MONEY TALKS: SOCIAL COMPARISON MAY BE RUINING YOUR FINANCIAL HEALTH.
. People compare themselves to others based on motivational considerations.
.Social comparison affects one’s financial health.
. Social comparison occurs upwardly, laterally, and Downwards.
. The Wealth compass in controlling social comparison.
As a society, we compare ourselves to people who earn more, have more, or have accomplished more. There is nothing wrong with this if the comparison will motivate you in achieving financial independence. With the introduction of social platforms like Instagram, it is easy to compare trends with netizens and hop onto what is considered fashionable.
The longer a person browses, the more stimuli they are exposed to and the more likely they will purchase impulsively (Beatty and Ferell,1998)
What is social comparison?
Social comparison theory was first proposed in 1954 by psychologist Leon Festinger, he suggested that people have an innate drive to evaluate themselves often in comparison to others. Advertisers often use the upward social comparison model to evaluate customer experience, by mentioning self-enhancement, improvement, and evaluation consumers will be compelled to buy products or services.
Further research indicates there are three concepts of social comparison. Upward, lateral, and downward social comparison.
Upward social comparison.
People compare themselves to those they believe are better than them. Upward comparisons often focus on enhancing one’s self-image. Financially, comparing oneself to people who have achieved financial freedom sets us on the right track to being financially fit.
Buunk and Gibbons (2006) suggested that upward social comparisons naturally tend to induce more negative feelings. Online platforms offer chances on impression management that exhibit perfect lives which sometimes are exaggerated by netizens (Walther,2007) One may feel the need to upgrade their lifestyle after feeling personally inadequate. In the process, they may end up giving in to emotional spending that Steve Down clarifies in his Financially Fit For Life Book through the Wealth compass.
Lateral social comparison.
This refers to comparing oneself to someone you see as an equal to you in various areas. Most likely, people make comparisons in terms of wealth, intelligence, and success with their peers.
This type of comparison can either motivate or create intense anxiety.
Downward social comparison.
In this case, people compare themselves to others who they term inferior. The focus is on making them feel better positioned. Often, this is a defensive mechanism that fails to hold our financial health accountable. We often convince ourselves that we are better off than people who make grievous financial mistakes after we make poor financial decisions.
Threats to one’s ego often result in the motivation to compare with a less fortunate person.
IMPLICATION TO FINANCES.
Perceptions of unfairness converge the effects of social comparison on financial dissatisfaction that eventually lead to emotional spending. Whether upwards or downwards, any decision evoked from an emotional thought will result in poor financial decisions.
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