Keeping Score – Personal Finance Voyeurism

I’m going to confess something.  I absolutely love to hear about other people’s finances.  Why?  I don’t know.  I guess I’m just a competitive jerk that loves to see how I stack up.  Okay, that’s not true but I do love to see how I stack up relative to others in my age category.  Knowing the details of someone else’s finances doesn’t help my financial situation one bit, or does it……..

It’s no secret that everyone prefers to keep their finances secret from those around them.  Why do you suppose this is?  Well, there are certainly the obvious reasons.  If someone is making poor financial decisions they probably don’t want to tell the world about it.  Think Jones’.  If you’ve read just about any personal finance book you’ll often hear about examples of people that are living beyond their means.  Most of the time all of their friends and neighbors just look in awe of their ability to spend money and assume that they are “loaded”.  In actuality, many of them aren’t.

I can’t even count how many times I’ve had my assumptions completely crushed when I heard the “real” story about someone’s finances.  Many times when I was younger I longingly looked at the fancy swimming pools in people’s backyards, or their brand new cars that seemed to get replaced every couple years, or their whirlwind vacations that they always seemed to be heading off to.  I can still remember thinking, “I want to be wealthy like they are when I grow up”.  As it turns out, most of those people weren’t wealthy at all.  They had just mastered the art of credit,  (or should I say were victims of the credit industry).  No wonder they were working all the hours they could get.  Someone had to make all those minimum payments!

Anyway, talk about digressing.  Back to why understanding other people’s finances might actually benefit you.  If you know the real story behind many of these “fancy pants” neighbors and friends you just might stop trying to keep up with them.  You may realize that you don’t want to end up in the same predicament that many of them are finding themselves in.  Let’s use another example.  How about that family that DOES have a lot of money.  They have nice things, and do many of the things that the Jones’ above have done.  If you understand that they are paying cash along the way and have a lot more money than you do, maybe you wouldn’t try so hard to keep up.

Here’s how I use the knowledge I gain about other’s finances:

In the case of the debt lovers:

I look at their situation and frankly feel a little sorry for them.  I use them as examples in the back of my head on why it’s so important to amass wealth rather than spend it.  By building a nest egg today, I’m securing my future and hoping that I’ll never have to endure the stress that debt can create. (note: living below your means doesn’t mean depriving yourself of fun today, it just means you save a little of the fun for later in life)  In a couple cases, after talking over finances and sharing some of my situation with them, I think I’ve, without trying, encouraged them to start working towards living debt free and taking control of their finances.

In the case of all those people that are far better off than me:

This is where I spend most of my time, quite frankly.  I’ve always been someone that looks at people that are doing better than I am.  I do this because I like to try to learn from them.  It’s amazing the subtle characteristics that you can get from people by just observing how they live their life.  How does that saying go?  “The greatest form of flattery is imitation”?  If you are going to live by this phrase, I’d highly recommend finding people that are in the place that you want to be and do what you can to emulate them.  Hint: Don’t emulate people that are in worse shape than you.  That can never go well……….