"You Think You’re Doing Fine in Life, Until You Hear a Friend Is Doing Better" - Julia Carpenter
- Vinicius Yamamoto dos Santos
- Jul 26, 2024
- 3 min read
Updated: Aug 6, 2024
In this article, Julia Carpenter warns readers against judging their financial health based on their friends' accounts portrayed on social media. As stated by Carpenter, comparing yourself with peers and those around you will have a profound impact on the way you view your own finances, typically making it seem insufficient and inadequate even when that's not the case. Furthermore, this notion of friends and social media influencing the way we judge our financial health also extends to broader areas, where many consumers feel pessimistic about the economy even with various promising factors like cooling inflation, a strong labor market, and a U.S. economy that grew 3.1% over the past year. Carpenter describes this pessimistic feeling as a disconnect, and emphasizes how our friends only exacerbate it by presenting ideal versions of their own finances and families on social media. In fact, a recent report from Edelman Financial Engines epitomizes how many people tend to overspend to keep up with their friends on Instagram and other apps and others feel less satisfied with the amount of money they have because of social media.
According to Isabel Barrow, director of financial planning at Edelman Financial Engines, time on social media creates more opportunities to feel worse about our financial position, even if unconsciously, which regularly leads to overspending. By frequently getting a glimpse of the perfection portrayed on social media, we feel as if we're not doing enough and will grow an urge to seek for more to not fall behind. It is human nature to compare our budget decisions, purchases, and perceived income to those we know, and this plays a major role in deciding how we perceive our own financial health and how we gauge our financial success.

When reading this article, I was constantly making connections to the book "The Psychology of Money" by Morgan Housel, especially with Chapter 3 titled "Never Enough". Other than incorporating a psychological approach to personal finance, Carpenter makes similar remarks to that of Housel regarding the concept of basing your own financial success by comparisons with those around you. In Chapter 3 of "The Psychology of Money", Housel highlights how social comparison leads us to gain the mindset that our financial health is never enough. He explains how the ceiling of social comparison is so high that virtually no one will ever hit it, meaning it is a battle that can never be won. For example, a rookie basketball player who earns $500,000 a year may consider himself rich. But if he was to play on the same team as Mike Trout, who has a 12-year $430 million contract, he would be considered broke by comparison. But by comparison, Trout would also be considered broke compared to the top-ten-highest-paid hedge fund managers in 2018 which earn at least $340 million per year. A relentless cycle of financial comparison is perpetuated because people compare themselves with those around them, especially those with greater incomes.
This idea is also portrayed in the article which emphasizes how social media can make any person quickly feel pessimistic about their financial health, creating an endless cycle of unhappiness when in reality things are not unstable. This is why Housel stresses the idea of accepting you have enough even if it's less than those around you. In the article, the owners of the two frozen yogurt stores outside of Indianapolis inform how they "tune out the noise" of how the economy is doing on social media. This is an example of business owners who have learned the lesson of accepting they have enough and not constantly comparing their earnings or financial success to others through social media. Ultimately, both the article and the financial book "The Psychology of Money" warn readers to avoid comparing themselves with friends and those around them and to establish a notion of what "enough" is in order to avoid overspending or having a downbeat view of life.
Sources
Carpenter, Julia. “You Think You’re Doing Fine in Life, Until You Hear a Friend Is Doing Better.” The Wall Street Journal, 29 Feb. 2024, www.wsj.com/personal-finance/the-surprising-effect-friends-have-on-our-finances-fe986ae5.
Housel, Morgan. The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness. Harriman House, 2020.
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