When satisfaction or contentment is derived primarily from our comparative view of others, particularly their financial persona, we may find ourselves never finding real satisfaction or contentment.
One can rarely attend a party, share a round of golf or meet up with relatives without forming some opinions about other’s “lot in life.” Those opinions are then assimilated into a construct of we are either “better off” or “have work to do.” Cindy’s new purse, Jack’s new house, or your brother-in-law’s new sports car can cause many of us a mix of angst and, sometimes, envy. We then take these comparative narratives and either act or ruminate about how we should modify our own lives.
This is a slippery slope and one that rarely serves us well. A few things to consider include:
In many cases, the opinions we internalize may not reflect the other crew’s actual situation. “The problem with spending behavior driven by social comparison is that it can result in feelings of relative deprivation when one can’t afford the same things that other people have, even though the reasons for wanting those things may not be apparent, and the person who does have those things might actually be experiencing overwhelming levels of financial stress. Furthermore, the person influenced by social comparison, who feels deprived, may already have all they actually really need!” – Derek Hagen, www.kitces.com.
Your investment returns are built for you, not for them. In addition, the investment results reported by others may include their own bias. We all know good old Gus who shows up at our BBQ and exclaims how he made 131% on a recent biotech stock that went public. Now Gus may be greatly loved by his family but he also might have recency bias. Essentially, we remember the events that have just happened with greater intensity than our older memories. This was on full display following the Great Recession of 2008-2009. No one wanted anything to do with the stock market and it proceeded to have a multi-year march upward.
So, comparison comes in handy when we’re shopping for a large ticket item or considering a new dentist. It’s not as helpful when we are making comparisons to our perception of other’s success and/or wealth. Your version of rich, wealthy, affluent, poor and broke is likely different from your neighbor. Learning to grow both gratitude and contentment in our current situation while selecting personal areas for growth can lead to happiness outside of comparison.
