Humans are competitive by nature, and that’s necessarily a bad thing. Our competitive nature stems from the fact that we are often concerned about our status relative to our peers or others in our social class. Hence, your self-esteem might enjoy a massive boost when you observe that your spending is higher than the average spending of people in your social class. In contrast, most folks might start losing sleep when they observe that their spending is below the average of their peers and they are not able to keep up with the Joneses.
You might catch yourself being ‘nosy’ when a colleague says he bought a new vacation, the neighbor is remodeling their house, or your best friend shows up with a new car. There’s a natural tendency you’ll want to find out how your neighbors are able to afford those shiny new toys. This piece discusses 3 usually untold reasons others seem in a better financial position than you are.
- Maybe they have a better handle on debt
One of the untold reasons some folks might be getting ahead of you financially is that they might have a better handle on debt. Debt could be a great ally if you don’t bite off more than you can chew, make payments when due, and strive to pay more than the required minimum. In fact, some folks can still get loans despite having bad credit by looking in the right places. Hence, when next you catch yourself getting jealous because your peers seem to be getting ahead of you financially, you should stop to consider the possibility that they might have some debts.
- Maybe they have some unspoken deep pockets
Another reason your peers could be doing much better than you financially is that they might have a financial support system that they never speak about. Most young professionals battle with a mountain load of student debt because college is expensive. However, your friends that paid their way through college, won full scholarships, or whose parents/relatives paid their tuition might not have student debt. Hence, at the end of the month when you receive your paychecks, your colleagues who have no/low student debt will have more money to apply towards savings for specific goals.
You should also consider the possibility that some of your ‘peers’ have trust funds that they never speak about because they want people to accept them for who they are and not because of their privileged backgrounds. In addition, some folks could make some speculative investments that turned out right to give them massive ROI.
- Maybe there’s an opportunity cost you don’t know
The third reason it doesn’t make sense to start losing sleep over the fact that others are seemingly doing better than you financially is that there could be an opportunity cost you don’t know about. In reality, you can buy just about ANYTHING you want, you just can’t buy EVERYTHING you want.
In essence, when someone shows up with a brand new car, you never know maybe they just cleared out their retirement savings and they are going to have to keep working until they drop dead. More so, people make trade-offs in their spending decisions at the expense of some other stuff. Hence, the neighbor remodeling their house might have decided not to save up towards the kids’ tuition.
James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek. When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College. He loves individual stocks, bonds and precious metals.