Personal Finance Is Personal

People love comparing themselves to others. It allows us to gauge how we're doing and what we could do better, and that could cause a lot of satisfaction or grief depending on who you're comparing yourself to. But when it comes to personal finance (which includes your job, standard of living, and personal assets), people don't realize that it's near impossible to make a fair comparison between themselves and other people. This is because there are many aspects of personal finance that vary widely from person to person. Some of these you can control, others you can't. Today we're going to call out some examples of how personal finance is personal, with a goal of you ultimately understanding why comparing yourself to others is usually a waste of time.

While you may see different advice on this website and many other websites and blogs and YouTube content across the internet, it's critical to understand that not everything is going to apply to you and your personal situation. Comparing Yourself to others may be a tool for gauging your progress, it ultimately doesn't matter if you don't know their situation. I know the people who bought a house (one of my goals) at a younger age than me in a profession that pays less than mine on average. There are many reasons why they could have purchased a house before I would have done so myself: they could be getting a certain type of loan that I might not be eligible for; it's very likely they had help from their parents or family with the down payment; it could be in a cheaper cost of living area that I'm not willing to live in. Whatever the case might be, I had to understand and learn that if I compared myself to this person, I was ultimately going to be sad for no good reason. 

Personal finance is personal because you have to play with the cards you're dealt. The "cards dealt" represent your personal financial and other qualitative considerations that go into these decisions. These considerations could include student loan debt, choice of profession (and how much it pays), where you live or want to live (cost of living is very important), whether or not you want to live with another person (or a few people), what support is available to you from friends and family, and what hobbies or passions you do in your free time.

Is important to understand that some of these things that we've mentioned above are not a choice for some people. As an example, I know people who wanted to move out the second they could because they wanted independence from their parents regardless of any financial support they can provide, and I know others who have a different relationship with their parents who are still living at home in order to save money for the future. Another example would be that I know people who are fortunate enough to have their parents pay for their education at expensive schools, and I know others who had to take out student loan debt to earn a 4-year degree at a relatively cheaper institution. Neither of these people is right or wrong, they are each just playing with a different set of cards; and as they move into their lives, they will have to make decisions differently based off their circumstances.

The reason why I'm sharing these examples with you is to let you understand that you are no different. Your situation is 100% your own and the best thing you can do is take the advice and information that's available and make it apply to you. You may not be able to take the common "cut out Starbucks everyday" advice because you don't go there at all, but you may be able to move back in with your parents before you start your new job to save thousands of dollars in rent.

As we say here: "Context is King," and your context is what should be driving your decisions, not anyone else's. So, don't spend too much time comparing yourself to others because you have no idea what their context is in the help or burdens that they have that you don't. the best thing you can do is try to empathize with another person's context and learn from their mistakes and successes as best you can.

Next week we'll talk about a similar topic: how the Millennials and Generation Z are playing a vastly different game compared to their parents when it comes to personal finance and employment.