Budgets: The Toxicity of Comparison
Budgets Are Great Tools for Everybody—But They Are Very Personal
I have to admit that over the last few months I have started reading personal finance blogs religiously. They have helped me to improve the grasp I had on my family's finances. We have implemented the envelope system, automated our savings, and curbed our expenditures without feeling the pinch. Quite the opposite: I have an almighty spreadsheet tracking all our expenses and I feel empowered.
But lately Pinterest has developed into a rabbit hole for me. I've become aware of FIRE and it struck me that there are tons of people out there who somehow live off ridiculously little money in general. Some buy groceries for a fraction of the monthly costs my family faces, some had their down payment together within a few months and some are only too happy to tell me that they can tell me how I, too, could achieve those things. There are even people out there who are in their 20s but have somehow managed to accumulate so much wealth they can technically just retire.
I read these blogs, my eyes as big as saucers, wondering where I have gone wrong. Why are my regular savings such a pitiful little sum of money, when others out there somehow squirrel away more than that but on only one income?
That's when it hit me. Treating myself on a whim with stuff I can't afford just to keep up with everybody else is stupid. It's not good for my mental health and the old bank account wouldn't like it either—but neither is comparing myself to money gurus who might have a totally different income, might live in a much cheaper area of the world, and who might have started out life being considerably better off financially than my family was. Because after all, I kind of have to take what they are telling me at face value since I don't know the ins and outs of their finances.
"Comparison is the thief of joy."— T. Roosevelt
My Personal Experience
The thing is, when it comes to financial awareness, we all start out at totally different places. My parents never taught me how to make responsible financial decisions. After they divorced when I was a teenager, all I knew was that there wasn't enough money around and that I couldn't have the stuff that I wanted. That wasn't necessarily bad at the time (I had plenty of friends in similar positions so it was easier to ignore the "rich kids") but it certainly meant that years later when I started earning money, treating myself became my priority.
Could I have saved more money back then when I had just started out? Knowing what I know now, obviously I could have. But in my 20s I wasn't the same person I am now. Although we would like to think of ourselves as grown up once we are officially graduates, I doubt that the majority of us are mentally grown up by then.
Do I regret all the money that I spent in my 20s? No—my experiences with overdrafts and credit cards made me a more responsible person.
Could I have accumulated as much wealth as some bloggers out there who say they could retire before hitting 30? I am self-confident and trust in my abilities but hand to heart, the honest answer has to be no. I worked for a not-for-profit organisation for a few years, lived in a very expensive area with high commuting costs and I had nobody who could have introduced me to a more money-savvy lifestyle. That paired with the fact that my partner and me were actually better off financially than most of our friends didn't lead me to think that anything could have gone better.
Do not overrate what you have received, nor envy others. He who envies others does not obtain peace of mind.— Buddha
Comparing your own situation to that of others and thinking others are better off than you is as old as humanity, but these days I feel like it is even easier to envy others, because social media allows us to put a heavily edited glimpse of our lives out there for everybody to see.
If I work hard in order to afford a special holiday—and have no financial setbacks that took priority—then I have every right to enjoy it. But me posting hundreds of holiday snaps for others to see who were not quite as lucky is bound to annoy a few people in my life, and to be seen as showing off.
People don't usually talk about the ins and outs of their money. We don't know how much our friends and relatives earn, how much they buy on credit, and what their lives really look like behind closed doors. Similarly, we don't know if somebody's bid for early retirement, home ownership, or a Ferrari was solely down to their efforts or involved a fair bit of luck and/or help.
Advice is Out There But So Is a Fair Bit of Showing off
As I have said, there is plenty of advice out there, but having read so much of it now that things are getting repetitive, I can boil it down to the following basic rules for being in control of your money.
Basic rule 1:
Create your budget. I have done this, and the outcome is one magnificent spreadsheet that takes into account our regular expenses as well as funds for repairs, Christmas, and vacations.
Setting up a budget is really sound advice, and so is the envelope system, which I would personally recommend to anyone who asked me about it. It feels great knowing that there will still be money for groceries or treats left at the end of the month. Pre-budget, things didn't always look quite so rosy just before payday.
However, that brings us to:
Basic rule number 2:
Slash your spending.
So now that I have developed an awareness, I am confident that our household is a fairly frugal one. Granted, our apartment is a fair bit bigger than what we require; however, for this area it is so reasonably priced that the cost of moving to a smaller one would not pay off, and with a second child on the way and regular house guests, a downsize might not make much sense in the long run.
There are a few bills that I am aware I can reduce by changing providers once our contracts come to their end in a few months. The difference in price will go into our savings, but again, they are not significant enough to allow early retirement just yet. They are just a baby step towards that down payment.
We don't have a lavish entertainment budget these days and our grocery budget (although it is higher than that of some proud bloggers out there) works for my family and provides us with a balanced, mostly vegetarian diet.
I am rather successful at bolstering our budget with vouchers and rewards programs but again, just reducing the outgoings might make us financially more comfortable but doesn't send us off into early retirement.
Obviously, the internet doesn't lie about this and so there is basic rule 3:
Increase your income
Sounds straightforward enough. To my surprise, there are actually a lot of side hustles out there that don't require much (if any) training and can be done flexibly from home.
Increased income means more money to invest so that your cash turns into "passive income" (which simply means you earn without having to invest your time).
It sounds great, but to be honest, this is where the wise early retirees lose me. Maybe personally, I am at the wrong stage of my life, but right now I'm not prepared to invest any more time into a side hustle that takes me away from spending time with my young family.
There is flexible work that can be done from home, but do I want to be a mum who comes home from work and is then still glued to her laptop? For me, the answer is not right now. There will come a time where my children are older and less focused on what I'm doing, and then I won't mind upping my hours.
Make Comparisons Work for You
In her article in Psychology Today, Dr Susan Biali Haas suggests "[using] comparison as motivation to improve what actually matters," instead of using it to make yourself miserable.
If somebody out there managed to save up vast amounts of money in a short time, I think that's amazing, but if I'm being honest, I'm not prepared to steam ahead at the same pace because there are other things that I value more right now. Nevertheless I can still let the success of others motivate me to save up for my own down payment in my own time.
As for the articles that are telling me how much I should have saved up already, I will just politely ignore them. After all, without knowing my income, personal background, or goals, nobody can actually tell me how much wealth I should have accumulated already.
At the end of the day, life is not a race. As long as you are proactive, life's not going to be all bad in the end.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
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