Keeping up with the Joneses

Perhaps it’s because the Demi Moore, David Duchovny flick, “The Joneses” is playing in a seamlessly endless loop on cable that a Wall Street Journal post entitled “Do Rich People Make Us Spend More, ” caught my eye. The movie, for those of you who haven’t seen it (and I’m not spoiling anything here since this much is apparent very early in the film) is that the Joneses are a fake family of four (two great-looking teens accompany the great-looking parents) whose existence is supposed to inspire others to want to be like them. And being like them requires buying the same stuff.

In reality, the filmmakers were onto something. A new study by economists Marianne Bertrand and Adair Morse of the University of Chicago School of Business shows that indeed, when the rich buy more, the non-rich often come along for the ride. I have often lamented (griped, complained, whined, whatever you want to call it) in this space that we need to be saving more. This new piece of research finds that an astonishing 25% of the decline in our savings over the past three decades (and three decades ago our national savings rate was an acceptable 10 – 11%) is a result of the fact that we’re trying to keep up with the rich.

Part of the problem, it goes on to say, is our celebrity-oriented culture. There was a time, you’ll remember, when parties in the Hamptons and Hollywood were hidden behind 8-foot hedges. This was before TMZ, and before the Real Housewives. It was before you could open US Weekly to a page that pointed out on one page how celebrities are just like us, before taking us to a page where we’d find a necklace, makeup, sweater that would enable us to be just like them.

What’s important to keep in mind amidst all of the hullaballoo is how little adding these perks of the rich means to your bottom line – and not just your bottom line of wealth, but your bottom line of happiness. Research has shown time and time again that things (with the exception of food, shelter, basic transportation, the absence of which will make us miserable) do not have the power to make us happy. Instead, they pale over time. They get older. They go out of style.

If you want to feel good about what you do with your money, spend it – if you must – on an experience rather than a thing. Then savor sharing your photos. And if you aren’t feeling like you have to spend it, save it. Put it away and visit your balance as it grows into something that can buy you your dream. Yes, your dream. Not the Joneses.

Jean Chatzky

About Jean Chatzky

Jean Chatzky, the financial editor for NBC’s TODAY show, is an award-winning personal finance journalist, AARP’s personal finance ambassador, and a contributing editor for Fortune magazine. Jean is a best-selling author; her eighth and most recent book is Money Rules: The Simple Path to Lifelong Security. She believes knowing how to manage our money is one of the most important life skills for people at every age and has made it her mission to help simplify money matters, increasing financial literacy both now and for the future. In April 2013 Jean launched Jean Chatzky's Money School , a series of college-style, interactive online personal finance courses that give men and women across the country the opportunity to learn from and interact directly with her. Jean lives with her family in Westchester County, New York.
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3 Responses to Keeping up with the Joneses

  1. Anonymous says:

    If nobody but the rich buys anything, but saves … we have a trickle-down effect of a stagnant economy. The industries providing goods and services will die off–as we have seen since the “crash”. The only people left with jobs … would be bankers! Naturally, there should be a balance.

  2. Joy Miller says:

    I love this. Of course it is because I agree with all of it and have been trying to live my life like this. My challenge is getting the next generation to understand this as well!
    Joy is a Wells Fargo employee.

  3. Jay Dias says:

    Great article. If only all of us could appreciate our own dollar than the neighbor’s million-dollar.

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