The money-smart art of not ‘keeping up with the Joneses’.

It was my third week as a novice employee at the bank. I had been hired as a relationship banker but due to company requirements, I had to start my training at the teller line. That is where I first became aware of the financial illiteracy of most consumers. Mr. Robert (for keeping this client unanimous, this is a fake name) was a regular client who came through the drive-through every other Friday. When I first waited on him, I immediately noticed the beautiful sky-blue Porsche Cayenne he was driving. I was impressed. Like any other curious person, I wanted to find out more about this guy. An unpleasant surprise came when later, a quick glance at Mr. Robert’s account history (sorry to break it to you, bankers see all your business) showed that when he made his check deposit every other Friday, his checking account was already well overdrawn by hundreds of dollars, including a few $38 overdraft fees. I was surely disappointed. Unfortunately, Mr. Robert looked great on the outside but very bad in his bank account.

‘This is not uncommon, many people live that way’, you may say. You are right. Let me give you another example. After finishing my teller training, it was time to move up to sales training. Essentially, it meant identifying opportunities to offer clients new products. Interestingly, the instructor used a live account in one of the demonstrations. This account was owned by a 55-year-old whom we would call Mrs. Ann. In September of 2014, Mrs. Ann had already paid over $10,000 in banks fees for that year. She literally lived in the red despite her $10,000+ monthly income. By the time her direct deposit hit the account, it was gone by almost 50%. Her expenses consisted mainly of purchases at department stores and high end restaurants. If the first example didn’t raise your eyebrows, I hope the second did.

These examples are perfect illustrations of individuals who have gone too far trying to keep up with the Joneses. In your life, keeping up with the Joneses may translate into getting the latest iPhone to match your cubemate. For some of us, it means upgrading our vehicle because the neighbors are no longer driving their three-year-old car or upgrading our TV because the Joneses now have a 55’’ screen Samsung TV and it looks so much better. Ladies, are you constantly trying to get a new pair of leggings to compete with the neighbor at yoga class? If you related to any of these statements, it is time for a financial cleanse. Whether you’ve realized it or not, keeping up with the Joneses slowly derails you from the financial stability tracks if it hasn’t already. It is a way of life that surely leads to trouble.

Ok, how do I stop keeping up with the Joneses?

Budgeting. Are you tired of me talking about living by a budget yet? I hope you’re not because I will always go back to it. Budget! Budget! Budget! It is a visual and in some instances, a physical reminder that purchasing that new pair of shoes will cause you to be late on your rent payment. Working with dozens of clients at the bank, I’ve seen that the simple fact of having a budget tremendously increases their level of financial discipline. So, I recommend starting there.

Next, ask yourself why. Why do you feel like you must get the latest fitness tracking gadget when your Fitbit is working fine and meeting your needs? Answer this question honestly and you will see how much money you get to save. We teach kids to discern between wants and needs so why can’t we apply the same principles in our own lives. I admit that I am often tempted to keep up with the Joneses as well. Here is how I’ve come to fight back. Whenever I’m suddenly tempted to buy the latest gadgets (insert here whatever may be a weakness for you), I ask myself these questions: will it matter in 6 months, a year or five years if I don’t own it? Do I want it or do I need it? Many times, walking around Best Buy, I had to tell myself this: Lionel, this wasn’t even a thought before you entered the store so you surely don’t need that.

Invest in quality products. Quality may be pricey at first but in the long run, you will save because you will not have to replace so often. Shop responsibly, be proud of what you have by taking good care of it.

Reach for the debit card. Would you buy that watch or that new purse if the funds were directly debited from your checking account? If the answer is no, then you shouldn’t swipe your credit card. In fact, since we are talking about financial cleanse, why don’t we put away the credit cards for a while if we are prone to keeping up with the Joneses. Try it for a few weeks and you will be amazed by how much you have saved.

Establish a ‘fun savings’ account. The more you plan, the less you will waste and the less you will be keeping up with the Joneses. In fact, planning will foster in you these virtues: patience and discipline. It is not wrong to treat yourself to some luxuries every once in awhile. The issue, I observe, comes when people cannot refrain themselves from reflexive buying. Open a new savings account and commit to allocating $25, $50 or $100 to it every pay period. In just a few weeks, you will have amassed $100, $200 or even $500 (based on your income and budget) to spend on yourself. In many cases, you will realize that you do not care much for what you really wanted just a few weeks prior.

Have the tough conversations. Brittany is somehow always wearing a new pair of shoes and at dance class, she always has a new outfit on. You’ve worked with Brittany for a couple of years and you are comfortable having meaningful conversations with her. Why don’t you ask how she gets to pay for it? Who knows, you might learn about an opportunity to increase your income with a freelance job Brittany could be working on. However, if she is constantly indebting herself, it is your clue to not be like her as your mom would’ve said.

Erik Pevernagie said ‘Many buy gadgets they don’t really need, with money they don’t have, for people they don’t actually care for, while infringing their corporeal and financial capacities, in order to pay doctors and psychiatrists’. Is that you? You now have the tools to no longer try to keep up with the Joneses.

Observe the masses and do the opposite!