When it’s time to make financial decisions such as contributing to your retirement, paying down debt, saving for college, buying a home, and building an emergency fund, you need to ask yourself a question. “Will this change my life for the better?” This question is important because it’s the opposite of the question people usually ask, which is, “Will my friends/family/neighbors approve?”
Here’s the thing about personal finance. It’s personal. That means that your decisions have to benefit you and your family and not be made for or because of someone else. Other people have their own personal finance decisions to make. When deciding on your financial path, you have to go in a direction that makes your life better. You can’t get caught up in worrying about what others will think. If you want to buy a house, you have to buy a house that will make you happy and that will make your life better, not the big house in the expensive zip code that your family likes but will drag you under.
Similarly, when you find yourself comparing yourself to your neighbors, you have to ask yourself, “Does this matter to my life?” You may worry that your neighbor has a bigger house than you, or a nicer car. Maybe he has a better job or wears nicer clothes. That’s great for him, but it has no bearing on your financial life. You don’t want to get caught up in worrying about his stuff because none of it will change your life. You want to direct your energy to worrying about and doing the things that will change your life. To do otherwise is to waste time and energy.
What will change your life is worrying about your own situation and controlling what you can control. If you need more money, worrying about your neighbor’s great job won’t help you. What will help you is getting a second job, or a better job than the one you have. If you need to save more for retirement, it won’t do any good to salivate over your recently retired neighbor’s frequent travels. When will help you is buckling down and socking more money away. If you need a new
car, it won’t help you to drool over your neighbors’ new Ferrari. What will help you is to draw up a realistic budget showing what you can reasonably afford and then shopping for the best you can get that meets that criteria.
There’s not one thing that your friends, family or neighbors own or do that will change your life. Only you can change your life through your actions. Therefore, it’s far better to put your energy and time into making your financial life better, rather than worrying about what other people are doing.