The financial fallacy “Keeping up with the Joneses” refers to the practice of maintaining a lifestyle or a consumption level that’s comparable or even superior to one’s peers or neighbors. It’s a fallacy because it leads one to make financial decisions based on others’ spending habits, rather than their own financial capacity or goals. This approach can result in overspending, financial strain, and debt.
It’s easy to fall for the “Keeping up with the Joneses” fallacy because we live in a society where a great emphasis is placed on external appearances and material possessions, sometimes equating them with success and happiness. As social beings, it’s only natural for us to compare our lives with those around us and feel the pressure to conform or compete. Social media today has amplified this phenomena to a global scale, making it even harder to resist this fallacy.
An appropriate financial practice is to focus on one’s own financial goals and limitations, rather than attempting to keep pace with others. This involves budgeting responsibly, saving regularly, managing debts wisely, and investing for the future. It’s a more sustainable, long-term financial strategy that considers personal financial health and wellbeing over societal perceptions or immediate gratification.
Further reading on this fallacy:
-
“Stop Acting Rich: …And Start Living Like A Real Millionaire” by Thomas J. Stanley. Book Link. This book explains the detrimental effects of trying to keep pace with others financially and provides strategies to escape this mindset.
-
“The Overspent American: Why We Want What We Don’t Need” by Juliet Schor. Book Link. The author explores the trend of excessive consumerism in America and examines why it’s destructive.
-
“Keeping up with the Joneses” - Wikipedia.
-
Conspicuous consumption - Wikipedia. This page offers an in-depth look at the societal and economic phenomena of outwardly displaying wealth and consumption to gain social status, an underlying principle of “Keeping up with the Joneses”.