Our media team at The Compound does an excellent job of marrying quality production value with useful analytics.
They recently shared with us the Spotify Wrapped data on Animal Spirits for 2024.
Our most popular episode this year was titled When Your Friends Are Richer Than You.
It’s always hard to tell the exact reason why people tuned in for something like this, but the episode title seems to have struck a chord.
Money is an emotionally charged subject matter. It’s impossible to keep your emotions out of your money because it’s human nature to get scared, excited, worried, jealous and all of the other feels.
This is why money is almost always viewed on a relative basis for comparison purposes. No one looks at their absolute level of income, net worth or assets. You compare yourself to others. How rich are you relative to your peers, co-workers or strangers on the Internet?
And you certainly compare your money situation to that of your friends. It’s impossible to avoid.
Did you see the vacation they took?
How can they afford private school?
How much money do you think they make?
That Animal Spirits episode was spurred on by an email from a listener:
My wife and I do much better than our 6-8 other parent/couple friends.
Recently we had another very close couple over for dinner and my wife and I were surprised at their reaction when I jokingly gave the husband a hard time about how he never hangs out with me. He and his wife quickly snapped back about how we don’t have the same life and my wife and I don’t understand the combination of work and childcare pressure they face.
The reaction made it seem like they had evaluated this before.
My wife and I seem to experience significantly less stress than our friends because of our financial ability to create as much childcare as we need.
This situation is understandable from both points of view.
When it comes to money you invariably compare yourself to people who are richer than you are.
Just 1.5% of the global population is made up of millionaires. More than 80% of the adult population around the world is worth less than $100,000. Four out of every ten adults on Earth have a net worth of $10,000 or less.
If you’re worth six or seven figures you are richer than the majority of the human population.
Do you think the lucky people in the 1.5% millionaire population compare themselves against the other 98.5%? Of course not!
If you have $1 million you’re jealous of the person with $5 million. If you have $5 million you envy the person with $10 million and on and on it goes. This line of thinking is good for humanity in that it keeps us striving to get better but it can wreak havoc on your psyche if you allow it to consume your thoughts.
There will always be people who are richer, smarter and better looking than you are. That’s just life.
But it’s exceedingly difficult to deal with the money equation when it comes to your friends.
There was an old Friends episode that nailed this dynamic perfectly. Ross, Monica and Chandler made more money than Joey, Phoebe and Rachel which caused some strife in the friendship circle:
The people who have more money don’t think about it nearly as much as the people who have less money.
Things become even more amplified when there are kids involved. Kids are expensive. As a parent, you want to do everything you can to give them the best life possible. Sometimes that means spending more money on them to the detriment of your own lifestyle.
But some people can afford to spend on their children and still live comfortable lives for themselves. Money might not make you whole in terms of contentment, but it can make you more comfortable and lower your stress levels.
That stings when you’re on the outside looking in.
These feelings will always persist because emotions are what make us human. But there are some things to consider when dealing with friendship-money problems:
You don’t know much debt it takes to fund their lifestyle. Sure, some people really do have more money, but others are in debt up to their eyeballs to keep up the facade of a luxurious lifestyle.
You don’t know how much they’re saving. I try not to judge but I can’t help myself when it comes to finances.
When I see a person driving an $80k truck or SUV I often think: I wonder if they maxed out their 401k or made 529 contributions this year?
While it’s easy to see how much money someone spends it’s not widely known how much people save, because saving is a lack of spending.
You can’t see your friend’s brokerage or retirement account statements as easily as their boats, vehicles and houses.
You don’t know how much stress is involved in the money they make. I know plenty of people who make a lot of money but their job has a lot of baggage.
They work long hours, don’t see their family very much and are always stressed out.
A high income can make you more comfortable but often comes at a cost.
Money is a taboo subject so I’m not sure how many friends are going out of their way to talk about this subject in a more meaningful way.
It is important to remember, however, that other people’s lives are not always what they seem from the outside.
Your friends — with more or less money than you — often have more money worries than you know.
Further Reading:
Rich vs. Wealthy