Yesterday I wrote a short commentary on how fintech is helping us becoming better savers by taking the savings decision away entirely. It also got me thinking about personal finance, and the role of an ‘invisible’ social approval.

Last year, I was rebuilding my personal finance “stack” - the philosophies, methods, and tools I use to manage savings, budgeting and investments. To do this, I asked about 10-15 acquaintances some very pointed questions about how they manage their money.

All asks were in relative terms - percentages vs. dollars, but I asked specific questions about the asset allocations, contribution patterns, savings as a % of income, etc. The incentive to them providing such personal information was that they would get to see the data from others that I asked. I was surprised to see how open people were with the information.

When I spoke to my friend Anish Acharya about this experiment, he came up with the perfect analogy:

We are all ashamed to talk about our financial shortcomings but everyone experiences them, so we’re all “alone together”. It’s like being in a dark room unknowingly surrounded by all your friends.

I think social approval subconsciously drives our financial habits more than we think. Financial literacy is not taught consistently, and this is amplified in heterogeneous cultures like Canada. Knowing what others close to us are doing can provide a real sense of comfort.

Advertising is based on one thing: happiness. And do you know what happiness is? Happiness is the smell of a new car. It’s freedom from fear. It’s a billboard on the side of a road that screams with reassurance that whatever you’re doing is OK. You are OK.