In a blog post in March 2018, John Hewison, our Founder and Chairman wrote about the dangers of making investment performance comparisons. In todays post, I want to concentrate on some dangers associated with making the wrong type of social comparisons and provide three useful tips which can be employed to redefine who we’re comparing ourselves to. Let’s face it, we’ve all done it before; our natural urge to always compare ourselves to others, it’s us vs them. The goal is to reduce financial anxiety and possibly even improve our financial well-being, so let’s get started.

Who do we tend to compare ourselves to?

I’m sure you’ve heard the phrase “keeping up with the Joneses”, but who are the “Joneses” we’re comparing ourselves to? Often, we’re comparing ourselves “upward” to someone who earns more, has more money or a neighbour with a bigger home. It might be a friend or someone we follow on social media (who we‘ve never actually met and know nothing about) whose lifestyle appears to be more exciting than our own, full of regular vacations and shopping sprees.

For some, upward comparisons might serve as a motivator to strive for more, but for many, this can also be a source of negative emotions towards ourselves. Take a moment to think about the last time you compared yourself to someone else. I bet you viewed this person as being “better off” which left you feeling negative financial emotions about yourself.

Why are upward social comparisons so harmful to us?

Research shows that a person’s perception of themselves relative to others has a greater impact on their happiness than their actual position. So if we’re always comparing ourselves upward, then it’s unlikely we’re going to be truly proud of our successes or fully appreciate our past achievements and personal growth.

When we stop to think about it, it’s easy to see that by always looking up to those who have more, many of us are actively making ourselves feel bad about our own financial circumstances.

So what can be done to change the focus of our social comparisons?

As a society, we’re all susceptible to making social comparisons. Even the wealthy and those on high incomes are subject to self-inflicted financial anxiety because of always looking up to those who appear to have more.

Here are three ways to redefine and improve who we’re comparing ourselves to:

1. Start making downward social comparisons:

In other words, compare your current financial situation to someone who has less than you or is earlier on in their own financial journey than you are. This should not only serve as a reminder as to how much you’ve achieved (rather than always wanting more) but could also inspire future growth.

2. Compare your current position to where you were at a previous point in time:

Regular self-reflection should put financial achievements in perspective by creating a positive connection between our actions (hard work, sacrifice etc.) and our accomplishments.

3. Find an appropriate financial role model:

Drawing parallels between our current position and where a financial role model once stood on their own journey can give us confidence that we’re on the right path towards the achievement of our own goals and objectives.

Redefining who we compare ourselves to is a great way to kick start 2019. Discover how you could improve your financial well-being by partnering with experienced advisers that provide people with the confidence and freedom to achieve THEIR goals and dreams and not those of others. Reach out here >>