Explain how comparing yourself with others shapes what you spend.
Choose a large purchase you expect to make within roughly the next year. It could be a holiday, a car, a wedding or a home. On a piece of paper, note the name of one person whose version of that purchase keeps coming back to you. Leave the paper beside you while you read, since the habit described near the end starts from that name.
Lesson 2.1 introduced the reference point, the benchmark that decides whether a result feels good or bad. Few reference points are as strong as other people. How satisfied you feel with a flat, a car, a holiday or a wedding depends heavily on what your friends, colleagues, siblings and classmates have.
People have always wanted to match the spending of those around them. Economists have been writing about it for more than a century. The everyday name for it, keeping up with the Joneses, comes from a comic strip first published in 1913. What has changed since then is the number of people involved. A generation ago, you compared yourself with your neighbours and the people in your office. Today you may measure yourself against hundreds of people a day. Many of them reach your screen because an algorithm picked their posts for the attention they get.
Comparison works against your goals by taking their place. You built your budget on your own income and your own plans. When you compare, you quietly adopt a different target, one shaped by another person's income, debts and priorities.
Spending rises most where others can see the result. In Singapore, four visible purchases stand out, and they rank roughly in this order.
Weddings come first. A wedding is public and happens once. Friends of a similar age tend to marry around the same time, so weddings come in clusters. The venue, banquet, photography, gowns and honeymoon can each feel like a statement about the couple.
Holidays hold a steady second place. Once colleagues are back from Japan or Europe and sharing photos, a weekend in Malaysia can begin to feel like a failure.
Cars sit third. They cost so much in Singapore that owning one is more visible.
Homes are by far the largest. People often talk about moving from an HDB flat to a condo, or from a resale flat to a new launch, in terms of what their friends have done.
The same thing happens with all four. You plan at one level. A comparison lifts the plan one step, another comparison lifts it again, and the budget covered none of those steps.
Take Hui Min (an invented example), who is engaged. Last year she and her fiance agreed on a wedding budget. Over the following six months, three of her friends got married. One had a banquet in a hotel ballroom, one flew every guest to Bali, and one hired a photographer whose pictures were all over everyone's feeds for weeks. When Hui Min sat down with a venue coordinator, her plan already seemed small to her. She walked out with a quote 40% above the budget they had agreed, and she could not say at what point she had chosen to spend more.
You only ever see one side of anyone else's finances, so the comparison is unfair from the start. A feed shows the ballroom, the villa in Bali and the new car. It leaves out the car loan, the credit card bill that follows the honeymoon, the parents who paid half the wedding and the savings account run down to zero. You are holding up your whole financial position, debts included, against the best moments of everybody else's, so on most days you come off worse. Losing that comparison can push you into spending that even the people you measure yourself against may regret.
Comparison has the most pull while it stays vague, as a loose belief that "everyone" has a grander wedding or a better holiday. The name the person habit makes it specific enough to check. Work through it in this order:
Note down the actual person or group you compare yourself with, instead of "everyone". For example, "my three secondary school friends who married this year". Beside each name, note what that person spent on. Go through each choice and ask whether you would still want it if nobody would ever see it and no photos went up anywhere. Keep what you truly want and drop everything else. Rework your plan and budget around what remains. If the decision is shared, make it with the other person.
Putting names on paper shows you two things. Your circle is a small, particular group of people, which is a long way from everyone. And the question you are asking moves from "am I keeping up?" to "do I actually want what they chose?"
Hui Min tried this. She listed the three friends and what each had paid for, then asked which of those choices she would want if nobody ever saw the photos. The photographer was a yes, since she and her fiance both care about pictures. The ballroom was a no, and Bali was definitely not. The couple went back to the coordinator together with a plan 10% over their original budget, and all of the extra went on photography.
This habit is for noticing the pull of comparison. Turning down the people involved is a separate skill, for example declining a group dinner or a shared holiday without damaging the friendship. Money Foundations lesson 4.4, "Spending with friends and family without the awkwardness", teaches it.
Begin with the name on your paper. Then think about who you really compare your spending with. You're looking for three people or groups, and for one purchase each of them has nudged you towards.
Write down three people or groups you compare your spending with, and one purchase each of them has influenced.
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