Humans are inherently competitive. Whether it's keeping up with the Joneses or keeping up with the S&P 500, we look for benchmarks in every aspect of our lives. At work, we seek career progression. At home we seek to marry the right spouse, live in a neighborhood that reflects our success, and take vacations at destinations that leave our neighbors green with envy. Every day, we seek to acquire material goods the represent "the good life." Even our children are not immune to the competition. We want them to wear the right clothes, go to the right schools, take the right career path, and give us grandchildren that we can be proud of.

Successful?
With all this benchmarking going on, one might expect our competitive natures to drive us to achieve success, yet success is elusive. If you can afford a weekend at the beach, why not a week at Disney? If Disney works out, why not a trip to Hawaii? After Hawaii, a trip to the French Riviera might be nice. Been there, done that? What about Positano? Italy is lovely this time of year, and everybody who is anybody has already been there, why not you?

The same holds true with cars, houses and of the other toy and trappings of wealth. Somebody else always has something that you want. So, what's the solution? Consider changing the benchmarks.

It's All Relative
Most people judge their success (or lack thereof) by what they see around them. From an investment perspective, this is referred to as a relative return comparison. Common benchmarks include family, friends and the people across town. Of course, the comparisons don't stop there. Courtesy of non-stop advertising, reality television and a cultural fascination with celebrities, everyday people get a glimpse at Madison Avenue's version of the good life. You can find out where Donald Trump goes for dinner, what Michelle Obama wore yesterday, and what kind of car A-Rod drives.

Producing your credit card or signing on the dotted line can give you instant access to some of those very same trappings of fame and fortune. The problem with these comparisons is that you always come up short in the end. Sure, you can drive the same car A-Rod drives, but you probably can't afford every car he owns. You can dine where The Donald ate, but you'll be flying coach to get there. In the end, you are left wanting more and feeling like what you have achieved is inadequate.

If you find yourself in this situation, think back to something your mother probably said: "Don't worry about what other people have; worry about yourself." Cliché, perhaps, but also quite true.

Absolute Power
In investment terms, this is referred to as an absolute return approach. Absolute return differs from relative return because it is concerned with the return of a particular asset, and does not compare it to any other measure or benchmark. In this case, the asset is your life, and the benchmark is your happiness.

Changing Plans
Making the transition to living an absolute return life in a relative return world can be a challenge. To do it successfully, you need to plan for it just as you would plan for any other financial goal. The process starts with an evaluation of where you are, and a decision about where you want to be. (For closer look at this part of the process, read Life Planning - More Than Just Money.)

Once you've determined your destination, it's time to evaluate your current position. The objective here is to determine where you are in relationship to where you want to go. After you've mapped out the territory, the next step is to develop a strategy to close the gap. (Enjoy Life Now And Still Save For Later and Is Your Financial Situation Sustainable And Renewable? provide some guidance on the process of planning for change. The final step is to take action and implement your plan.)

Conclusion: Happy, At Last
The key to success is to focus on yourself, without making a comparison to your cousin or the guys on the golf course. The quality of life that comes with self satisfaction and financial security can be significantly more satisfying than the treadmill of keeping up with the Joneses. So when life feels like a hedonic treadmill, step aside and rest; the rat race will still be there tomorrow.

Once you've made a successful transition, take a little vacation to give yourself a reward. Instead of going to an "in" destination, do something fun. (For some help with making your travel plans cost effective, check out All-Inclusive Vacation Keeps Travelers On Budget, 3 Money-Saving Cruise Ship Tipsand Save On Planes, Trains And Automobiles.)

Related Articles
  1. Entrepreneurship

    How Does ClassPass Work and Make Money?

    Find out how ClassPass makes money, how the company aims to help both businesses and consumers, and why it has been so successful.
  2. Retirement

    What Are the Risks to Your Retirement Security?

    One of the biggest risks to your retirement security is something you may take for granted: your health, and more specifically, health-care costs.
  3. Retirement

    Secrets to Finding the Right Nursing Home

    The wrong choice could mean inadequate – or even deadly – care.
  4. Retirement

    How Much Medicaid and Medicare Cost Americans

    Medicaid & Medicare cost Americans plenty out of their paychecks. But how much, really? And what does that money buy?
  5. Budgeting

    The 5 Most Expensive States for Child Care

    To get a better sense of how child care costs can fluctuate, here's a look at the costs of child care across the country.
  6. Budgeting

    How to Defray Long-Term Care Expenses

    Here's a handful of options on what you can do to defray long-term care expenses.
  7. Budgeting

    The True Cost of Home Caregiving

    Caring for eldery family in-home might be unavoidable, but most caregivers don't realize the true cost of doing so.
  8. Personal Finance

    cities with best healthcare system

    A starting guide to figuring out where the best care is when the diagnosis is a scary one.
  9. Investing News

    Profit and Cost Centers in the Wellness Industry

    Fitness, mind and body exercise and healthy eating are driving the wellness industry's growth in revenue, making wellness the next industry expected to cross the trillion-dollar threshold.
  10. Entrepreneurship

    Five Rules of Persistence for Entrepreneurs

    “Anything worth attaining will require persistence,” is the first lesson of entrepreneurship.
RELATED TERMS
  1. Mobile Health

    Mobile health is the practice of medicine using new mobile technologies.
  2. Case Management

    Planning, processing and monitoring the healthcare services given ...
  3. Level Death Benefit

    A life insurance payout that is the same whether the insured ...
  4. HIPAA Waiver of Authorization

    A legal document that allows an individual’s health information ...
  5. Medicare Doughnut Hole

    A range of total prescription drug spending in the Medicare Part ...
  6. Guaranteed Issue Life Insurance

    A type of financial-protection policy that provides cash to a ...
RELATED FAQS
  1. What are the benefits of hiring a Chartered Financial Analyst (CFA) to be my financial ...

    A Chartered Financial Analyst (CFA) has successfully passed rigorous coursework in the fields of economics, financial analysis, ... Read Full Answer >>
  2. How does Jeff Weiner make money from LinkedIn?

    LinkedIn CEO Jeff Weiner creates revenue for his company from user subscription fees, advertising and marketing operations, ... Read Full Answer >>
  3. How do firms improve their employees' human capital?

    Human capital describes employees' knowledge, skill sets and motivation that provide economic value to a firm. It is important ... Read Full Answer >>
  4. What advice has Jeff Weiner given to would-be entrepreneurs?

    Jeff Weiner, the billionaire CEO of LinkedIn, is known worldwide as a phenomenally successful entrepreneur and a major influencer ... Read Full Answer >>
  5. What country spends the most on healthcare?

    The United States currently ranks highest in health care spending. Of the countries spending the most on health care, the ... Read Full Answer >>
  6. How did Johnson and Johnson's corporate responsibility policy pay off in 1982?

    In late September, 1982, Johnson & Johnson recalled all of its Tylenol products after seven people in the Chicago area ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!