Comparison in Financial Planning: Forget the Joneses

A wealthy couple check out the view from their luxurious home.

(Image credit: Getty Images)

published 28 October 2023

In today's fast-paced world, it's easy to fall into the trap of comparing ourselves to others, especially when it comes to our finances. Social media, advertising and even our social circles bombard us with images of success and wealth. As a financial adviser, I've witnessed firsthand the detrimental effects of this comparison game on individuals' financial well-being.

In this article, we'll explore why it's crucial to shift our focus from comparison to purpose. Where we might find ourselves comparing our journey to others, we should instead embrace and embark on a purpose-driven approach to financial planning. I'll also provide actionable steps to help you prioritize your unique financial journey.

The pitfalls of the comparison game

It's human nature to look at others and wonder how we measure up. Paying too much attention to what anyone else has or what they’re doing is never a good idea. We see our friends' new cars, exotic vacations and seemingly effortless financial success, and we can't help but feel a twinge of envy. However, this habit of constantly comparing ourselves to others can be corrosive, leading to financial and mental turmoil. The pitfalls to avoid:

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1. Buying into the illusion

First and foremost, it's essential to recognize that what we see of others' financial lives is often just the tip of the iceberg. Social media and public displays of wealth don't reveal the whole picture. Behind closed doors, people may be struggling with debt, financial stress or personal challenges that aren't visible to the outside world. Comparing ourselves to an illusion can lead to unnecessary anxiety and discontent.

2. Neglecting your unique financial story

Conventional wisdom in finance often emphasizes numbers and benchmarks. While these metrics are essential, they can neglect the most critical aspect of your financial journey: your unique story and aspirations.

Every individual has different goals, values and circumstances. By constantly comparing ourselves to others, we risk losing sight of what truly matters to us. As financial adviser and author Carl Richards puts it, "Personal finance is more personal than it is finance."

3. Ignoring the wisdom of Theodore Roosevelt

Theodore Roosevelt once said, "Comparison is the thief of joy." These words hold timeless wisdom, reminding us that comparing ourselves to others robs us of the joy that can be found in our own financial journey. Instead of striving to replicate someone else's success, we should focus on building a path to financial success that is uniquely ours.

Embracing a purpose-driven approach to financial planning

Now that we understand the pitfalls of the comparison game, let's explore five actionable steps to shift our focus from others to ourselves when it comes to financial planning.

1. Define your financial goals

Start by setting clear and specific financial goals that align with your values and aspirations. What do you want to achieve? Whether it's buying a home, retiring comfortably or paying off debt, your goals should reflect what truly matters to you.

2. Create a personalized financial plan

Work with a financial adviser to create a personalized financial plan tailored to your unique goals and circumstances. Your plan should outline a roadmap to achieve your objectives and address potential challenges along the way.

3. Stay informed, not obsessed

It's essential to stay informed about financial matters, but don't obsess over every financial move others make. Instead of comparing your investment portfolio to a friend's, focus on the long-term strategy outlined in your financial plan. Periodically review your plan with your adviser to ensure it remains aligned with your goals.

4. Practice gratitude

Cultivate gratitude for what you have achieved in your financial journey. Take time to appreciate your progress, no matter how small it may seem. Gratitude can help you find contentment in your financial life and reduce the urge to constantly compare yourself to others.

5. Avoid impulsive decisions

Avoid making impulsive financial decisions based on what others are doing. Just because someone you know is investing in a trendy stock or pursuing a particular investment strategy doesn't mean it's right for you. Stick to your well-thought-out plan and consult your adviser before making significant financial moves.

Conclusion: Your journey, your success

In the world of financial planning, it's time to shift our focus from comparison to purpose. Your financial journey is unique, and your success should be measured against your own goals and values, not someone else's.

People who constantly compare themselves to others tend to be focused only on numbers. Yes, I’m a financial adviser, and of course I care about numbers, but we know financial planning is only partly a numbers game. More important, planning for your future should be about determining your story — one that is undoubtedly unique and using it to develop a financial plan that’s right for you and your family

By embracing a purpose-driven approach, setting clear goals and working with an adviser, you can create a path to financial well-being that is uniquely yours. Remember, comparison may be the thief of joy, but purpose is the key to financial freedom. Join us on this transformative journey toward financial well-being, prioritizing kindness, humanity and achieving your financial goals.

Securities offered through Cadaret, Grant & Co., Inc., and SEC Registered Investment Advisor and member FINRA/SIPC. Advisory services offer through Cadaret, Grant & Co., Inc., and Cedar Brook Group, an SEC Registered Investment Advisor. Cadaret, Grant, & Co. and Cedar Brook are separate entities.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Frank Legan is Partner, Financial Adviser and member of the Forward Look Committee at Cedar Brook Group, one of the largest independent wealth management firms in Northeast Ohio. Frank spends his days designing and implementing personalized financial planning strategies for corporate executives, closely held business owners, artists, families and retirees. He specializes in lifetime income strategies, investment advice and estate planning services. He also works with businesses to develop strategic and succession planning strategies. He is the author of "The Humanity Factor," a book about focusing on your strengths, guiding you through a personalized, step-by-step guide to financial planning.