I’m sure we’ve all been there. A friend, acquantance, neighbour, or colleague makes a big purchase and you think “how can they afford to do that but I can’t?” Sometimes it’s not even a big purchase, it’s a culmination of smaller things: new clothes, buying lunch everyday, fancy dinners, regular travel. You sit there and wonder, am I falling behind? I thought we were on a similar level, but how can they afford to spend so much? What you’re experiencing is money envy – longing for someone else’s posessions, earnings, or overall financial situation.
I know that’s not a fun feeling, and unfortunately, we have no control over what others do or spend. What we do have control over however is our perception and mindset around the situation. In this article, I am going to teach you to separate spending from income, recognize what you prioritize in your life, and how you can make sacrifices to afford what you want.
Reduce Money Envy By Separating Spending from Income
The biggest thing to recognize is what someone spends does not equal what they earn. There are people out there who spend way more than then make, and live in debt. In fact, the average American in 2022 had almost $8,000 in credit card debt. It’s really easy to make flashy purchases and look like you’re living the high life, when in fact you’re up to your throat in debt. The person who is wearing designer clothing and driving a luxury vehicle may make the same amount of money as you, but spend their money much differently. They also may be getting support from parents or family members, which you don’t always consider.
On the other hand, there are the quiet rich. These are the people that live a relatively humble life, but have a surprisingly high net worth (a great book on this topic is The Millionare Next Door by Thomas J. Stanley). They could afford to spend their money on the flashy stuff, but they don’t care to. They spend a lot less than they earn, and they have the financial comfort and stability to show for it. Think about which person you would like to be.
When looking from the outside in, you only see what’s visible. You see the clothes, the cars, the travel, but you don’t see the healthy balance sheet and high net worth. Just remember, money talks, wealth whispers – the money envy comes from what you see, but they don’t see the net worth you’re building. It’s important to separate someone’s spending habits from their perceived earnings and net worth. Everyone prioritizes their spending differently, and you may be much better off than you realize.
Recognize What you Prioritize
At any given moment, we are all allocating all of our finances to what we deem most important. This includes your living expenses, such as housing and groceries, and your discretionary spending, such as eating out. But what people often don’t think about is the savings/investing piece. You are allocating a certain amount of your income into saving/investing because you deem that to be more important than spending it on other things. Or on the flip side maybe you are failing to save/invest because you are deeming other things more important than putting money away.
For each person, what they deem most important will be different. So for someone you know, they may feel that spending $1,000 a month on designer clothes is important. Whereas for you, you feel that saving/investing that $1,000 is more important. What I’m trying to highlight here is that often people are not earning any more money than you, they’re just allocating their money differently. You could afford to do a lot of the things that you’re envious of, but you prioritize your long-term wealth.
You could afford to spend a few hundred dollars a month to eat at fancy restaurants, but you instead decide to invest that in the stock market. Recognize that that’s a choice you’re making, and not a matter of being capable or not. The money envy comes from the feeling that you can’t do the things others are doing. By reframing your mindset you can be confident in your decisions of how you allocate your money.
Making Sacrifices to Afford What’s Important
As I mentioned above, you are already allocating your income to your top priorities. To introduce anything more into your financial life, you have two options: expand your income to be able to afford it, or reallocate your priorities to fit it in.
The option of expanding your income is not always something that can happen quickly, or something you have immediate control over. You’re often at the mercy of your employer, your clients, or the general market. You may have to trade your time or energy in exchange for this increased income. It’s important that you’re consciously making the decision to perform this sacrifice. It is often a long-term pursuit of investing in yourself.
The second option of re-allocating your priorities to afford what you want will often be something you have more control over. On top of your base living expenses, you have the full freedom to allocate your money how you best see fit. Let’s imagine that you wanted to start driving a Mercedes. You can lease a Mercedes for ~$1,000/month – where in your budget could you find $1,000? Maybe that means that you don’t eat out at all. Maybe it means that you don’t put any money into savings, or move to a smaller home. Now depending on your financial situation, this may not be a great choice, but you’re at full freedom to make this choice. In my situation, I would prioritize putting $1,000 into savings rather than driving a luxury vehicle, but there are others who make the opposite choice. For more on this idea, see this article.
Again, this brings me back to the idea that what you’re spending doesn’t equate your income or net worth. I could afford to drive a luxury vehicle, but I would rather prioritize my long-term financial health.
Conclusion – How To Eliminate Money Envy
The biggest thing to remember when it comes to money envy is that what people are spending does not equate what they’re earning. You are making a conscious decision to allocate your money differently based on what’s important to you, and aligning this to your values. If you really wanted, you likely could afford a lot of what others are doing, but that’s not what’s important to you. Remember this, and use it to strengthen your confidence in your decisions.
I also encourage you to reframe your thinking to reflect on yourself. Think back to the person you were 3, 4, or 5 years ago, and where you were at then. Would that person have been envious of where you are now? I would guess yes. So keep that in mind – you can only be compared to where you were in the past. Keep moving forward and improving yourself.