Keeping Up: Just Who Are the Joneses?
When you hear the phrase, “keeping up with the Joneses,” you probably envision a scenario in which next-door neighbors are attempting to out-do each other with purchases. One neighbor buys a jet ski, and the other one buys a boat. One puts in a lavish hot tub, the other an in-ground pool. Or someone buy a new iPhone, and you trade in your 2 year old one to “keep up”.
The not-uncommon parlance regarding personal finance is a way to discourage households from overspending because they want to match the apparent status of those around them. But do you know the origin of the phrase? Did you know that there may be, in fact, real Joneses to whom the situation quite possibly refers?
By most accounts, the infamous financial literacy phrase made its first appearance in popular culture in 1913 with a comic strip created by Arthur R. Momand that was depicting the fictional McGinnis family. They were slowly but steading making more money in their careers. Even so, so they strove to keep up with the social standing of their neighbors, the Joneses, who were unseen in the strip. The comic strip depicted a fictitious town on Long Island.
But there are suggestions that the Joneses might also be real people. The story goes that Edith Wharton, the famous novelist, was from a wealthy family of Joneses. Her father had a substantial financial stake in Chemical Bank, and his impressive wealth might have led to an urge to impress other wealthy New York families.
In 1853, one Elizabeth Schermerhorn Jones built a 24-room villa in the Hamptons, where all the wealthy New York families spent their summers. According to this particular legend, that impressive structure led other prominent families, some of whom were related to the Joneses, to build their own lavish homes in the upscale hamlet.
But the competition might have gone beyond even spectacular homes. New York’s old-money families, including the Jones and the Astors, began a series of “patriarchs balls” and hosted exclusive events accessible only to the well-heeled. The theory goes that all the ostentatious homes and extravagant social events gave rise to a perpetual one-upmanship fostered by the singular desire to “keep up with the Joneses.”
Regardless of the origination of “Keeping up with the Joneses”, it all amounted to a bevy of affluent New Yorkers spending a lot of money to impress one another and compete for social status. However, their tale left a couple of lessons in personal finance that you can draw from, even a century later. If/when professional advice is needed to help battle the temptation to “keep up with the Joneses”, try a financial therapist.
Lesson One: Being the Joneses is expensive
At the time Elizabeth Jones built her Hampton estate, it was perhaps the most expensive property in New York. Since no one splurges for that kind of home without showing it off, it was the site of numerous extravagant gatherings, where other elites could come and witness the fruits of the Jones fortune.
Of course, the construction costs astronomical, and as people tried to out-do each other, the soirees became increasingly pricey. In short, it was costly to be the Jones family. Once you start down the path to excess, it’s difficult to turn back.
Financial Lesson Two: Keeping up with the Joneses is expensive
If the current median home price in your city is say $500,000, it’s great if you can afford to have a $1 million home constructed. But if your friend or family member already has one, and you respond by building a $1.5 million house, you might start to realize that it’s expensive to keep up with other people.
While you might not host a 200-guest ball just because your neighbor hosted a 100-person ball last month, you might find yourself wanting a bigger TV than your neighbor has. You might buy a Maserati because your neighbor bought a Mercedes. You might be tempted to send your children to the most expensive private school because the folks next door send their kids to the second-most-expensive place.
In short, trying to maintain a lead in the social-status department can be a huge detriment to your finances. Trying to keep up with, or stay ahead of, the Joneses can be a financial suicide mission. The approach goes against every basic financial literacy concept.
Often, you’ll never out-do the Joneses, but you can undoubtedly out-spend them if you’re willing to throw around more money than they do. This admonition is not necessarily a battle cry for frugality. There is much to be said for wanting the finer things in life or satisfying some “Needs”, and if you can afford them, it’s certainly your right to pursue them.
Extravagant spending with the goal of out-doing someone else’s expenditures is rarely a sound financial plan, nor is it a stable path toward true wealth. If the Joneses’ spending habits eventually catch up to them (as it did in real life), what sound personal-finance plan would include attempting to outspend them yourself?
By Jon McNamara