Not everyone is 100% there yet mindset-wise. It's okay to ask questions like this. The majority of people, I think, coming to Mustachianism would have a question like this ("How do you not compete or keep up"). But yes, to most of us oddballs here, it's not even an issue. :)
This is really what it boils down to. This is why this blog and forum exist: because the mindset isn't instinctive in today's society. We've spent generations bowing to corporations who have been perfecting their game, trying to sucker us out of more money, and almost all of society has followed along.
Think of it as giving your brain a priority-reset. You have to go all the way back to zero, and figure out what is actually necessary from there. If you try to figure out your long-term happiness formula based on what society tells you, the equation doesn't balance. When you take the rest of society's pressures out of the picture and go from there, it gets much simpler. And people find that it doesn't take nearly as much money to be happy once you figure out what's actually necessary for happiness.
And if you get your self-worth and happiness from trying to impress other people, well then... Sorry, can't help you. ;)