Comparing Finances

How often do you find yourself comparing your finances to your neighbor’s?

Whether it’s Halloween candy or your investment accounts, do you ask:

  • Why don’t I have what they have?
  • Why don’t they have what I have?
  • Why are you not like me?

Maybe it’s hard to distinguish between opinion vs. observation, and as a result, comparisons are continually circling in your head.  When you make these comparisons, is it a future state that you’re chasing?

In his article, Two Worlds: So Much Prosperity, So Much Skepticism, Morgan Housel discusses how the demand for forecasts grows, particularly after a surprise such as COVID-19. In the heat of the pandemic and even today, most people yearn for a clear map of the future.  

  • When can we travel again?
  • Will how we work forever be changed?
  • Was the economic stimulus too much? Not enough?

As you know, these questions can drive a lot of opinions, comparisons, and emotions. Morgan goes on to make the point that critical economic events don’t require forecasts; they’ve already happened. And what’s already happened tends to get overlooked as headlines are quick to make the next prediction. When everyone’s focused on the future, it’s easy to ignore what’s sitting right in front of us. There’s little incentive to acknowledge what’s happening in the present.

How would it feel to bring control and clarity to your financial plan to allow you to focus on what’s in front of you? Said another way, wouldn’t it be freeing to stop living for tomorrow and comparing your finances to someone else’s?  Isn’t the goal to live for TODAY and consider your finances compared to YOUR goals and values?

2020 was a surprise.

It was a year in which many of us grasped for forecasts and made comparisons.

Morgan goes on to define a new kind of skepticism as current trends are suddenly stark and extreme.

  • A business can either operate in a pandemic, or it can’t.
  • You’re essential, or you’re not.
  • You can work from home or you can’t.
  • You’re open, or you’re closed.

These are observations, not opinions.

In a world where everyone can share their opinion publicly via their social media platform, our role is not to pass judgment but rather to recognize what has happened and determine how that fits into our plan. This is, of course, much harder to do if you don’t have an adequate plan in place!

Morgan concludes with the thought that it’s hard to acknowledge the idea that two opposite things can be true at once:

  • Consumers are in the best shape they’ve ever been in.
  • Others think that’s bogus because they’re in the worst shape they’ve ever been in.
  • Both viewpoints are true. It’s two different worlds.

Don’t be angry that these two views exist.

Let’s stop comparing your finances to someone else. Do what you can today to shape your financial plan given the events of 2020:

  • Quantitative considerations:
    • Do you have adequate disability insurance?
    • Are you taking on too much risk in your investment portfolio?
    • Are your estate docs current?
    • Are your finances prepared for changes in the tax code and estate exemption?
  • Qualitative considerations:
    • Are you too focused on headlines and not enough on what’s going on inside of you?
    • Does your career fulfill you in ways necessary to be the best version of you? If not, how can you work towards that?
    • Do you spend too much money on things and not enough on experiences?

Let’s make sure your financial plan addresses what’s right for you and not what you’ve observed in the headlines or your social media feed.  We’re happy to connect anytime!