In today’s world, the constant pressure of comparing ourselves to others—especially in the realm of finances—has become a significant barrier to personal happiness and financial well-being. Dr. Daniel Crosby, Chief Behavioral Officer at Orion Advisor Solutions and author of The Soul of Wealth: 50 Reflections on Money and Meaning, explores this topic in-depth, revealing the psychological impact of social comparison on financial contentment.
The Dual Role of Money and Comparison in Financial Contentment
Crosby highlights a compelling finding from his research: when it comes to financial satisfaction, two key factors emerge as equally predictive: how much money you have and who you are comparing yourself to. While it’s intuitive that more money correlates with greater financial satisfaction, the power of social comparison is just as influential, if not more so.
We tend to underestimate how much our financial well-being is shaped by our reference points. For example, if you live in an affluent neighborhood or follow high-profile celebrities on social media, your sense of financial success might feel insufficient when you compare yourself to others. Crosby emphasizes that in today’s connected world, these comparisons are not limited to our immediate social circles but are extended globally via social media. Unlike previous generations, who compared their financial standing to a small, localized group, today’s individuals often measure their wealth against global superstars or curated highlights of friends’ lives on platforms like Instagram.
The Psychological Impact of Social Media on Financial Happiness
This constant exposure to others’ “highlight reels” can diminish our own sense of financial satisfaction. Crosby explains that even casual social media browsing, or “doomscrolling,” can lead to feelings of inadequacy and unhappiness. One of the studies he cites found that limiting social media usage to just 20 minutes a day—10 minutes in the morning and 10 minutes at night—resulted in a 13% increase in happiness, which, Crosby notes, is greater than the benefits of some psychiatric medications.
The issue, according to Crosby, is that social media presents an unrealistic view of others’ lives. We often see only the best moments—vacations, achievements, celebrations—while overlooking the struggles, failures, or mundane aspects of life. This distorted view can leave us feeling like we’re not measuring up, creating a sense of “lacking” in our own lives, even if we are financially well-off.
Social Media and the Vulnerability of Adolescents
The impact of social comparison is especially pronounced in young people, particularly adolescent girls. Crosby discusses the psychological risks associated with early exposure to social media, citing a connection between social media use and the rise in mental health issues, such as anxiety and eating disorders, among teens. Drawing from his own experience working at an eating disorder treatment center, Crosby explains how media literacy was an essential part of the treatment. Teaching patients to recognize how images are manipulated and how marketers target insecurities was a key first step in therapy.
As a parent, Crosby has set strict rules around phone usage for his children, withholding devices until they are old enough to drive (16 years old). He argues that these devices—and by extension, social media—are having a devastating effect on the mental health of the next generation. He likens it to the smoking epidemic of previous generations, suggesting that we’ll look back and wonder why society allowed unrestricted access to these tools that have such profound negative psychological impacts.
Navigating Social Media as a Parent
Despite his strong stance on limiting screen time, Crosby is empathetic to the challenges faced by other parents. He acknowledges that many may feel their children will be socially isolated without a phone, especially in today’s digitally connected world. However, Crosby believes that fostering in-person interactions—rather than relying on digital forms of communication—can have a far more positive impact on a child’s social development.
By encouraging physical get-togethers over virtual chats, Crosby believes children can experience more meaningful connections. In-person communication offers richer, more rewarding interactions than texting or social media, which often feel shallow in comparison. Ultimately, while screen time cannot be fully avoided, parents can limit its negative effects by promoting face-to-face communication and setting boundaries around technology use.
The Role of “Reference Classes” in Financial Comparison
Another concept Crosby delves into in his book is the idea of “reference classes,” or the groups against which we measure our financial success. These reference classes can be local—such as your neighborhood or workplace—or more distant, like celebrities or influencers on social media. Crosby warns against using an arbitrary reference class that skews your perception of your financial standing.
For instance, someone who lives in a wealthy area may feel poor compared to their neighbors, even though they might be financially comfortable by broader standards. Crosby advocates for a more intentional approach to selecting reference classes, urging individuals to think critically about who they compare themselves to. Rather than benchmarking against high-profile figures or unrealistic portrayals of success, it’s more productive to compare oneself to a relevant and manageable group—whether that’s people within your income bracket or your personal achievements over time.
Mitigating the Effects of Social Comparison
To counteract the detrimental effects of social comparison, Crosby suggests several strategies:
Limit Social Media Exposure: As mentioned earlier, restricting social media use can lead to an increase in happiness. Limiting screen time reduces the constant influx of comparisons and helps individuals focus more on their own lives.
Be Mindful of Reference Classes: Carefully choose the groups to which you compare yourself. Instead of comparing yourself to those who are wealthier or more successful in superficial ways, focus on a more grounded reference class based on your personal goals and values.
Encourage In-Person Interactions: For children, particularly, prioritizing real-life connections over digital ones can foster deeper and more satisfying relationships.
Practice Gratitude: Focusing on what you have and appreciating your achievements, no matter how small, can counterbalance the tendency to focus on what others have.
Conclusion: A New Approach to Financial Contentment
In conclusion, Crosby’s insights offer a compelling look at how social comparison is stealing away our financial contentment and mental well-being. In a world where social media exposes us to an endless stream of curated perfection, it’s essential to reclaim control over how we measure success and happiness. By limiting our exposure to unrealistic portrayals of others’ lives and fostering authentic connections, we can protect our financial contentment and mental health in the long run.
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