What your bank balance actually means (Spoiler alert - probably nothing)

So you've got a little over $3k in your savings account. Is that good? Scrolling through Instagram and notice someone your age posting pics from their second international trip in 12 months. Your workmate doesn’t stop talking about the house they just bought (they’re excited, what do you expect) and your old college mate's LinkedIn says they're now a director.

Meanwhile, you're staring at your bank balance wondering if you should have more saved or less debt by now. A different job, a better handle on all of this.

It’s an unhealthy mindset to get into comparing your money to anyone else's. It’s a complete waste of your time and energy. Not because comparison is unhealthy but because you're comparing things that aren't comparable.

The numbers you don't get to see

Your workmate who just bought the house? Their parents used their home as equity to help with the deposit or perhaps they had no deposit at all and their parents home is now leveraged to the max in order of helping them get on the property ladder.

That old college mate, the one you are connected with on LInkedin but never actually communicate with, they're making $58K in a city costing an arm and a leg to survive in, maxing out credit cards to keep up appearances. Their title says director but have you ever taken a moment to check out their company? It’s amazing how many people give themselves this title and they are a company of one.  

And that insta ‘wanna be noticed’ person? They are still squeezed into an over populated flat living with roommates at 32, hasn't contributed to retirement in five years and their car never appears in the insta reel because, well you can probably guess why.

You don't know any of this. You just see and hear what they want you to and assume you're getting left behind.

But behind what? Behind a version of reality that doesn't exist? Behind people who are making completely different trade-offs based on completely different circumstances?

I've worked with people making $240K who feel broke and people making $70K who feel secure. The difference isn't the income. It's what they're measuring themselves against and what they're trying to build.

The only comparison that matters

Stop comparing yourself to other people. Start comparing yourself to past you. Where were you a year ago? How much did you have saved? How much debt? What was your financial stress level?

If you're better off now than you were then, even slightly then you're moving in the right direction. That's the only benchmark that means anything.

Maybe you only saved $1,200 this year. But last year you saved nothing, so this is progress. Maybe you still have $15K in credit card debt, but last year it was $22K. That's $7,000 of progress nobody else sees but you can when you look at your balance.

The number itself doesn't tell you if you're doing well. The trajectory does.

What you should actually be measuring

Forget the Instagram comparisons and the average savings by age articles. Here's four things that will tell you if you're on track:

Can you handle a $2,000 emergency without panic? This is the baseline. If you can't, that's your first goal. Not because some article says you should have six months of expenses saved but because life happens and you need a buffer.

Are you spending less than you earn? Sounds basic, but most people can't answer this with certainty. If your balance is higher at the end of the month than it was at the beginning, you're moving forward. If it's lower, you're not.

Do you know where your money goes? Not in theory. Actually. Can you name your top five expenses? Do you know which ones fluctuate the most and have a plan to even this out? If not, you're flying blind. You might have $10K saved right now but it’s going to disappear soon for all the things you didn’t build a plan around funding.

A little tip: Most people justify these as unexpected expenses but let’s stop kidding ourselves, they were always expected. We never just created the right strategy to manage these efficiently without draining what we thought was real savings. 

Are you making progress on what matters to you? Not what society says should matter but what you actually want. If you're building toward that, even slowly, you're winning. If you're cruising without direction, who cares what your bank balance says today, it has no true value.