Keeping Up

Rob Carrigg, Jr.

I’VE WORKED AS a financial advisor for 25 years and yet I’m still struck by how many people fall for one of the oldest cons in the book: keeping up with the Joneses.

Being ostentatious is no longer seen as déclassé, at least in America. Instead, it’s a requirement for reality TV, the currency of Instagram Influencers and a proxy for achievement on Facebook. Why be rich when we can appear rich?

We’re hardwired to act this way. A 2013 study titled Keeping Up With the Joneses found that humans are greatly influenced by group behavior, often assigning value to others and what they own, even when no other information was available. Similarly, a 2015 study by German neuroscientists used functional magnetic resonance imaging to measure brain activity in participants as they outdid and were outdone by others. When they saw themselves as performing better, they experienced a boost in the same area of the brain that’s triggered by a gambler’s high. What happened when they couldn’t keep up with the Joneses? They showed activity in an area of the brain associated with feeling pain.

“Pop” Momand is often credited with popularizing the phrase, “Keeping up with the Joneses.” His syndicated daily cartoon ran from 1913 to 1938. It focused on the hapless McGinis family and their misadventures, as they tried and failed to keep up with their never-to-be-seen neighbors, the Joneses. The Joneses canoed, so the McGinises tried it, only to end up in the water. Mr. Jones wears pink socks, so Mrs. McGinis dresses her husband in pink socks and a ridiculous fuzzy hat, all in an ill-fated attempt to show up their neighbor.

We all try to keep up with the Joneses. The thinking is simple: If the neighbors can afford it, why can’t we? This type of decision-making stems from a cognitive bias that psychologists call the anchoring effect. We take a sliver of information, such as the neighbors remodeling their kitchen, and decide it’s time we did the same.

Unfortunately, we can justify almost any behavior if we look around—because it’s highly likely someone else is already doing it. This is our herd mentality, an instinct that helped our nomadic ancestors to survive. But today, it can lead to a series of bad financial decisions. You sat in first class the last time you flew, so there’s no going back to coach. Your kids made friends at that private school, so you can’t pull them out now. The perceived social contract of your chosen lifestyle makes your decisions for you.

You may be able to pay that tuition, make those car payments and continue to vacation in Instagram-worthy locales, but that doesn’t necessarily mean this spending is sensible. Managing money is about putting yourself in a position where someday you’ll be financially independent. If you’re well on your way and you’re saving enough, great, you might even be the Joneses. But if you’re trying to keep up, then it’s a slippery slope that can often lead to overspending and under-saving.

Another reason to avoid such competitive consumption: You have no idea what’s really going on over at the Joneses. Yes, you might appear to be in a similar financial position because your houses are alike, you work in related fields or you share similar backgrounds. But as I’ve learned in my years as a financial advisor, it’s tough to get an accurate picture of a family’s finances unless they let you look under the hood.

There may be circumstances you have no idea about. Maybe the Joneses have trust funds that pay them income every month. Maybe those trust funds pay their kids’ tuitions all the way through college. Or perhaps the Joneses just earn way more money than you think. Professions such as doctors and lawyers have vast income ranges. It’s possible that you think your neighbors are making $200,000 when they’re really making $800,000.

An additional reason to avoid mimicking the Joneses: What if they’re in way over their heads? Perhaps they’re suffering from what humorist Robert Quillen described in 1928 as, “Americanism: Using money you haven’t earned to buy things you don’t need to impress people you don’t like.” Maybe they’re living off their credit cards, that summer house they refer to as theirs is owned by grandma, and their last Google search was “how to file for bankruptcy.”

From what I’ve seen, keeping up with the Joneses is an epidemic in America. It’s a significant contributor to under-saving, excessive debt and the looming retirement crisis. But it isn’t too late to break the cycle. The next time you justify a major expenditure based mostly on seeing what your friends or neighbors are doing, stop and ask yourself: Is this something you truly want—or are you just trying to keep up with the Joneses?

Rob Carrigg, Jr., is a Certified Financial Planner in Portsmouth, New Hampshire. He is a problem solver who works to simplify people’s financial lives. Rob’s current passions are jam bands, pickleball and coaching his eight-year-old’s lacrosse team.

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