Keeping Up with the Joneses – It's Real
Written by Kelley Keehn
Friday, June 19th, 2020
It used to be that if you were poor, you looked poor. If you were rich, everyone knew you were rich. But with the creation of credit, and with today's cheap credit, it's easy and enticing to live like a big shot while only paying the interest on rising debt.
Keeping up with the Joneses (or FOMO) is a real thing. One report found that for every $1,000 your neighbour wins in a lottery, your likelihood of going bankrupt increases by 2.4%. Good thing your neighbour isn't likely to receive a windfall like that anytime soon, but it illustrates the phenomenon isn't just an urban myth.
The Dangers of Keeping Up and Accruing Debt
The trend to keep up is dangerous and too many Canadians are using their homes as ATMs. Those using a Home Equity Line of Credit – or a HELOC as many know it – skyrocketed in recent years. And with household debt numbers on the rise in Canada, that means that at the end of two, three or more years, these debts aren't getting paid off.
But why do we fall prey to trying to keep up with others, even if we know it may be funded by debt?
Canadians are more susceptible because not only do they believe they can afford it and deserve it, but they also feel like they need to have it to maintain their "level" in society.
Tips to Help Arm Yourself Against Unreasonable Financial Comparisons
- Remember, most people are purely concerned about themselves. They only look at others for comparison purposes—they just want to know where they themselves end up on the scale. They don't really care about you, per se. Who are you really trying to impress in the end, if no one's really watching you?
- Focus on yourself. You don't know where people's money is really coming from. It could be from debt, but also parents or other relatives.
- Happiness is a state of mind, and when you make it something external—like the latest gadget, a new partner, a new job, trend, car—you're no longer the master of your own happiness. No one should base their happiness on external things, because we can't control our environments 100%.
This article or video (the “Content”), as applicable, is provided by independent third parties that are not affiliated with Tangerine Bank or any of its affiliates. Tangerine Bank and its affiliates neither endorse or approve nor are liable for any third party Content, or investment or financial loss arising from any use of such Content....
The Content is provided for general information and educational purposes only, is not intended to be relied upon as, or provide, personal financial, tax or investment advice and does not take into account the specific objectives, personal, financial, legal or tax situation, or particular circumstances and needs of any specific person. No information contained in the Content constitutes, or should be construed as, a recommendation, offer or solicitation by Tangerine to buy, hold or sell any security, financial product or instrument discussed therein or to follow any particular investment or financial strategy. In making your financial and investment decisions, you will consult with and rely upon your own advisors and will seek your own professional advice regarding the appropriateness of implementing strategies before taking action. Any information, data, opinions, views, advice, recommendations or other content provided by any third party are solely those of such third party and not of Tangerine Bank or its affiliates, and Tangerine Bank and its affiliates accept no liability in respect thereof and do not guarantee the accuracy or reliability of any information in the third party Content. Any information contained in the Content, including information related to interest rates, market conditions, tax rules, and other investment factors, is subject to change without notice, and neither Tangerine Bank nor its affiliates are responsible for updating this information.
Tangerine Investment Funds are managed by Tangerine Investment Management Inc. and are only available by opening an Investment Fund Account with Tangerine Investment Funds Limited. These firms are wholly owned subsidiaries of Tangerine Bank. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.