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05:18 2017-09-03

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This article originally appeared on Businessinsider

There’s a bad habit that’s all too familiar to the social media generation: comparing our lives to the ones we see on our Instagram and Facebook feeds.

It’s easy to do when you’re scrolling through photos and status updates about this person’s city-hopping tour through Asia or that person’s new car, house, or relationship.

Whether or not we intend it, those images often send signals about their financial status — and cause us to reflect on our own. But there’s an inherent problem with that.

Most of the time our assumptions about other people’s wealth are faulty, explained certified financial planner Liz Weston in a recent article on personal finance site NerdWallet.

That’s because we see what others want us to see, not what they’re giving up to make those purchases, according to Weston. Photos of an epic vacation, a fancy dinner with $13 cocktails, a new apartment with city views, or daily trips to Starbucks, may make you think someone is flush with cash — even if they aren’t.

What we can’t see is that “maybe they’re up to their ears in debt, or they’re trust fund babies, or they’ll never be able to retire,” writes Weston.

Comparing our full financial picture to everyone else’s highlight reel can be detrimental.

Before you’re tempted to keep up with the Rich Kids of Instagram, try implementing a budget you can easily stick with, even when it seems like everyone around you can afford the things you can’t.

One straightforward approach is the 50/30/20 budget. It breaks down your take-home pay into three simple categories:

  • 50% covers fixed expenses, like housing, utilities, transportation, insurance, groceries, and childcare (if that applies to you). The biggest chunk of that category is probably housing, considering the average American’s spends 37% of their take-home pay on rent or a mortgage payment.
  • 30% is your disposable income, funding things like travel, entertainment, and dinners out.
  • 20% goes toward building up an emergency fund, contributing to your 401(k), and paying off any debt.

This guideline was first introduced by US Senator and former Harvard professor Elizabeth Warren and her daughter Amelia Warren Tyagi in their New York Times bestseller “All Your Worth: The Ultimate Lifetime Money Plan.” It’s meant to be a benchmark that ensures you cover all your financial bases — while leaving room for flexibility.

Let’s see what this looks like for the average 25 to 34-year-old in America, who earns a pre-tax annual salary of $40,352, according to the Bureau of Labor Statistics. We calculated take-home pay using California taxes, which equals $2,340 a month.

Plug that into NerdWallet’s 50/30/20 calculator and the monthly budget looks something like this:

  • 50%: $1,170 to spend on necessities
  • 30%: $702 to spend on wants
  • 20%: $468 to save and pay off debt.

If any of those categories look dismal to you, the good news is the 50/30/20 budget is just a starting point. If you can find ways to reduce your monthly housing or transportation costs, for example, you can shift the excess over to your fun money or savings.

Ultimately, the key is to establish realistic financial benchmarks that make sense for yourlifestyle, not the filtered ones you see on Instagram.