Perception vs. Reality

I absolutely love this picture. It shows me hanging precariously from the side of a rock face, 100 feet above the ground without a rope. I am literally a slip away from falling to my death. Or am I? The truth is, I am about 3 feet off the ground in this picture, but you would never know that without me (or the photographer) telling you.

Too often our perceptions of events, people, and actions quickly become realities to us. We believe our perception is the absolute truth unless something comes along that force us to change our belief. Our brains are actually wired to believe our perceptions with such vigor using heuristics, or mental shortcuts.

I am constantly reminded of perception vs. reality when I see my friends on Facebook buying homes, cars, and boats… They seem so happy. It has created the 21st century version of Keeping up with the Joneses. Research studies have actually shown that seeing how happy others are on social media sites like Facebook can lead to depression about how crummy our own life is in comparison. The perception is that other people’s lives are so great, however the reality is they are only sharing the parts of their life they are happy with, and keeping the rest to themselves.

What does all of this have to do with personal finance? Too often we believe that if we could just buy a home, a new car, or some other expensive toy we would be happy, just like everyone else. The problem with this logic is we don’t know the situation of the people we are trying to emulate. They may have a higher income than us, may have been given some of the things we think they bought, or even worse, they may be up to their eyeballs in debt.

Don’t try to have what everyone else has because you believe it will make you happy. Your perception of other’s situation, and a desire to have what they have, will lead to poor financial choices. And in the process, you might become the person someone else is trying to keep up with, leading to an endless cycle of poor financial decisions. Break the cycle by taking control of your own financial situation, and know that your perception of others people’s lives is just a perception, not necessarily the reality.

What do you think? Have you ever bought something simply because you saw someone else had it? Did it make you happy? Share your thoughts below.