One of the main reasons many adults today overspend is because they try to ‘Keep up with the Joneses’. We all do it to some extent. I know I have. I once bought a new BMW and it felt good. I would drive it around town and thought everyone was saying, “wow, he’s made it!”
The truth is that no one cared, lots of other people had similar, or better, cars. Don’t get me wrong, I loved the car but I did start to regret buying it when additional costs started to build up. My insurance was higher, the servicing cost was higher, my fuel bill was higher and new parts were crazy expensive.
I learnt a lot from my car experience. I’m now a lot more aware of my motives when it comes to spending. I always take time to ask myself, “Am I buying this for me or to impress other people?” Many times the answer has been the latter and I walk away. Asking myself this question has saved me a lot of money.
I have shared this story with my kids many times. My kids 6 and 8 years old already say things like, “My friend has this” and “My friend has that”. It seems humans are designed to want things we can’t or don’t have.
Whilst there is no right or easy answer in terms of how to help your kids avoid the desire to compare themselves, in this blog I go through four areas which I have discussed with my kids on this topic.
Make them aware of the “Keeping up with the Jones’’ phenomenon
Awareness if the key to helping solve or avoid many money problems. So take the time to explain to your kids that they are likely to want to spend their money to impress people. It’s natural.
Highlight that there will always be someone who has something bigger or better than them. If they are unhappy that they don’t have what others have then they will always be chasing happiness. This leads nicely on to my next point.
Highlighting that the Joneses are not always as they seem!
We all look at what people have and make assumptions. One thing I have learnt is that these assumptions are usually wrong once you find out more about ‘The Joneses’. I’ve met people who have lots of great things but they have to work every hour under the sun just to keep those things (mostly big houses and expensive cars).
This might be fine if they loved working and didn’t have a family. In most cases they do have a family which they don’t see as often as they’d like. Explain that what we see of the Joneses is the ‘Front’ however, in most cases there is an entirely different picture going on behind the scenes.
Essentially, we don’t know everyone’s full story, so there is no point trying to be like them.
Grateful for what they have
One of the most powerful ways to avoid ‘keeping up with The Joneses’ is to take the time to be grateful for what you already have. Take the time to sit with your kids every now and then and discuss what they are grateful for.
Make sure they focus on the non-material things, for example, their family, friends and experiences they have had. These are the things that really matter and they don’t rely on having lots of money or caring about what others think.
Getting them to understand financial security is the priority
In my mind, people who are wealthy, aren’t ‘showy’ and don’t necessarily surround themselves with lots of nice things. Instead, they focus on financial security, of not living in financial fear or spending beyond their means. They look to make money work for them.
To help with this, get your kids to visualize money as seeds. If those seeds are planted (saved) they can grow into a tree (a Blue Tree as we call them in our family). If people spend all their money they are giving away all their seeds and will never have any trees.
Without these trees they have no protection from the storm (emergencies) and they are also missing out on the opportunity to earn more seeds (as money saved can grow). I highlight that if people don’t have their own Blue Tree forest then they are unlikely to be financially secure and therefore they should not want to compare themselves to them.
Whenever my kids want to buy something, I always remind them to put at least 10% of all the money they receive away to help grow their Blue Tree forest. Over time I hope this becomes a habit which will help them avoid spending all their money.
From my own experience, I get a sense of empowerment from knowing I have savings. I wouldn’t give that up for a bigger house or a fancy car.
Make sure your kids grow up being aware of the “Keeping up with the Jones’’ phenomenon. This can really help them avoid the same spending mistakes that so many adults make today and soon regret.
Don’t get me wrong, I don’t want to put your kids off spending – after all, spending is fun! It’s all about helping them spend wisely and to make sure they get the most out their spending.
So, try talking to your kids now about the following four areas:
- Make them aware of the “Keeping up with the Jones’’ phenomenon.
- Highlighting that the Jones’ are not always as they seem!
- Grateful for what they have.
- Getting them to understand financial security is the priority.
If you are struggling to work out your own financial priorities and are struggling to make sense of your money and want to make some changes, then come and talk to us. We can help you achieve your financial goals by showing you how to build a money management system that is tailored to your needs and fits with your lifestyle.
When you are ready to talk, we are here to listen and help. Drop us an email or click on this link to find a day and time that suits you to have a chat with us, we’re really very friendly. Best of all it’s free.
More on Will Rainey: After years providing investment advice to governments, insurance companies and some of the world’s largest pension schemes, Will founded Blue Tree Savings Ltd to help parents teach their kids about money. Blue Tree provides weekly blogs which help parents learn engaging ways to teach their kids new money topics (visit www.bluetreeblog.com). They also provide workshops for companies and have now released a digital Piggy Bank which allows kids to decide where to put the money they have received and shows them their financial forest growing as they save their money.