My recent article, Thou Shalt Not Covet Thy Neighbor’s Tesla, was recently featured on the Credit.com personal finance blog. This column was built on some recent research and writing that I’ve done on behavioral finance. Specifically, Daniel Kahneman’s insight that well-being is a relative measure. Though it is difficult to admit, having an income that is just a little larger than those in your social circle seems to be just about right for most.
Here’s an example from the article of how relative financial capacity can affect your perceived well-being:
Many of us can remember the moment our first friend showed up with a brand-new iPhone or iPad. It was nearly impossible to avoid a twinge of envy as they demonstrated its versatile wonders. An exaggerated example of this social ritual is occurring around the Tesla Model S all-electric car that can go from 0 to 60 mph in 4.2 seconds. Not only do I want to own a Tesla, I want to own one before my friends and neighbors begin to drive home with this 2013 Motor Trend Car of the Year.
You can see how easily these urges pressure everyone in a social group to continually scale upwards towards bigger and better items and experiences. This current article is an attempt to synthesize this human impulse among friends. Since it is inevitable that each group of friends will represent a spectrum of financial capacity, healthy relationships require that all be prepared to manage these pressures.
I turned to a friend and Licensed Professional Counselor for some advice on this topic. She spoke mostly about keeping good boundaries among your friends but also issued some warnings. She shared,
Getting someone to have honest discussion about their financial situation in an unsecured situation [e.g., not their financial consultant bound by confidentiality] is difficult at best.
Money, it appears, is just too personal. You can read the rest of the article here.
Photo: Tesla Motors Model S Media Gallery