It’s Expensive to Impress Other People!

cost of impressing others

Do you think this guy spends to impress?

Honestly, who would impress you more as someone who has his or her act together:

  • A person driving a new upscale brand name car, or one driving an older average car?
  • A family living in a tony neighborhood, or one living in a solidly middle class one?
  • Someone who travels the world each year for a cool international vacation, or someone who stays domestic for a budget-oriented trip?

A person driving a sporty or luxury car, living in nice home in an upscale neighborhood, who travels to far-flung corners of the globe each year seems like an interesting person!  Wouldn’t it be more fun to hang out with someone like that, rather than the person driving an old car, living in some ordinary middle class home in a plain neighborhood, who doesn’t travel to exotic places regularly?

“Yes” would probably be the answer for many if not most people, I would guess.  No scientific data here, but I think that the average person out there would be more impressed by the first option in each of the 3 questions above.

Of course, in money circles the answers might be different, but us personal finance junkies are probably outliers that way :)

To be fair, many people can rightfully afford those nice things.  However, my guess is that there are far too many people who simply can’t afford to live such lives, but feel like that’s the standard they want to live up to.  They just couldn’t imagine having a life with “average” cars, homes, and vacations (among other things).  They feel like they’re deserving of something better than average.

Moreover, many people just don’t want to appear average or give off an impression that they’re not successful.  It’s Big Hat, No Cattle Syndrome at work. This can really kick in when your peer group around you has nicer things.

Again, I probably see things differently than the typical non-personal finance enthusiast, but it just doesn’t matter to me if I have things that aren’t as nice as others who I know.  Our cars, our home, and vacations are all pretty average-looking in my opinion.  Is it bad that they aren’t different?

I wasn’t always this way.  Literally, when younger, I wouldn’t wear anything to work unless it was from Nordstrom.  I took some great vacations, having visited all but 3 states in the US while also visiting Europe multiple times, China, India, and a few other locales.   Real estate dreams became an obsession of mine!

I even remember a guy I worked with, older and higher up the organizational chart than me, driving an older most car.  How lame, I thought! What a boring dude!

Yeah, that was an immature view.  He was actually smart, though I didn’t realize it then.

These days, it’s more about my kids and financial freedom.  Or, more accurately, the quest for financial freedom.   This is because I realize that time is precious, and is more important than spending hard-earned money to look successful, cool, or whatever.

It’s not that I don’t care at all about nicer things.  That would be disingenuous to say.  Rather, it’s just that they’re not as important now, and I can suppress the still-present interest in such things because other things mean more.

Case Study

Thinking in terms of time and money, let’s consider a few alternatives for each of those 3 options above.

Car:  A nice upscale car costing $40,000, or an ordinary used car costing $10,000.  Difference = $30,000.

Home: A beautiful new “McMansion” costing $500,000, or a nice but older-looking home costing $300,000.  Difference = $200,000.

Vacation: 3 years of deluxe international trips costing $25,000, or 3 years of modest domestic trips costing $5,000.  Difference = $20,000.

So, someone wanting to look good and be cool might be tempted to spend an extra $250,000 for that more “impressive” lifestyle.  Just how much time does someone have to work to spend an extra $250,000?

Let’s assume that a person has a solid salary of $100,000 pre-tax.  After taxes, how about saying this person has $70,000 in income? If the person has annual expenses of $50,000, that means that $20,000 is saved annually.

If that same person wants to upgrade to a better life, it would take 12.5 years worth of savings in order to finance the good-looking options.  There are probably a number of other ways one could do such calculations, but a quick calculation like this makes the point:  it can be very expensive to live up to a certain image.

So why do it?

It’s fascinating how so many people would probably disagree with my view, and think I’m being cheap.  Perhaps, but it’s actually more intended to put great value on time and peace of mind, instead of letting image and status control me.

Admittedly, it’s not the material things that I get jealous of; rather, it can be others achieving more success with the same level of effort that can get me envious at times in certain situations. That’s another post another post for another day.

But material things?  No, they don’t matter too much in terms of competitiveness.  Too time-intensive!  Financial security and future freedom mean more, at least to me.  That’s the intoxicating goal, rather than possession of nice things.

What Do You Think?

Do you ever get caught up in spending to impress? It’s okay to admit it if you do :)

Do you consider the time it takes in order to afford certain things?

Do you know anyone who has certain lifestyle standards that he or she just won’t compromise?

 

Comments

  1. says

    I don’t worry about what other people think too much. I have a 2001 F150 that I plan on keeping for as long as possible. It’s in pretty good shape, I enjoy tinkering with it for the most part and the best part is no monthly payment!

  2. says

    Hi Squirrelers, this is Mama Squirrel from Dewey’s Treehouse. I am hosting this week’s Festival of Frugality, but the submissions thingy isn’t working very well, so you may have submitted something that isn’t shoung up. Would you let me include this post? I’ll check back tonight. Thanks in any case (from one squirrel to another).

  3. Kathy says

    The first thing I think about when seeing someone driving a fancy car or eating out all the time etc. is that they are probably in debt up to their eyeballs. I actually have less respect for someone living beyond their means simply to impress others. Like some of the people on those house hunter shows on HGTV. The are so caught up in having hardwood floors and granite counters and stainless appliances because they want nice things when they entertain their friends or family. Do they really think stainless appliances work better than white ones? These people are spending money they don’t have to impress friends and family. They’d do better buying less expensive and using the extra money for a larger down payment or to pay their own closing costs.

    • Squirrelers says

      Yeah, I know what you mean about the house hunter people on HGTV. Not all, but some of them seem to have pretty high standards – and get really turned off by homes and features that many people would find great. I know a few people just like this, including one couple where one of the people is very focused on impressing others via the home.

  4. says

    I live in a very affluent neighborhood of Chicago and I am shocked that people need to tear down a perfectly good $800k house (with rental opps!) to rebuild a $5-10 million mega mansion. Who needs all that stuff? Who needs to prove that their better than their neighbors with three different indoor pools? Yuck. Tacky and wasteful.

    • Squirrelers says

      Yuck is right. There is no shortage of teardowns in the city. Being local, I suspect many people elsewhere might not realize just how many very expensive teardowns have occurred in Chicago.

  5. says

    I agree for the most part. The international trips are eyes opening, though. I think everyone need to see the world more. We spent a lot of money traveling, but I think it’s worth it. We’re not trying to impress anyone, we just want to see other cultures and broaden our horizon. At home we’re pretty frugal.

    • Squirrelers says

      That makes sense. Actually, I have to admit that some of my most enjoyable times have been on travels. I wouldn’t take them back, and I learned quite a bit from the experiences. They weren’t to impress, and reasons are just like yours.

  6. says

    My parents never spent to impress. They spent to purchase experiences for our family. Their frugality has apparently rubbed off on me, because I tend to spend more for the experience, like a trip to the Grand Canyon, versus buying things.

  7. says

    I have never spent to impress, but spent beyond my means because I wanted stuff before I had the money to pay for it. I’ve learned my lesson now. I do catch myself wondering when I see someone with a new car or big purchase how they paid for it. I have a co-worker who is always complaining about having no money, but continues to eat lunch out everyday and make needless purchases.

    • Squirrelers says

      There’s good reason to wonder in many of those cases, and I just talked to someone in the last few days just like that. They make for a good story :)

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