When evaluating one's needs and wants, it is very easy to fall victim to unhealthy comparisons that blur the line between what is really necessary and what is simply desired. Many people unintentionally define themselves in contrast to others, especially to those in seemingly similar circumstances and close proximity. When your next door neighbor buys a boat, you may unrealistically convince yourself that you can afford one too; after all, you live in comparable homes, hold comparable jobs, and comparable lifestyles. Or when your best friend books a trip to Greece, you may be tempted to finance a trip somewhere equally exotic, even if you have to rely on credit cards and cash advances to do so.
Making purchases based on these types of comparisons may be common, but that doesn't mean that it is a healthy way to make financial decision. In fact, keeping up with the Jones' may be keeping you in debt, increasing your cash advance reliance and potentially leading to serious financial problems.
Observing others living a more luxurious life than one's own may make an individual feel downtrodden and inadequate. Some may reason that they should be able to afford certain items because others seem to be able to. It is important to recognize that things aren't always as they seem.
In general, people do not have access to their neighbors or friends credit reports or bank account records. On the surface, it may appear that others are more monetarily well-off, but without access to financial records, such a conclusion is simply unsupported. In turn, making a financial decision, such as taking out a cash advance or maxing out one's credit cards, based on such appearances is a sure-fire way to get one's self into unnecessary and irresponsible debt.
Another important consideration is that no two situations are ever the same. While some in your social circle may seem to be living luxurious lives off of an income comparable to your own, they may have other sources of income that you are unaware of. For instance, they may have side jobs, inheritances, investments, or savings accounts that fund their lifestyles. Thus, if you strive to have what they have, you may be making bad financial decisions based on a faulty comparison of appearance.
Striving to materially keep up with everybody else is dangerous, as it can lead to unhealthy financial practices such as extreme credit reliance and, potentially, bankruptcy. Increasing debt to maintain appearances will only end up leaving you worse off in the long run. If seriously abused, bankruptcy or defaults on credit card payments and cash advances can occur, destroying your credit and making it that much more difficult to acquire luxuries. Instead of letting comparisons with others lead to dissatisfaction with one's self, it is wise to develop healthy financial practices, such as savings and investments, which could potentially encourage the lifestyle you desire.
Certainly, it is beneficial to live within your means, avoiding comparisons with others, and cultivating a sense of gratitude for what you have, instead of longing for what you don't.
