Costly Assumptions

We constantly make assumptions about others—in myriad contexts; big or small; about those close to us, complete strangers, and everyone between. Some of these assumptions can be very costly in figurative terms. Others literally cost us money!

In this excellent essay, NY Times “Sketch Guy” Carl Richards explains that “we base our decisions about how we spend our money on how we think our income compares with those around us.” But how we think our income compares with those around us is most often pure conjecture. We don’t truly know how others are faring, though we like to make up stories on that front and believe those stories without basis.

He offers a timely example: “As you gather for holiday meals, notice the stories you tell yourself about the person who bought and cooked the organic, free-range turkey. Let your mind wander into stories of trust funds, annual bonuses or the credit-card debt they must have racked up. Then, call yourself on it. Notice the stories. Admit to yourself that you are a storyteller of really great fiction, and when it comes to money, you’re a judgmental storyteller.”

These stories can cost you money. As Richards writes, “unless our neighbors have shared their tax returns, we don’t know their real income.” When we spend more to keep up with them, “our financial decisions could easily be based entirely on fiction.” The bottom line: “Stop making assumptions about things you don’t actually know and definitely stop spending based on those assumptions.”

It’s an Eyes Wide Open message, and I love it! We can commit to see clearly what we know, what we think we know, and what we’ve simply made up—and we can hold ourselves accountable for that clarity. Richards makes the point in memorable terms. Returning to your holiday table, “remind yourself of the facts as you know them. It’s a turkey. It’s good. The rest is just fiction.”

Enjoy the turkey this holiday season. You can enjoy the fiction, too, but make sure you don’t believe it. That’ll cost you.

How do you see it? I want to hear from you. Please join the discussion and share your favorite story of false assumptions about the wealth or spending habits of others.

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-Isaac Lidsky


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