This Money Mindset is Ruining Your Finances and Making You Unhappy—Here’s How to Change It

Ever feel like you just can’t seem to get ahead financially? 

It seems like every year or two there is a new financial calamity working against us. This year it’s inflation. Before that it was the Covid recession (not that that is over yet). Then you pile on high student loan debt, a hot housing market, previous recessions, expensive medical bills, stagnant wages, and the list goes on… 

And while many of those things are not (entirely) your fault, you still have a responsibility to yourself to manage your money in the best way possible. You can take actions to improve your financial situation. 

Most of us generally know what these steps are: pay off debt, save more, invest in a retirement account, etc. 

But there’s a bigger issue that may be holding you back from making those things happen: your money mindset. 

One money mindset in particular is responsible for keeping you from getting ahead financially and building your best life: comparing yourself to others. 

This is not to say that everyone with financial problems just has a mindset problem. A single parent working multiple jobs and struggling to get by certainly does not just need to change her mindset. Poverty is real and we need systemic change to break that cycle. 

But many of us are actually making enough money and still feel like we’re never going to have everything we want and need. If you’ve ever thought to yourself “I make a decent amount of money, but I just don’t know where it goes,” that’s a sign that you might want to think about your mindset. 

One reason you might be feeling like you never have enough is that you’re comparing your financial situation to that of other people. 

I know, I know. We’ve all learned that we shouldn’t compare ourselves to others and that the grass is always greener, blah blah blah. It’s not like we’re walking through the neighborhood looking at the biggest, nicest houses and longing after them. Okay, well, maybe we are. I mean, I am. Yes, I do want that house with a big kitchen and room for an office. 

It’s hard not to look at what other people have and long for that too. 

And to some extent, that’s okay. It’s okay to want things and dream about having a bigger home or taking more vacations. 

But there’s a difference between wanting things that will improve your life and mindlessly comparing yourself to others. 

Dreaming about things that you could do if you had more money can be a positive motivator. If you want to retire early and travel the world, you might be more motivated to earn and save more money. Longing for a home that better fits your family’s needs and lifestyle can help you start taking the steps to make it happen. 

The problem is that most of us are unlikely to be able to do everything we want. We only have so much time, money, and energy. We have to make choices about how to spend those precious resources so we can build the lives we want. 

When we start comparing ourselves to others, we get into a trap where we want too many things. This often leads to overspending, debt, lack of savings, and most importantly, general unhappiness and dissatisfaction with life. 

When you compare yourself to others and long for things you don’t have, it’s important to remember three things:

1. You don’t truly know anyone else’s full financial situation. 

When you look at what other people are doing with their money, you are getting only a very small snapshot of someone’s finances. You don’t see the whole picture. 

It’s like the Indian folk tale about the blind men and the elephant—each blind man touches a different part of the elephant and thinks different things depending on which part he touches. One touches the tail and thinks it is a rope. Another touches the tusk and thinks it is a dangerous weapon. 

Humans have a tendency to only see partial truths instead of the whole. Looking at just one aspect of someone’s life does not give you an accurate and complete picture.

Financial problems have a way of hiding themselves, and you never know when someone might be spending in a very unhealthy way. 

Many people have accumulated so much credit card debt that they can barely manage the minimum payments, let alone the full amount. 

Others spent their whole lives buying big houses, cabins, boats, etc and are now finding themselves without enough money for their retirement expenses. 

You shouldn’t assume that just because your friends buy new cars every few years or go on dream vacations every year that they are financially healthy or even because they earn a lot of money. 

That big house your friend bought? It could be that they received an inheritance or help from their parents. 

Comparing yourself to others is dangerous because you never know what someone else’s full situation might be. 

2. Other people might just have a different financial reality. 

We like to think that using your brain and working hard are the keys to success, but in reality, there is a fair amount of luck involved. Lucky in choosing the right profession, having a family with resources and influence, knowing the right people, applying for a well-paying job at exactly the right time. 

Unfortunately, life just isn’t fair. 

Some of us live lives where things just seem to fall into place. Others of us aren’t so lucky. We develop an expensive medical condition or go through an expensive divorce. Some of us graduated from college at the worst time to find a job or bought homes at the height of the bubble. 

You might not be able to change your life circumstances, but constantly comparing yourself to others who were more lucky in life is only going to lead to unhappiness. You need to focus on the things you can control and worry about doing the best you can with the circumstances you have. 

3. Other people might just want different things

Not to brag (okay, maybe just a little), but I am a darn good cook. I can grill a mean steak and make a chocolate turtle cake to rival the one from my favorite bakery. I like making meals with my husband and enjoy eating what I make. As a result, I have a hard time wanting to go out to dinner and spend tons of money on food I can make at home. If I’m going out to eat, it has to be because I’m looking for a particular experience or because I’m tired of cooking. 

Other people love going out to eat and simply enjoy being in a restaurant eating good food. 

There is nothing wrong with either. We are different people and are allowed to spend our money in different ways. I don’t spend a lot of money on eating out because I want to spend my money doing things I enjoy more. If eating out is something that brings you joy, then you should absolutely do it, but it might mean you have to give up something else. 

The point is that we all have different values, goals, and desires in life. It simply doesn’t make sense to evaluate our lives and financial situations in light of how others choose to spend their money. 

You have to figure out how to live the best life for you given the resources you have. Get clear on what it is you really want out of life and start working toward that now. Focus on those things that are most important to you and cut out all of the things that don’t really matter. Once you do that, spending less and saving more become a whole lot easier.