Keeping Up with the Joneses
Lifestyle inflation can be the enemy of wealth building. What could happen if you invest instead?
Please refer to our transcription below if it is easier and/or more convenient for you:
It’s a curious fact of life that as your income grows, so too can your expenses. More money earned may turn into more money spent, but is all that spending really necessary? One study found that money makes us happy when it serves to improve our social standing with our peers. When your neighbors, the Joneses, buy that new car, it’s easy to think it may be time to get one that is just a little bit nicer. This desire to keep up with the Joneses can quickly snowball out of control.
Let’s take a look at what you might do with that extra money the next time your income goes up. Let’ say the Jones family just remodeled their living room and kitchen, and you’d like to do the same. That’s $50,000 you were going to spend. Earning a hypothetical 6% rate of return would more than triple in 20 years. You could redecorate now, or invest the money and have $160,000 down the road. It’s a simple fact of life that lifestyle inflation can be the enemy of wealth building.
Call us today, and let’s talk about how to grow your wealth.