Are you trying to keep up with the Joneses? I’m here to tell you, keeping up with the Joneses is detrimental to achieving financial freedom. In this article, I will show you why keeping up with the status quo will make you broke.
Keeping Up With The Joneses
The term “Keeping up with the Joneses” means always wanting to own expensive objects and do the same things as your neighbors and friends because you are worried you will not appear to be on the same social status as they are.
If you try to keep up with the Joneses, you are hindering your goal of financial freedom.
I notice in this social media world we live in, a lot of people do things “for the Gram.” Meaning they post things because they want to give people a certain perception of themselves—but what they post isn’t genuine.
Most of these people that we see on social media living “wealthy” lifestyles—that are full of $500 bottles of champagne at the club and exotic vacations—are not real. The majority of them can’t afford the lifestyle they portray.
Then we see what our “friends” post on social media, and we feel bad about our own financial situation. We feel bad because we don’t have money for that lifestyle—or worse, we go out and buy luxury items we can’t afford to appear wealthy just like them.
Don’t be that fake person, or feel bad about your own financial situation based on what you see on social media. Stop keeping up with the Joneses.
Now, I’m not trying to belittle anyone, nor am I saying you can’t buy luxury items—because I have bought a $1,000 shoe in my day. But what I am saying, is you can only make a purchase like that if you can afford it.
Can You Afford Your Lifestyle?
It’s okay to live a luxurious lifestyle if you can afford it.
But what is your definition of being able to afford something? Is it being able to pay off the credit card in full when the bill comes?
That used to be my definition of being able to afford something. But, my definition of what I can “afford” has changed over the years.
The way I determine if I can afford a luxury item now is I look to see if my assets can purchase it—not my earned income.
Before I felt like I can buy a $5,000 Chanel bag because I had a lot of earned income—meaning I could buy the bag with the money I earned as a lawyer. I would justify this purchase because I had a good income.
I finally did not have any credit card debt, and I would pay for the bag in full when my credit card bill was due. But this way of thinking is exactly what prohibited me from being financially free earlier in life.
If you don’t mind working for many years and you have high job security, then this way of thinking might be okay. But for me, I wanted financial freedom.
“Financial Freedom My Only Hope”
You ever hear the lyrics from the Jay-Z song where he says “Financial freedom my only hope. F*ck living rich and dying broke.” If you don’t know who Jay-Z is, he’s a rapper that’s also a billionaire mogul.
The words he says in that song is so true! It makes no sense to appear rich, and end up dying broke. Wanting financial freedom played a major part in my decision to get rid of my BMW (my actual car is in the picture above).
I loved my car, and it was beautiful, but I was spending approximately $850 a month for a car I only drove on the weekends—and I didn’t have a car note! The cost of parking, maintenance, gas, insurance, and any other fees (like registration, inspection, and tickets) was a lot.
Since I live in New York City, my car was a luxury and not a necessity. This BMW was a liability that helped me appear rich. Therefore, I could only justify keeping the BMW if my assets were paying for it.
At this point, since I would have to work to pay for my BMW, it had to go.
I took the money from the sale of my BMW and invested it in the stock market.
I personally use Robinhood.com to purchase individual stocks. This website is great because you can buy and sell stocks for free—there are no commissions or fees.
Most other brokerage firms charge at least a $4.95 fee per trade, and some have hidden fees.
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The only thing I’m willing to pay for with earned income is my necessities—not luxury items.
Buy Assets That Go Up In Value
Don’t get me wrong, although I am frugal in a lot of areas in my life, I still do have expensive taste for certain things.
I try to only purchase luxury items I think will make me money in the future.
So for example, if I want to buy a luxury bag, I would try to buy a timeless piece—like a Chanel classic flap bag—and nothing trendy because timeless pieces go up in value.
Taking the Chanel medium classic flap bag as an example. The style of these bags hasn’t changed much since 1955. These bags never go on sale, and the prices increase on average 15% each year.
So, let’s say you purchased a Chanel medium classic flap bag in 2010 it would have cost you $2,850. Today the bag is will cost you $5,400—that’s an increase of $2,550 and almost a 90% return on your money.
But let’s be realistic, most people buy a Chanel bag to wear it—so assume the bag is in good used condition, it would be worth approximately $3,000 today. As you can see, if I decided to sell the bag I would make money.
Be clear, I am not endorsing buying Chanel bags as a form of investing—far from it. My point is I have started to look at my purchases differently.
I try to surround myself with assets when possible. If my purchase is not an asset at the time, I think of how I can possibly turn my purchases into assets.
Finally, when I do plan to splurge on myself, I only do so with the money I make from my assets. I never spend the principal of my investments when splurging, only the interest.
Stop keeping up with the Joneses in order to appear rich. If you REALLY want to be rich, and not just appear rich, you have to do what rich people do. Rich people buy assets that make them money, and then use that money to buy their luxury items. Rich people don’t work for money; they make their money work for them.
- You Don’t Need A 6-Figure Income To Be Financially Free
- How I Saved $300,000 In 4 Years
- 9 Simple Baby Steps To Financial Freedom You Need To Take
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