryant.

I used to try to keep up with the Jonses and I learned my lesson. There is so much more to life than competing with others. We are great as individuals and don’t have to be the same as others. Do what works for you and enjoy that. I find having this confidence plays out in finances as well as other areas of your life.

I agree that we don’t have to compete with anyone to live happily.

I’m a fan of people who live big that can afford it. The problem is that most people can’t afford it and want to look big. That costs them dearly. Great post!

Thank you, Joe! I can’t agree with you more.

This is a very important subject, Shilpan. As the economy is still in a vulnerable state, the last thing anybody should be doing is spending recklessly just to keep up with the Joneses. This is true even if you’re filthy rich.

The Millionaire Next Door is a great book that touches heavily on this. So many millionaires seem to think that keeping up with the Joneses will somehow boost their prestige and social ranking. How sad!

Absolutely. We are still in recession as far as job growth and real GDP growth. Living way below means happiness and freedom from financial worries.

This seems to happen to professional athletes all the time.. They buy fancy cars and bling, and then a few years later, because of injuries, they have no earning potential and lose it all..

You can’t live your life mimicking the foolish.

There ya go from my friend. When your income relies on your physical fitness, it’s hard to predict what tomorrow will look like if you can’t play due to physical constraints.

Great article. Keeping up with the Jonses is a horrible idea in any context. As homeowners, we definitely get the temptation to compare your house, landscaping, cars, and “stuff” to our neighbors, but it’s really a wasted effort because if they’re doing the same thing, you’ll never please them.

And who cares if they think you have nice stuff or not. I think we should really focus more on high quality relationships NOT high quality materials.

Good thoughts, Jacob! happiness comes from having quality relationships, and not from the lifeless material possessions.

[...] Keeping Up with The Joneses: A Fast Lane to Financial Fatality on Street Smart Finance [...]

Quick thoughts :
- Warren Buffett does travel by private jet. It’s well documented.

- no one is ever transparent, so you can never tell who is doing well, and who is struggling financially. Even your closest friends keep their finances secrets.

I think the “Keeping up with the Joneses” mentality is rooted in our American culture of winning. Everyone wants to show that they are gold medal winners. In real life, opulent wealth is the only way to prove you’ve succeeded. And faking it is better than admitting the truth – that you don’t make a lot of money.

What we need is to rid ourselves of this obsession with winning at all costs, and judging our lives by a single metric – money.

I have a better metric – positively impacting others.

Aah, good to know that he is traveling in his private jet. What do you mean by opulent wealth? Thanks for stopping by.

I totally agree with you. He was never motivated by making money and I think that’s one of the key reasons to his success. Despite that he is a brilliant investor.

Absolutely. His life is so inspiring not only because he is the smartest investor on the Street but also for his uncanny humor and simplicity.

[...] Keeping Up with The Joneses: A Fast Lane to Financial Fatality on Street Smart Finance [...]

I love the stories about how those with everything …. money, wealth, fame…throw it all away!!! It gives great hope for the normal person!

Yeah — we can learn a lot about ‘How not to…’ from these celebrities. :)

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[...] @ Street Smart Finance writes Keeping Up With the Joneses: A Fast Lane to Financial Fatality – Keeping up with the Joneses shows its ugly head with new avatar in every generation. It’s [...]

[...] Keeping Up with The Joneses: A Fast Lane to Financial Fatality Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like. — Will Smith Keeping up with the Joneses shows its ugly head with new avatar in every generation. It's got a face lift now under the new name… Read more [...]

[...] Keeping Up with The Joneses: A Fast Lane to Financial Fatality Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like. — Will Smith Keeping up with the Joneses shows its ugly head with new avatar in every generation. It's got a face lift now under the new name… Read more [...]

[...] Keeping Up with The Joneses: A Fast Lane to Financial Fatality by Street Smart Finance. [...]

[...] members; we are programmed to do work we hate to make more money in order to appease others by inflating our lifestyle. We do everything to keep doing more of what we hate to do to find happiness from external objects [...]

[...] on me that many of us have imprisoned our purpose and happiness to a societal epidemic – to live like Joneses by spending tomorrow’s earnings [...]

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