I just started reading Daniel Gilbert's book Stumbling on Happiness, which isn't so much about how to be happy as it is about how difficult it is to predict what wil make you happy. It's sort of in the Malcolm Gladwell & Freakonomics school of books that offer all sorts of strange and interesting studies.

Anyway, I was directed to a recent Forbes article by Gilbert that offers these paragraphs:

Our real estate brokers advise us to buy the most modest house in a neighborhood of grand homes rather than the grandest house in a neighborhood of modest homes. And that may very well be the right way to maximize value. But it is the wrong way to maximize happiness, because every time you drive down your magnificent block and pull into your extremely short driveway, you'll wince.

The quote discusses your potential happiness (or lack thereof) in this situation, but it could also address the potential impact on your financial well-being.

I have lived in the cheap house in the rich neighborhood, the rich house (relatively, I'm not rich) in the cheaper neighborhood, and the house that's smack dab in the middle. And I can tell you that the way you spend money is often influenced by your neighborhood, although not always in ways you might expect.

When I lived in a bigger house than many of my neighbors, it was easier to control spending--that makes sense. What may be surprising is that when I lived in the cheaper house than the neighbors, I sometimes felt swayed to spend maybe a little more money--the dings in my car might got fixed a little quicker, for example--but I wasn't out buying boats or whatever to show I fit in. I sort of watched the neighbors actions as if they were a movie I was watching, in the same way you might watch Entertainment Tonight and not envy the stars because it feels like they're almost unreal, or so far removed as to have no impact on how you live your life.

The toughest time for me to keep my spending down was actually when the neighbors were all basically the same as me money-wise. That's when I found the keeping up with the Joneses is hardest to resist. Because then the neighbors don't buy outrageously expensive things that make you shake their head. Nope. Instead, they buy things that are just a little teensy bit better than what you have, and are just barely out of reach within your home's budget--and that's when it drives you crazy. And that's when you end up spending money on things you don't really need only to find that they aren't particularly satisfying.

You try to be Zen about it, look for happiness inside your self instead of through comparison to others, but there's no doubt that it can be tough. But if you can resist, it can pay much bigger dividends (literally and figuratively) down the road.

Delayed gratification is almost always better than today's gratification--but it takes a strong will to wait for it, especially when life offers no guarantees.