With many sectors of the Irish economy having recovered from the recession, people are now buying more luxury items. Some who feel that they too need to spend money in order to ‘Keep up with the Joneses’. This is a surefire way to run out of money and make yourself miserable.
You see your neighbour pulling up in a brand new car, going off on another holiday. Their kids are always wearing designer clothes while yours are wearing hand me downs. You find yourself asking “How could they possibly afford that?” Or more likely saying to your other half “how come we can’t afford to do that?”.
The thing is, we don’t talk about money. So you don’t know if someone can really afford that expensive lifestyle. It can be a bit like Facebook pictures showing the perfect life that people like to portray their lives as. It doesn’t really tell you what’s going on behind the scenes.
The Joneses could have come into money, a parent might help them out financially, or they their job may actually pay better than you thought. Or it could just be lots of debt.
During the Celtic Tiger, I remember calling out to a client’s house to pick up a cheque from them. I knew they earned about the same as me, but they had the big house, a BMW X5 and a Mitsubishi Pajero in the drive. The house was kitted out with the large tv on the wall etc. I knew I couldn’t afford all of this, so how could they? The answer was they couldn’t. They were funding their lifestyle through debt. They had remortgaged their house on numerous occasions and everything was being paid for over 30 years.
And they are not an isolated case. An awful lot of people who appear to have a great life are up to their eyeballs in debt. Their bank account is empty at the end of the month, they have no savings for an emergency and they aren’t putting anything into their pension, so they can never retire and always have to keep working.
What other people do is not important. You need to focus on what is important to you and what you need to do to achieve that. If that means driving a banger of a car so you can save to bring the family to Australia on a holiday of a lifetime, then do it. Or if it means going without now so you can retire in comfort, then do it. Make wise decisions with your money now and you won’t run out of it in the future.
If you have any questions, send me an email to firstname.lastname@example.org