We live in a condo association, mostly occupied by immigrant workers or retirees. The town we live in has one of the highest per-capita income in the country. Even a two bedroom condo costs around $150,000. We are renting here but, mostly the families own their condos. We have neighbors sporting Audi, Mercedes, and BMWs. Whenever we go for a walk inside the complex we feel that everyone is probably richer than us.
Do you always look at your neighbor and wonder why he always drives the latest and best model cars? He also has a lot of time and money to spend in holidays abroad every summer. Recently, you also noted that his child also goes to one of the best schools.
No matter how rich you are, chances are very high that someone in your neighborhood is richer than you. I raised this question to the general public that why they think the neighbor is richer.
I took a different approach and posted a question “Why you think your neighbor is richer than you”.
The answers varied between each other. I classified the responses into 5 major categories, as below.
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i) His job has better perks
The type of life a person lives is a reflection of the nature of employment he is in. People with better-paying jobs will tend to accumulate wealth and get rich faster than those at the lower paying jobs. For example, a multinational company CEO will be paid higher than an elementary school teacher.
You will establish that better-paying jobs will allow your neighbor to change cars frequently or own several, take kids to better schools and even go for holidays every summer.
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ii) They are more educated
The level of education is directly related to the income that one gets. You will, therefore, note that your more educated neighbor will have a flashy lifestyle because he advanced in education and, therefore, occupies a higher level in the job market.
A highly educated, MBA or Ph.D. person will always be regarded and relied upon by an organization to make key decisions. Because of wide knowledge, he is believed to drive growth and his organizations to the next level. His income will, therefore, be higher because many organizations want to have him aboard.
For example, you will find that a director at a local multinational also sits on the government advisory board. This neighbor will, therefore, be richer than you. Make a step of advancing and reaching his levels.
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iii) Has a smaller family
A well-planned family is easier to manage even with fewer resources. If your neighbor has a small well-planned family, it will be less expensive and will have more resources to spend on luxury. The neighbor can also afford to make more savings to take children to better schools.
This is different for a person with larger family which requires more to feed, cloth and even larger shelter. It important to plan a family based on the level of income.
iv) They have additional income generating enterprises
Income that people receive from their payments might not be the best way to assess their richness. During the recent recession, even high-earning professionals found themselves on a downward decline.
However, it is personal income that has been cited by many people to give them richer lifestyles. By establishing additional sources of income, even those with lower perks are able to live better lives. This could be the key reason that your neighbor remains richer than you.
You neighbor’s investment is diversified, thus generating higher returns at lower risk compared to yours. They have investments in stocks, bonds, and metals. They know how to trade gold. Sometimes trading helps us to accumulate wealth.
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v) They are better at budgeting
Being rich can be a factor of great budgeting. Your neighbor could be great at budgeting, either because he/she learned the skills in school or has gained them at the workplace. A great budget will be able to plan resources such that only important ones are given preferences.
Others that can wait are either pushed to the next payment or abandoned altogether. This enables your neighbor to make more savings to buy a better car, take children to better schools and even stock his business.
(Related – Why do personal budgets often fail)
These are the key reasons why your neighbor is richer than you. Consider advancing your career, learning budgeting skills, and establishing newer income-generating activities to become rich like your neighbor.
But, there is an opposite view which is more appealing to me. I would like to feel that we are the richest. Maybe the rich neighbor is actually living with borrowed money. They may have been bankrupt before. They may be using items on lease to show off, you never know the actual fact unless you are very close.
Why should we worry about it then?
Whereas we are living debt free forever. We can afford to buy a home without taking in a mortgage. Most of the times, neighbor’s richness is just an illusion. What is more important is to be self-sufficient, happy and fulfilled. How to be happy in Life is an old post I’d like my readers to read today.
It is important that you consider all the above points in your quest to become richer. At the same time don’t let this complex feeling, which can only make us more subdued, set in your mind.
Jenny @ Frugal Guru Guide says
“Well planned family?” Most people with big families have planned them. The rewards of a child are so much higher than those of a luxury car habit! There is no competition for me.
It’s people like you, with a mentality like that, which are the problem in this world.
Jenny @ Frugal Guru Guide says
And the neighbor who spends like that isn’t richer than me. He just spend more. 🙂
Amen to that. I can pretty much guarantee that our neighbors aren’t richer despite their fancier stuff and smaller (better planned? not likely) families.
Thomas | Your Daily Finance says
Well you also have to assume that some of our neighbors are in debt and are struggling and just look good on the outside. You never know who’s home is in foreclosure these days. I really don’t worry about my neighborhood looking like they are richer than we are. If they are smart and helpful I will simply ask can you give me some advice on how to get to a particular level or start a business. Usually people with knowledge and know how are more then willing to help.
[email protected] says
I like to tell myself that everyone has more figured out than I do. It keeps me hungry in learning new ways to be efficient, save and invest. It can be dangerous to compare yourself to others around you, especially when you don’t have all of the details (which you wouldn’t for a neighbor’s finances), but if you can use it as a motivator to keep up with your own finances, then I think it is useful.
[email protected] says
Fascinating questions. I think others’ finances may be less transparent, especially if they’re spending ostentatiously. The fancy cars, etc. are probably not nearly paid off, for example.
Little House says
I think it’s really hard to tell if a neighbor is richer or just in more debt than you are. There are so many people out there “keeping up with the Joneses” that’s it’s hard to tell at face value who is really financially better off. Case in point; I know someone with a 5 bedroom home, with lots of cars (though not necessarily new), and go on lots of trips that might appear “richer” than their neighbor. However, their neighbors might not realize that they aren’t paying their mortgage, nor haven’t been for over 4 years. So appearances don’t tell the whole story.
David @my2centopinion says
When I used to prepare taxes sometimes the nice looking people that seemed to have it all, in fact did. Sometimes, they had leveraged themselves so badly any small problem could turn into bankruptcy.
I also saw people that seemed to have nothing, ugly clothes and old cars. Sometimes they were begging for the tax refund loan. Sometimes they’d tell me about stocking it into their retirement account.
You really can’t ever tell.
I try to be proud of my frugality. When someone proudly talks about their new car, I proudly show the duck tape holding mine together.
SB, I live in a similar area. My condo I own cost me 285k and it is a pretty small apartment. And I always see people having several cars and I still drive my 97 pick up truck (yet still in great shape). So I am asking those questions almost constantly.
But what bothers me more is that I meet people I know that they do not have a better job than me, for example and yet they still have better cars, travel abroad, shop in the nearest grocery store filling one sometimes two cart – if I ever do that I would kill my budget for several months ahead. Many times I asked my wife if she had a clue, how those people do that.
Money Beagle says
My wife stays at home. A lot of our neighbors are two income households. I’m pretty sure this is the major difference if there is one.
Anton Ivanov says
I see people around me driving nice cars and wearing expensive clothing all the time. They may even have a bigger house than me. But I know that 90% of them are over their head in debt and are just a few months away from bankruptcy. They may have pretty toys, but their net worths are $0 or negative.
I am 100% debt free and live the lifestyle that I am perfectly happy with. And I know my financial future is set because my net worth keeps increasing every year.
Paul @ The Frugal Toad says
I’m a Teacher, all my neighbors are richer than me! 😉 I chose this profession so I am not complaining. I am working hard to increase my income and live a frugal lifestyle so that I can do the things I enjoy and save for retirement.
Michael @ The Student Loan Sherpa says
I try not to consider my income relative to my neighbors… it can’t really go anywhere positive.
My mother tends to speculate what her neighbors do for a living or how they make their money. I kiddingly joke with her that they would be the millionaire next door.
Now, there are so many ways for people to earn an extra income or living in general. You never know, they could be making a killing selling wares on Esty.
Derek | MoneyAhoy.com says
vi) they have accumulated a shit-load of debt and will be debt slaves until they’re 70?
Mr Financial Debauchery says
Isn’t the trick to the question: Why do you “THINK” your neighbor is richer than you? Think being the operative word. I believe it was the Millionaire Next Door author who basically proved to us all through his series of books that our neighbors are not in fact richer than us. Rather they are just a bunch of fakes and we’re all foolish to think that they were richer in the first place.
I think the grass is just always greener on the other side on so many different levels. Just because someone seems more relaxed or better off financially doesn’t necessarily mean they are.
Marie Hickman says
When someone brags about their big house, boat, car, etc., I ask them (sometimes in my head but sometimes out loud), “Is it 100% paid for?” If no, then they are NOT ahead of me! It’s important to focus on your own life and your own race, not others’.
People who think they are better off than you take advantage of your entertaining
and maybe a littke jealous of your material possessions that you have had since
Marriage and neighbor…you may have to explain that in a better way 🙂
GOD has discriminatory policy while allocating the parents and birth place neighborhood. Sometimes the deserving real one gets swapped by the non deserving neighborers. In such cases.. change your neighborhood to some slum location where all the dwellers get swayed by your status. In case do not want to move, start giving a free car wash on weekends to wealthy owners who are not in the immediate neighborhood. Give free nanny services to cats and dogs again not from immediate neighborhood. Giving laundry services can also be explored.. !!