Have you ever looked up someone’s address on Zillow to see their home purchase price?
Guilty!
Admit it. We’ve all been there.
I’ve always felt a natural curiosity about money. It occurred due to the lack of transparency on money altogether. For example, most people present a highlight reel or idealized versions of their lives on social media. As a result, these representations can set unrealistic expectations of what lifestyles people should afford. Additionally, I rarely discussed income with my peers until my mid-20s, when most people started establishing their careers with higher incomes.
Thankfully, while a money taboo still exists, money transparency is up and coming.
Websites like Payscale and Glassdoor provide more insight into what companies pay employees.
The media has shifted a focus on money diary-type videos too. I used to religiously watch Glamour’s Money Tours and “How This Job Title Spends Her $XX, XXX Salary” videos. They gave an insight into their paychecks, investments, savings, and most common expenses.
This curiosity extends beyond these anonymous videos.
Why does that curiosity become an obsession with how everyone else manages their money?
Here’s why.
Ego: We Want to Feel Better
Here’s a controversial opinion.
We’re obsessed with how people spend their money because we want to feel better about ourselves.
I was caught in this cycle when I went down the rabbit hole of Dave Ramsey videos. My husband called me out on why I watched them. For me, it was entertainment. But he didn’t want me to fall into the trap of justifying additional expenses because they weren’t a big deal compared to these financial disaster stories.
Months later, the YouTube channel, How Money Works posted a video called “The Problem with Laughing at Poor People.”
The video coincided with my husband’s perspective. It explains how laughing at poor people quickly became one of personal finance’s most popular content genres. These reaction videos have gained popularity from Dave Ramsey’s show giving advice to millionaire Graham Stephan reacting at how much people are spending and dishing out his frugal advice.
What do these videos look like? A guest will come on the show, and the host will advise them to clear their debt. Or a content creator will react to a video of someone revealing how much they spend in a month.
While it sounds harmless compared to people giving terrible financial advice, these shows may do more harm than good.
Most people understand that having $100,000 in credit card debt and voluntarily choosing not to work full-time in the United States is detrimental to your finances. If you know this terrible financial situation, you don’t need to watch this video for educational purposes.
Instead, watching people who made worse decisions is a coping mechanism to put personal worries into perspective. It may feel like fun entertainment, but it’s not a good long-term solution.
It’s easier to justify your financial situation because it’s not as bad as an idiot who financed a Tesla while working part-time at Arby’s. We then get into the trap of I can buy this because I’m in a better spot than someone on the verge of bankruptcy. That person had $100,000 of credit card debt, while I only had $10,000.
The cycle continues.
Comparison: We Want a Benchmark of How We’re Doing
Money is still a taboo topic for many people. I’ve had friends offended when someone asked them how much their sofa cost.
Even with my closest friends, I don’t know the ins and outs of their finances. But we are all curious to see how we’re doing, from how much we’re earning, our earning potential, our ability to buy a home, or our wedding budget.
What’s the psychology behind this?
Wendy De La Rosa, Ph.D., an assistant professor of marketing at the Wharton School at the University of Pennsylvania, explains in the American Psychological Association, “A person’s subjective wealth perception is their financial situation compared to a relative benchmark, such as their budget or the income of those around them.”
For instance, an employee may feel great about their $100,000 salary. But once they discover their coworker makes $105,000, they feel stressed and anxious. De La Rosa explains how engaging in this comparative behavior is easy.
For those in the same position, we want validation that we’re being paid fairly compared to our colleagues. Thankfully, money is more transparent now than in the past. Websites like Glassdoor allow current and former employees to post their salaries.
Whether it’s our coworkers or our friends, humans grow obsessed with how much people earn and spend their money due to comparison. We want to rate how we’re doing. Are we on track to retirement? Do we have more investments for someone who makes the same salary?
This can go both ways.
Pros of this curious benchmarking:
- Inspiration. A coworker of mine kept asking me how I had life figured out. At 25, I never considered my life figured out at all. But from an outside perspective, she only saw that I was in a happy relationship as a homeowner. The light bulb clicked when I revealed what percentage of my income I saved and invested. Her ratios were off, and she made the necessary adjustments.
- Learning. I consulted with a friend who got married a year before me. He advised me to take the plunge and apply for business credit cards that provide better rewards with no annual fee.
- Adapting strategies that work. When I learned that my friends were making $90,000 right after college graduation, I used that as motivation to jumpstart my career. I adapted their strategy of job hopping early in my career to double my income.
Cons of this comparative benchmarking:
Unhappiness.
Harvard Professor Arthur Brooks has spent years researching the association between achievement, wealth, notoriety, and a lasting sense of satisfaction. Brooks writes, ” The insatiable goals to acquire more, succeed conspicuously, and be as attractive as possible lead us to objectify one another, and even ourselves. When people see themselves as little more than their attractive bodies, jobs, or bank accounts, it brings great suffering.”
Constantly comparing our financial situation to others can fall into the “comparison is the thief of joy” category. I have friends that will never be happy with how much they earn because it’s never enough. Their only acceptable answer is to make more. It consumers their identity and purpose in life.
Bad sacrifices.
Delayed gratification is a common sacrifice in the pursuit of building wealth. But studies have shown that people with a strong desire for money tend to sacrifice time for self-growth, leisure, and intimate relationships.
Reality: We Want the Truth!
What’s the secret sauce?
In a previous article, I discussed how people seem to afford things you can’t.
Is it credit card debt or a big inheritance? Are other people self-made and just better than you?
The truth is more nuanced but typically includes financial help, debt, creativity, and hard work.
Here is how these four factors impacted me.
- Financial help. I’ve received help from my parents for significant life events like my wedding. I also experienced the privilege of living at home with my parents rent-free until I moved out at 23 after college and my first full-time job. These experiences helped me save my money for investments and take on unpaid internships to gain experience — something I would never have signed up for if I had to pay rent on my own.
- Debt. When I attended university, I accumulated student loan debt. However, I paid it off quickly.
- Creativity. I put on my big girl pants and started negotiating when I could. It takes little time, just more courage.
- Hard work. The hard work can mean years of schooling or grinding through a full-time job with side hustles.
One of the motivators for getting into credit card rewards stemmed from curiosity. I wanted to know how.
After scrolling social media and seeing people post luxurious flights or vacations for $100, I needed to know what kind of scam was happening. How were people flying on business class and first-class flights for $100? Because they were only paying taxes and fees!
Like most other things, learning about this takes time and effort. There’s no get-rich-quick scheme. I listened to podcasts, watched YouTube videos, and read articles on maximizing credit card points.
I also learned it’s not for everyone. For those who aren’t debt free or don’t travel, this hobby isn’t the best use of their time. They’re better off using debit cards to control their spending or focusing on high cash-back rewards cards.
I’m a fan of the CNBC Millennial Money features over Dave Ramsey calls. They feature what people of different incomes make and how they spend their money.
Over the years, I’ve learned much about real estate, starting my own business, and side hustles. Some worked while some didn’t.
Final Thoughts
Here’s a quick recap:
- Ego. We want to feel better about ourselves. Unfortunately, there is a secret pleasure of being better than someone else. That’s why this content genre of harping on people with bad financial decisions succeeds.
- Comparison. We want a benchmark of where we fall. We’re curious about where we fall among our peers. Are we doing well, average, or below?
- Reality. We want the truth! Just how is everyone else doing it? We want the whole picture of success stories, luck, and secret help!
Okay, maybe I haven’t been obsessed with others’ spending. But I get the obsession behind it. I’ve been the person to watch these money diary videos when they’re released and consume the content of everyone revealing their financial woes.
Do you love learning about others’ finances? Or do you mind your business?
Ultimately, the money obsession outside our lives is rooted in our desire for validation, curiosity, and truth. While it can start with good intentions, I believe it’s essential to learn from others’ experiences and reevaluate our curiosity.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.
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