Most of us have heard of the term “Keeping up with the Joneses”. And hopefully most of us know that it is not a horribly mediocre reality show. It refers to a type of lifestyle inflation in which we accumulate more and more things to keep up with our friends and neighbors, despite not being necessarily able to afford such things. This practice is what undoubtedly gets many people into financial peril, leading to a paycheck to paycheck existence, and sometimes even worse. Keeping up with the Joneses is detrimental to your financial health, so recognizing this practice in your own life is certainly a step in the right direction.
I remember a conversation a few years a back with one of my friends who was a resident physician at the time. He mentioned an event at his hospital where some doctors were teasing another doctor because he drove a Toyota Camry and not a luxury car. It wasn’t even an old or beat up car it was a brand new Camry but they still were teasing him about it. Even though they were just having fun with a colleague, my friend said this lifestyle inflation is very common among MD’s. There is a certain amount of prestige in being an MD, and many doctors take that to believe that they “deserve” fancy luxury cars and houses for example.
This type of thinking extends even those who aren’t doctors, as society has engrained the idea that all doctors should be driving a luxury car. If not, something must be wrong and that can unfortunately change the perception of some patients towards their doctor. The bottom line is that unless you can truly afford a luxury car, you are not entitled to one even if you are a doctor. When we start believing that we are entitled to certain things because of our position and don’t even run the numbers to see if we can afford it, that’s when this type of lifestyle inflation can creep up on us and cause havoc on our financial lives.
I will go into more detail in future posts about when you can be sure something such as a car is affordable, but as a general rule if you find yourself buying something because of outside pressure and do not run the numbers, you are playing the dangerous game of keeping up with the Joneses. This can lead to lots of debt and stress which can wreak havoc on the lives of you and your family.