The Power of Resisting FOMO: The Key to Financial Independence

In today’s world of social media and constant comparison, the fear of missing out (FOMO) is one of the biggest financial pitfalls people face. Whether it’s upgrading to a bigger house, driving a luxury car, or jumping into the latest investment trend, the pressure to keep up with others can derail even the best financial plans. But what if the secret to wealth wasn’t about chasing opportunities, but rather resisting the urge to chase at all? 

Morgan Housel, in his book Same as Ever and in his conversation with Shane Parrish on The Knowledge Project Podcast, makes a powerful argument: 

"I think not having FOMO is the single most important financial skill. I think it's so important that you cannot ever imagine accumulating significant wealth over your lifetime if you are susceptible to FOMO." 

This idea resonates deeply with me, as I’ve seen firsthand how resisting FOMO has been the most valuable skill in our journey to financial independence. More than anything else, my wife’s and my ability to ignore societal expectations and stay focused on long-term financial goals has been the deciding factor in our success. 

The Lifestyle Creep Trap 

Housel uses a simple yet profound example to illustrate the dangers of lifestyle inflation: 

"If your income goes up by 10% but your needs only go up by 5%, you're better off. But if your needs go up by 12%, you're worse off." 

This is where so many people get caught in an endless cycle. They earn more, but instead of using the extra money to build wealth, they increase their spending even more. Bigger houses, fancier vacations, and newer cars feel like justifiable purchases when earnings rise—but they often lead to financial stagnation rather than progress. 

My wife and I avoided this trap by deliberately living below our means, even when we could afford more. As our income grew, we focused on maintaining the same core lifestyle while directing excess funds into investments. That gap—the difference between what we earned and what we spent—became the fuel for our financial freedom. 

The Visibility of Wealth vs. Financial Freedom 

One of the reasons FOMO is so powerful is that material wealth is easy to compare. You can see the neighborhood someone lives in, the size of their house, or how nice and expensive their car is. But what you can’t easily see is their net worth, their financial security, or the freedom they enjoy. 

In my area and among my friends and family, most people want the extra things in life— a pool, a boat, an RV, a new car, snow machines, and so on. These things bring enjoyment, but they also come with costs, both financial and in terms of freedom. My wife and I have deliberately chosen to omit those things from our lives because we value flexibility and financial independence over accumulating more possessions. For us, experiences hold far greater value than material things, making it easier to say no to lifestyle creep and keep our focus on long-term freedom. 

This reminds me of a well-known quote from Fight Club: 

"The things you own end up owning you." 

It’s easy to accumulate things, but each new possession comes with obligations—maintenance, storage, insurance, and the mental load of keeping track of it all. Instead of being a source of happiness, these things often become burdens, making financial freedom harder to achieve. 

Understanding the True Cost of Purchases 

One thing I want to emphasize is that making financial decisions based on what you truly value doesn’t mean someone is making a bad decision. My goal isn’t to say that buying a boat, an RV, or adding a pool is always the wrong choice—it’s to make sure people fully understand the costs before they commit. If someone takes the time to weigh the true financial and time costs of a purchase and still believes it’s worth it, then that’s great. I know I’ve made financial choices that some might see as questionable, but as long as I’ve considered the real trade-offs and still feel good about it, then I’m happy to pursue it. 

One of the most effective ways to resist FOMO and make better financial decisions is to ask yourself a simple question before making a big purchase: 

"How much time at my job will I have to trade to have this thing?" 

Most people only think about the sticker price, but the true cost of a purchase goes far beyond that. If something costs $50,000 and you make $50 an hour, it may seem like it will take 1,000 hours to pay for it. But when you factor in taxes, investments, and other financial obligations, the real cost is usually about 33% higher—meaning it actually takes closer to 1,333 hours of work. 

And don’t forget the hidden costs—maintenance, storage, insurance, registration, and upkeep. A great example of this is installing a pool in your backyard. At first, it seems like a one-time expense, but the real cost adds up quickly. Based on an analysis originally outlined by Mr. Money Mustache’s post The Twenty Dollar Swim, the true cost of pool ownership includes higher insurance premiums, ongoing maintenance, repairs, and increased utility bills. What seems like a $50,000 addition can easily balloon into a six-figure expense over time. And that’s before factoring in the time spent cleaning, repairing, and managing it. 

By thinking in terms of time and opportunity cost, it becomes much easier to decide if something is really worth it. Instead of spending years of labor to afford a new toy, many people would be better off investing that money into something that provides long-term freedom. 

The Freedom of Saying "No" 

One of the greatest advantages of avoiding FOMO is the freedom it brings. When you’re not chasing every new opportunity or material upgrade, you maintain control over your finances, your time, and ultimately, your life. Instead of being stressed about making enough money to fund an ever-expanding lifestyle, you reach a point where your wealth works for you. 

Resisting FOMO allowed us to focus on investments that aligned with our long-term goals instead of chasing speculative trends. It allowed us to prioritize financial independence over fleeting luxuries. And most importantly, it gave us the ability to make decisions based on what truly mattered to us—not what society dictated we should do. 

Patience, Discipline and Independent Thinking

Both Morgan Housel and Shane Parrish emphasize the importance of patience, discipline, and independent thinking in building wealth. Their work has reinforced what we’ve learned through experience: financial success isn’t about making the most money in the shortest time. It’s about maintaining control, making consistent, rational decisions, and avoiding the distractions that lead so many people astray. 

FOMO is a powerful force, but it’s one you can resist. And if you do, the rewards are far greater than any fleeting sense of missing out—because what you gain is real financial freedom.