Trying to keep up with the Joneses?
“The Joneses spend money they don’t have, to buy things they don’t want, to impress people they don’t like.” Will Rogers
Do you often wonder how your friends seem to live a more extravagant lifestyle than you?
Whenever you meet with them, they are constantly talking about the brand-new boat or car they just bought, or the vacation or cruise they just took. You just sit there listening, saying over and over to yourself, “How can they afford all those things?” You may automatically assume they’re rolling in money; however, chances are they could also be rolling in debt. They might have large loan on that brandnew boat or car, or putting their vacations and cruises on their credit cards and only making minimum monthly payments.
In other words, your friends may be living the lifestyle of the Joneses. Who are the Joneses? We’ve all heard the phrase “Keeping up with the Joneses.” That phrase was made famous by a 1913 comic strip about a family that tried to keep up (financially) with their neighbors who happened to be the Joneses. I’m sure almost everyone at one point in their life has felt the need to keep up with the Joneses.
Everyone overspends a little and splurges on occasion. It’s human nature to want what others have. But for many, “keeping up with the Joneses” can become an overwhelming obsession that can lead to financial ruin.
Living below means
The first step to financial independence is to live below your means. Means refers to one’s income. To “live below your means” simply means spending less money than you make. However, living below your means goes against much of what the advertisers and media are promoting. We currently live in a society today that promotes instant gratification through advertising and media. We are expected to buy the best of everything
and live above our means.
Living above means
One of the biggest financial mistakes you can make is living above your means. You can’t go through life spending more than you make and expect to save money. I am not suggesting that anyone should not have nice things for the sake of becoming a rich miser in their old age. I like having nice things, too. However, just because you can buy something doesn’t mean you can afford it.
One of the biggest financial mistakes you can make is living above your means. You can’t go through life spending more than you make and expect to save money.
Managing your money
The fact is that how you manage your money can be more important than how much money you make. No matter how much money you make, you need to find a way to spend less than you make so you can save and invest the difference. And the bigger the difference between what you earn and what you spend, the sooner you’ll find yourself with enough money to live the lifestyle you want in retirement.
The Joneses may be driving a brand-new, high-priced car today, but have no retirement savings for the future. You may be driving a 10-yearold car, but have a growing retirement fund. If that’s true, the Joneses should be concerned about keeping up with you.
Martin Krikorian, is president of Capital Wealth Management, a fee-only registered investment adviser at 9 Billerica Road, Chelmsford. Call 978-2449254,capitalwealthmngt.c om; email info@capitalwealthmngt.c om.