Understand Your Finances
Why you should stop comparing your finances to friends'
Chase has partnered with Business Insider and The Players’ Tribune to present a special edition of "Letter to My Younger Self," a series in which athletes reflect on their biggest lessons learned—from finance, to relationships, to careers. The following article was produced by Business Insider.
Your friends are all flying to Las Vegas for the ultimate bachelorette party. Your Facebook and Instagram feeds are full of expensive cars, lavish gifts, and incredible new brownstones. It's so easy to give in to the pressure to go along, post along, and purchase along with those around you. After all, you only have one life, so why not live as well as everyone else?
Turns out, the fact that you only have one life to live is exactly why you need to stop comparing your lifestyle and finances to others. Fear of missing out, or FOMO, is a documented phenomenon that has young adults making constant comparisons between their lives and others — and drives them to spend more money on things than they can afford. Here are four reasons why that's the wrong way to achieve your financial dreams.
1. You can't get ahead on a razor's edge
Living paycheck to paycheck isn't fun. But for many people, it's a temporary phase while becoming financially mature. Giving in to splurges to keep up with your friends only extends that period of time. If your goal is to get ahead, don't rush. Living frugally will allow you to set money aside and grow your financial life.
2. You'll end up living someone else's life
You wanted to live big like your friends in a high-paying sector, so you get a job just like theirs. You may be making the money you desire, but if your heart was set on being a teacher, will you ever be happy? Or perhaps your dream is to be a lawyer, but you don't want to trade your weekend trips with friends for tuition bills and all-night study sessions. The ability to buy and do the same things as your friends rarely brings the same satisfaction as following your own goals and priorities. In fact, having a career that is meaningful to you improves personal empowerment and fulfillment, and decreases stress. Make your own decisions, and you'll find your own happiness.
3. Your friends could be making poor choices
Sure, that flashy red sports car projects the perfect image of financial success, but you have no idea how your friend is making it work. He could be so deep in debt, it'll be the last car he ever owns. You're not the only one tempted to overextend yourself financially to keep up with others. Those you're hoping to emulate just might be faking it themselves.
4. Everyone has different priorities.
Your friend's budget may allow for two new pairs of Jimmy Choos and three fancy Sunday brunches a month, because those things are important to her. You may make the same salary, but have a goal of paying off your student loan in three years or saving for a down payment on a house. Your goals don't have to be the same as your friend's. Join her for one brunch a month, keep it to a single mimosa, and you'll be celebrating your own financial victories in no time.
When you compare your life and finances to others, you're letting their goals, priorities — and even their mistakes — become your own. Focus on your own aspirations and the right financial decisions will be easier and much more satisfying.
Please read NBA star Ray Allen's letter on the meaning of sacrifice.
Natalie Burg is a Chase News contributor. Her work has appeared in Business Insider, and Forbes BrandVoice.