If you are a financially savvy person, you already know to take advantage of the employer match on your 401K. You’ve created a budget, and set up an emergency fund. But you’re here, which means that you probably still scour the Internet daily, looking for anything other than listicles with advice like, “give up your daily latte” and “buy in bulk” to keep you pushing forward in your goals for your finances. The financial blogging community is a—wait for it—wealth (ha!) of resources for saving more, spending wisely, and making the most of every dollar. But it can quickly become overwhelming, too.
I started saving for retirement when I was 21, so at that point I felt like I was ahead of the curve, compared to my friends. We graduated at the worst possible time, right as the 2008 economic downtown was hitting America. Getting jobs and navigating student loans made retirement a distant priority for most of my buddies. But I felt urgently about stashing cash away for the future. It didn’t take long before I started looking for new points of comparison. Was I saving more than other people my age? Was I saving more than other people in my field? A quick Google search will help you find all kinds of calculators and guidelines. For me, it also turned up some very helpful, inspiring personal finance bloggers. I started reading EarlyRetirementExtreme, MrMoneyMustache, and others.
I went from being at the top of my comparison point, to the lowest. Here were bloggers who managed to retire at 30!
These bloggers impacted how I think about money in many positive ways—for instance, Mr. Money Mustache challenged me to reconsider what frugality looked like. But their posts also made me feel like I was falling way behind where I ought to be. This, in turn, only fueled the guilt I already had about spending.
Rock Star Finance maintains a list of 216 bloggers who share their net worth and their journeys to meeting their goals. There are dozens of other bloggers out there who are retired early, living on investment or rental property income. It’s easy to compare yourself to these success stories and feel upset at where you are at financially. Here’s my advice: Don’t.
Similarly as to why Facebook usage is linked with depressive symptoms, comparing your journey to someone else’s only breeds anxiety. It’s helpful to remember that other people are likely only sharing their successes with the world—sharing your failures is hard, so people are less likely to do it; sharing successes garners praise and admiration (and blog comments), so people are more likely to do that.
Here’s a few points to keep in mind about comparing your balance sheet to other people’s.
- Finances aren’t a competition. Money is a means to an end. Ultimately, having a good handle on your personal finances helps you live the life you want to live. That might include raising a family, traveling, continuing your education, or even that cardinal sin of money management: daily lattes. Money helps you do the things you want to do in your life. Keep your purpose in mind.
- Comparison doesn’t help your money grow any quicker. Picking up good financial practices from people who are successful is smart. Wishing you had their money is a waste of time. Spending time feeling anxious about money you don’t have is time that you’re not using to grow your own net worth.
- There is always someone richer than you. Early on in my career, I felt like I was doing well because I saved more money than the people around me. I happened to be at the top of my comparison group. This didn’t mean anything. At that point in time, there were plenty of people I’d never met who were making and saving more money. There’s always someone who is hustling harder and doing better than you. And that’s fine! It doesn’t matter. You don’t have to earn the most, spend the least, or retire the earliest. Other people’s success shouldn’t affect your plans.
The danger in comparisons is that you might start chasing someone else’s goals instead of setting your own. If this blog needed a mantra, it would be: money is a means to an end. It can help you accomplish so many different things, but you’ll accomplish not much and won’t enjoy the ride if you don’t know where you’re going and why. Before you rush headlong into furiously stashing cash, establish why you are saving. Determine the amount you need to save to accomplish your objective. Then get started.
In a future blog post I hope to unpack these concepts a bit more. The underlying premise of this post—and really, the underlying point across most of the good finance blogs—is that your goals for your money should be driven by your values. When you compare yourself to others, you are comparing yourself to someone who may hold different values. It’s okay to value different things. What is universally true is that you should be using your money in a way that reflects your values, and making decisions about how to use your money that get you closer to accomplishing your goals.