“Keeping up with the Joneses” is the demand for status through the purchasing of consumer goods and consumption in order to satisfy our preoccupation with our relative social standing and prestige in life. Keeping up with our neighbors has caused the diversion of our finite resources away from more important alternatives such as potential investments, retirement, savings, and reducing debt.
Recently, I have seen firsthand how expensive it can be to keep up with the Joneses, our next door neighbors and the ones down the street. My next door neighbor recently had a professional landscaper come out and put in an irrigation system in their front lawn. The landscaper also mulched, installed sod, planted new trees, and added fancy professional flower bed edging. The total cost came in right at $4,000 for the new front lawn. While it was expensive, I will readily admit that their new lawn is very beautiful.
Another neighbor down the street went the slightly cheaper route. He recently had a contractor install a new sprinkler system to the tune of $1,500. This neighbor skipped the sod and professional landscaping in favor of throwing out new grass seed on his brown, spotty lawn himself. Additionally, one thing that a lot of people may forget when it comes to a new law sprinkler system is the water bill. A new sprinkler system is the gift that seems to keep on giving (or taking from your wallet). I heard from the rumor mill in the neighborhood that my next door neighbor now has an average water bill of $200 a month. And, the neighbor down the street told me that he regularly has a water bill of $140 a month. Now, I know that a home’s water usage is a personal decision with several factors, but I will take my crappy dead spot lawn and $30 water bill any day of the month.
The opportunity cost of having a beautiful lawn is just not worth it to me and my wife. We are happy with our mediocre lawn and small water bill. An opportunity cost is the value of the next best alternative forgone as the result of making a certain decision. In other words, by spending $200 a month (the opportunity cost) on water and a nice lawn, my family would not be able to go out to dinner as often, save as much for retirement, payoff existing debt, etc. The list goes on and on as to the better alternatives for my family that having a beautiful lawn. But, for some people, their opportunity costs are different and a perfect front lawn is very important to them.
According to a study from MoneyExtra.com, research found that many people are determined to keep up the appearance of continuing their same lifestyle despite struggling financially. The study reveals that despite 56% of homeowners admitting that they are suffering from money problems during this global recession, more than 37% of them still will not commit to the lifestyle changes that could lift them out of debt.
Many people view downsizing, even during the recession, as a sign of failure. While I know, like everyone else, from firsthand experience that it is a hard task not to get fixated on what your neighbors are doing and buying, we need to ask ourselves, “How much do our neighbors really care?” While I stop and admire my neighbor’s beautiful front lawn, I don’t want to spend that kind of money on one of my own. The cost benefit analysis does not make it beneficial for me to put in a new lawn. Many of our neighbors are actually worried about their own finances and too busy to care about your lawn, house, or processions. There are so many more important things in life, and we should all strive to not get wrapped around the axle about what we have, what we don’t have, and what our neighbors are doing.