“I’ll Never Catch Up”

It’s a feeling that a lot of us get after we spend our early adulthood not really worrying about our personal finances while some of our peers are actually making great moves. We finally wake up to the financial mess we’ve created (good) and take a bunch of steps to fix things (good), but then we look around at the financial state we’re in and recognize that we’re way behind where we “should be” (bad).

Sarah and I were once in our late twenties with more than $10,000 each in student loan debt, more than $10,000 each in car loans, somewhere around $20,000 in combined student loan debt, and several thousand dollars in additional debt for things like furniture. We barely had enough in our savings account to cover a meal at a restaurant, let alone an actual emergency, and we lived in a tiny apartment. The one good thing we both did in that era – our single good financial move – is that we signed up early on for our workplace retirement plans (something we’re incredibly grateful for today).

We woke up to our financial reality and we started fixing things as fast as possible. We eliminated all of that debt. We bought a house and then paid that off in less than five years.

Even then, we both had this underlying sense that we would never catch up to where we should be, that we would never catch up to where some of our friends were in their financial journey. We would never catch up to where we should be.

“I’ll never catch up” became a comfortable unspoken refrain, an understanding that we’ll never truly make up for our earlier financial mistakes, that we’ll always be behind the curve of where we could be.

There’s a core problem with that line of thinking, of course. It’s incredibly lazy. The idea that we’re “behind” and that we can’t “catch up” comes solely from benchmarks we invented in our own head.

We have this idea that we’re “behind,” right? What is it that we’re behind? Are we “behind” someone who’s earned a much higher income than us? Are we “behind” where some personal finance writer told us that we should be at our age without knowing a thing about our life? Are we “behind” our own ideal of where we should be based on unrealistic expectations of a perfect life?

Here’s the truth: our sense of being “behind” and “never being able to catch up” comes from benchmarks that are never actually based on reality. They’re entirely figments of our own imagination, based on comparing ourselves with the social media presence of others, with people who have had perfect lives and perfect support, with the ideals of personal finance writers who have nothing to do with us, and with completely unrealistic expectations. None of those things are real, at least not in the sense of actually understanding the reality of our life.

There is one – one – benchmark that matters: you.

Where were you financially a year ago? How about five years ago? Are you better off? Substantially better off? Then you’re doing well.

What if things aren’t going so well? Well, consider this: where would you be had you not been practicing good financial principles over the last year or two? How bad would the debt be then?

The idea of “catching up” is rooted in comparisons with the lives of others, people whose lives really have no complete meaningful overlap with your own. Trying to “catch up” to someone who has a different job than you, with different pay and benefits and different responsibilities and different time commitments and different stresses, is silly. Trying to “catch up” to someone who might have a spouse earning a lot more than you are is silly. Trying to “catch up” to someone who may have parents or others providing financial support – or who did provide financial support earlier in their lives – is silly.

I can name fifty reasons why trying to “catch up” to someone whose story you only partially know is utterly silly, but I think you get the idea. Comparing your life to someone else’s is pretty much impossible because the details are so different, even between people who might seem kind of similar at a quick glance.

The truth is that the only worthwhile comparison to you is you. No one else has the set of experiences that you have, for good or bad. You don’t know what’s going on backstage in other people’s lives. You don’t know how that compares to your own life. You just don’t have nearly enough information about anyone else’s life to make a good comparison to your own life.

So, before you spend even another ounce of energy comparing yourself to someone else and buying into the notion that you’ll “never catch up,” I have a few challenges for you.

First of all, sit down and take a snapshot of your financial life as it is right now. Make a big list of your significant assets – your home (if you have one), your cars (if you have any), your checking account, your savings account, any investment accounts you may have, and any other possessions you might have with significant value. Try to figure out what the value of those possessions are.

Then, make a big list of all of your debts – every business or person to whom you owe money. Write down the balance of each of those debts.

Then, add up the total value of all of the assets, then the total value of all of the debts, then take the total assets and subtract the total debts from that. This gives you a single number – your net worth. Save that.

After that, put a reminder on your calendar to calculate your net worth again in one year. Just put a new entry somewhere, whether it’s on your wall calendar or on Google Calendar or on the Reminders app on your phone. Just put it somewhere where you’ll see it in one year.

Now, for the next year, make a conscious effort to be more financially responsible. One easy way to do that is to open up a retirement account at work or open up a Roth IRA for yourself if your workplace doesn’t offer it and start funding that retirement account automatically by setting up a direct withdrawal from your paycheck or from your checking account. Consider an automatic transfer from your checking to your savings to fund an emergency fund, too.

Along the way, try to avoid accumulating more debt. Try to make your loan balances and credit card balances go down. Make an extra payment or two. Your goal should be, at the end of each month, to have a lower overall debt balance than at the start of the month unless there is a very good reason for it. Even if the change is small, you should be aiming to make it happen.

While you’re at it, try being a bit more careful with your spending. There’s no need to become a frugalista, but just move forward on some simple ways to save money. A good place to start is with the list of “frugal improvements” I wrote recently – money-saving tactics that were so beneficial in other ways that I would stick with them even if they didn’t save money.

Give it a year (if you have that much patience) or at least a few months and then calculate your net worth again. See how the total compares to your old one.

That’s “catching up.” That’s financial progress, the only kind you can meaningfully measure in this world. Everything else is a broken or unfair comparison.

If you’re doing well and making good financial choices, your net worth will be quite a bit bigger than the last time you measured it. If you’re not doing well, that net worth will shrink.

If it’s shrinking, make sure you know why. If it’s a big reason, like a big expense that couldn’t be avoided, that’s okay, but at all other times, your net worth should be growing. If it’s not growing and you can’t come up with a really good reason that’s about a fundamental need in your life (or, if you have a lot in retirement, a market downturn), then you’re making some big mistakes.

If it’s growing, take pride in it. Aim to keep that progress going and make the leap even bigger next time.

It’s that comparison to self that matters. There is no “catching up” with that comparison. There is no “I’ll never be able to do it” with that comparison, because virtually anyone can grow their own net worth with a little effort. The self-comparison numbers don’t lie.

Don’t worry about “catching up” to people besides yourself. Instead, worry about “beating” the pace you were on yesterday. You’ll end up in a good place if you do that consistently.

Good luck.

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