The danger of lifestyle inflation as a result of “keeping up with the Joneses” is a warning echoed throughout the personal finance literature with a menacing quality that rivals childhood tales of the Boogeyman. But unlike the fantastical nature of made up folklore, the veneration of the Joneses poses a very real threat, comparable to the more pressing warnings of genuinely concerned parents, like your teeth falling out if you don’t brush them.
Despite these warnings, however, children remain less than vigilant about their dental hygiene, and adults who should know better, continue futile attempts to keep up with the Joneses, living far beyond their means, resulting in record numbers of consumer debt.
Even I, in my infinite condemning of overspending and hyper consumerism, fall prey to the dangers of lifestyle inflation. In a self-reflective moment earlier this summer, I admitted my own dream of the sprawling beachside property complete with gourmet kitchen, walk in closets, jet skis, and the like. With reality shows like Million Dollar Listing and a Facebook newsfeed full of status updates and photos of friends in exotic, international locales, it’s no wonder. The Joneses are no longer the family next door in suburban USA with the white picket fence; they’re the ones with fabulous penthouse apartments on television and the acquaintances taking trips around the world.
[tweetthis]The Joneses are no longer the family next door, they’re the ones with fab penthouse apartments on television [/tweetthis]
Redefining the Joneses.
This shift of who the Joneses are and the subsequent upscaling of the American Dream, is something Juliet Schor explores quite masterfully in her book, The Overspent American: Why We Want What We Don’t Need. (You can read the first chapter here, I highly recommend it).
Schor starts by introducing us to a concept of the Joneses from the 1950s, when it was the neighbors who set spending cues and motivated lifestyle inflation, setting the standard for what you had to have, like vacuum cleaners and automatic washer/dryers. Those Joneses weren’t nearly as dangerous, however, because their financial means were similar to our own, their incomes, the value of their homes, etc.
In today’s age, however, the neighbors are no longer the point of comparison. In fact, today’s Joneses are often people with incomes three, four, or more times are own- resulting in feudal, debt inducing attempts to attain a lifestyle that is quite simply, out of reach; at least as long as that kind of massive income disparity remains.
Inflated Lifestyle Reference Points.
Schor also notes that rather than looking to our neighbors for spending cues as we used to, we now turn to our colleagues in professional and larger community contexts. The problem with these broader reference groups is that they are less likely to be comprised of people who all earn approximately the same amount of money. If I’m comparing myself as an actress making 40k to my colleague who makes 60k, it pushes me to strive for more, but when I start making lifestyle comparisons to friends pulling in six figure incomes I run into trouble.
While our incomes maybe vastly different, our social sphere is the same, creating peer pressure to spend on similar things like shared nights out, comparable apartments, etc. As Schor explains, “those at the lower economic end of the reference group find themselves in an untenable situation.”
[tweetthis]When incomes are different but social sphere is the same, it creates peer pressure to spend on similar things[/tweetthis]
Advertising and media only exacerbate the problem. Whether we consciously or recognize it or not, they play a huge part in defining our version of the Joneses. For example, Sex and the City and Friends were two major influences that shaped my assumption of the New York standard of living. (You mean I can’t afford a huge apartment in the West Village as a waitress or one column writer?)
Non-fictional media figures are also influential players. What I wouldn’t give to have the style and wardrobe of Michelle Obama or Kate Middleton. But by using millionaires or unrealistic fictional lifestyles as my reference point for the things I want and need, I set myself up for lifestyle inflation that far exceeds my limited means
A New Normal.
These Joneses with means so far beyond our own have become the social norm, redefining and ratcheting up the “minimum” standard of living. The list of wants transforming into needs expands at an unprecedented rate, one we simply can’t afford to keep up with. The white picket fence is no longer enough when the McMansion is the new normal.
In 1986 the Roper polling organization asked Americans how much income they would need to fulfill all their dreams. The answer was $50,000. By 1994 the “dreams-fulfilling” level of income had doubled, from $50,000 to $102,000. Lifestyle inflation is quite literal. Just imagine what that number is now, 20 years later!
[tweetthis]The white picket fence no longer feels like enough when the McMansion is the new normal #personalfinance[/tweetthis]
One of the most mind-blowing facts of Schor’s book is that it was published in 1997. Reading the first chapter yesterday, it felt as relevant as ever. I started to wonder what else would be included in the redefinition of the Joneses if The Overspent American was written today. Certainly the influence of reality show excess like my Super Sweet Sixteen and Platinum Weddings. Come on, you didn’t really think the average cost of wedding climbed to 30k on its own did you?
And what about the explosion of the internet and social media sharing? Suddenly my point of comparison is in the hundreds if not thousands of people, most of whom make a lot more money than I do.
How to Stop Lifestyle Inflation.
Rather than constantly upscaling in an effort to “keep up”, Schor recommends downshifting to bring your lifestyle into alignment with your values.
[tweetthis]Rather than constantly upscaling in an effort to “keep up”, bring your lifestyle into alignment with your values.[/tweetthis]
Many Americans get so caught up in the pursuit of more income to support their inflated standard of living, that they lose touch with their priorities- they have no time for the things they care about most, they don’t believe in the work they’re doing, etc. This realization becomes the catalyst for the downshift. Even today, we can see the rejection of lifestyle inflation in the increased momentum of the minimalist and “tiny” movements, the rising popularity of DIY, etc.
So the question becomes, who are you going to make YOUR Joneses? Will you live a life of constant dissatisfaction, feeling like you never have enough because you can’t possibly spend on par with millionaire reality stars? Or will you model your lifestyle on those prioritizing their time and experiences over possessions and things? Or maybe you fall somewhere in the middle?
Upon further reflection, I admit that I still want the beachfront experience, but maybe I can give up the fantasy of a palatial estate that would mire me in debt, and instead get my fulfillment from the friends and family who would share the scenery and ocean breeze with me.