Today’s post is part of the “Family Financial Guidelines” series. Whether you’re going through a financial turnaround or are just wanting to stay on top of things, this series will give you the tools to get and keep your family’s finances on track
There are countless pieces of really good financial advice, and we’ve covered several of them already:
- Spend less than you earn
- Analyze your biggest expenses
- Realize that little things can add up to big things
- Don’t neglect maintaining your things
- Stop wasting time
- Make savings automatic
Now let’s take a step back for a minute and discuss an important guideline that I should have probably discussed at the start of this series. In order to have a successful financial turnaround (or to maintain your good financial position) you have to realize that you don’t need to impress other people.
Spending To Impress
So many people find themselves in financial trouble because they feel like they need to impress people, whether it’s family, friends, co-workers, or just random strangers. Let’s be honest: people tend to associate fancy things and big spending with success.
After all, you seem to be doing pretty well for yourself if you’re driving around in a new BMW. You seem to be successful wearing your new clothes and playing with your new tech gadget. You seem to be successful coming home to your McMansion. But the spending decisions required to live this “impressive” lifestyle are quite high. Have you looked at the average price of a new BMW ($60,000) compared with a used Buick ($25,000)? Both vehicles will get you to work and back and be reliable forms of transportation, but you’ll be paying around $35,000 more to impress people with the BMW. A Coach purse can run several hundred dollars, compared to under $100 for a different brand. Both purses will store your belongings, but you’ll be paying a couple hundred dollars more to impress people with the Coach purse. Housing will vary with your local market, but the price differential between a “good” house and an “impressive” house can be huge.
Now, I’m not saying that owning a BMW or huge house is a bad thing. It’s not, and owning a Coach purse isn’t a bad thing either in itself. The thing is, if you have to finance all these things to maintain that “impressive” lifestyle is it really worth it? Is it really that important to keep up the appearance of having it all when in reality your financial situation is in dire straits and only getting worse?
Think about it.
What Opinions Really Matter?
Does it really matter what your co-workers think about your car, clothes, purse, etc.? Not really. As long as your car gets you to work every day and as long as your clothes are appropriate for work, that’s really all you should care about. What’s infinitely more important is what your co-workers (and boss) think about your work.
The same thing goes for your friends and family. Does it matter what they think about your house, car, latest vacation, spending habits, furniture, etc.? Not really. As long as you have adequate housing, transportation, furnishings, etc. that’s really all that should matter to you. What’s much more important is what your friends and family think about you as a person, your personality and character. A friend doesn’t really care about your “things”; they care about “you”.
The Bottom Line
Once you’ve completely turned around your financial situation and paid off your debt, once you have a healthy emergency fund and are contributing enough for retirement, once your financial life is completely under control and where you want it, if buying a BMW, a Coach purse, a mansion, or whatever else you can think of is that important to you, then go for it. But when that time times, you’ll be buying it because you really want it; not because it looks impressive to other people.