Sometimes, unforeseen circumstances can put people’s finances into chaos, and the only way to stay afloat is to take on personal debt. These life-altering events are often unavoidable. However, other people fall into this vicious cycle for other reasons.
The truth is that in today’s day and age, many people find the need to compare themselves to others. Many want what others have, driven by either insecurity or jealousy, and will go beyond their means to obtain it. This desire turns out to be baked into our human DNA, and was first formalized into theory over 50 years ago by an American social psychologist.
Social Comparison Theory
Back in 1954, Leon Festinger proposed that in order for people to fulfill the basic human behavior of self-evaluation, they end up comparing themselves to others. This is known as “social comparison theory”. Humans are constantly evaluating themselves against others across all facets of life, including wealth, intelligence, and success.
We live in an age of maximum visibility through social media, where everyone knows what everyone else is doing at all times. Your old high school classmate just bought a shiny new BMW and posted it on Facebook. Now, you look at your 10-year-old Honda Civic and think maybe you deserve a “better” car. Your ex-girlfriend posted an Instagram selfie on the beach in Barbados holding a coconut cocktail with the hashtag #thelife. You longingly stare at your desk at work and wonder if it’s time to take a vacation soon yourself. A friend of yours posted a long, gushy thank you to her husband on social media about the new Rolex she is sporting. You begin to think about purchasing one even though you have never worn a watch in your life.
"Keeping up with the Joneses"
Some people may be able to afford upgrading their car, taking an extra vacation, or buying an expensive watch. However, when we start chasing what other people have for our own self-fulfillment, it can lead us into debt. Perhaps you could not really afford that shiny gold watch but still slapped it on your Amex credit card while telling yourself you’ll be able to figure out how to pay it off later. The more purchases made like this through self-comparison, the further and further you might spiral into debt.
There will always be someone who has more than us. Mark Zuckerberg has a net worth of $71 billion, yet there are several people who are richer than him. Do you think he wishes he was closer to Jeff Bezos who has a net worth of $112 billion? Very doubtful.
If we are constantly comparing ourselves and our possessions to those of others, we will never be able to enjoy what we have. Staying true to yourself and living within your means are the keys to living a happy, debt-free life.