Making incremental progress on your financial life is part of a daily practice that I call The First Habit, which is a daily investment in your health, wealth, and wisdom. We’ve reviewed a morning routine that guarantees you get the most important things done–it’s like paying yourself first.

If you are playing along at home, you are waking up early, taking time to clear your mind, giving your body what it needs to stay strong and fit, and taking some time to get your finances in order.

Just as daily exercise is necessary to keep in top physical shape, there are daily financial exercises to get into top financial shape. Today (this week), it’s time to get some perspective on work life balance.

There’s a quote floating around on the interwebs that is attributed to John Lennon.

When I was 5 years old, my mother always told me that happiness was the key to life. When I went to school, they asked me what I wanted to be when I grew up. I wrote down ‘happy’. They told me I didn’t understand the assignment, and I told them they didn’t understand life.

It’s unlikely John Lennon actually said that, but I think there is something in the thought worth spending more time considering, which is this: What are we doing?

What Do You Want to Be?

I’m not sure when we started asking kids “what do you want to be,” but I imagine it’s first world phenomenon. It’s pretty safe to say that our ancient hunter/gatherer ancestors didn’t think much about what they wanted to be when they grew up. First of all, their life span was not as long, and second they were too busy foraging for food and avoiding other hungry meat-eating creatures.

If you could go back and ask them that question, you’d likely get a quizzical look (not because you asked such a probing question, but because I don’t think they spoke English). But if you could communicate, the answer to what they want to be would be simply–alive!

With the agricultural revolution came the domestication of animals and the potential to harvest (store) grain (labor). Livestock and sacks of cereal grain could be used to barter. People could now start to focus on other things.

Communities developed with divisions of labor (you focus on basket weaving, and I’ll focus on fishing), which increased efficiency. This basic formula of specialization and increasing efficiency has continued for thousands of years to this day as evidenced by specialized labor such as dog food tasters and professional line standers.

Now many, if not most, people define their lives in terms of their job. At social gatherings, the small talk turns immediately to “what do you do?” We ask kids what they want to be. There is an obsession with “careers.”

The job has become the focus of our lives. In this pursuit of what we do for paid employment, we’ve lost sight of what life is. Instead of working to live, we live to work.  Work life balance is But how did we get here?

The Great Disconnect

Somewhere along the way, the concept of money was invented, since it’s a lot easier to pass around coins and slips of paper than bags of grain and head of cattle. Money allowed both physical and psychological distance between the producer and the consumer. Money allowed people to labor one day and buy stuff on another. This was great for commerce and trade. However, it also created distance between your labor and your purchases.

Because money is a symbolic representation of value, the memory of how it was created is easily lost. Instead of having a granary filled with the season’s harvest, you instead have a number in a bank account. Since it’s so intangible, it’s harder to get a sense of how much is enough.

In short, while money has been a great invention for trade and commerce, it’s abstract nature makes it harder to directly connect it to your labor (and therefore your time and life).

Remember When Cash Was King?

Until recently, we lived in a cash dominated economy. Paying with cash or check still took some work. You had to track what you had in your account (or under your mattress). There were large fees for “bouncing” a check. Employers would issue paychecks and you had to go to the bank to deposit it.

While the money was abstract, there was something deliberate about receiving a check and depositing it.  It mattered that the deposits were greater than the withdrawals. You still had to pay attention.

Toward “Frictionless” Transactions

In the last few decades, a new form of payment has taken over our economy–credit! Diner’s Club introduced the first “universal” credit card in 1950. It was technically a “charge card” meaning the bill had to be paid in full at the end of each month. Then, in 1957 the option of maintaining a revolving balance was introduced. American Express, Visa, MasterCard, and Discover Card have come to dominate commerce.

In my lifetime, I have seen a sweeping change in the way money is managed. When I was a kid in the 70s and 80s, using a credit card was not very common. My parents wrote checks and balanced the checkbook.

Now, there is no “bouncing” a check, you just put it on the card. It doesn’t really matter what you have in your bank account, just as long as you can pay the “minimum payment.” 

Now we have direct deposit, credit cards, Amazon 1-Click, and ApplePay. The goal is frictionless transactions.  It’s all in the name of consumer convenience, but we all know that the word “convenience” is market-speak for “we want fast/easy access to your money before you can make a different decision.”

Debt is Normalized

So the disconnect is now complete. With frictionless transactions, we have several generations of people who no longer comprehend how their current work (or future life) relate to what they consume. The result is they far outspend and outcovet their income and they mortgage their futures in the “rat race” of our current culture.

The marketing message is that you deserve all the world has to offer. Let’s look how the current culture gets you into trouble:

1 – Consumer debt: Kids grow up watching hours of TV and all the commercials that come with it. Some estimate that the average child sees more than 40,000 commercials a year. Every day it’s a new and improved smart phone, computer, or other gadget. Fashion changes every season. Credit cards give you access to all of it. After all, as the commercial asks, “What’s in your wallet?” (Not cash, that’s for sure!)

You deserve that new phone. No money? No problem. Just swipe here.

Average U.S. household credit card debt = $16,748 ($1300/yr in interest)

2 – Auto loans: With sprawling cities and suburbs, cars are a necessity for many if not most of us. Despite the fact that used cars are reliable and much cheaper, people continue to have a fascination with having something new and shiny.

You want to travel from A to B in a large, new, shiny vehicle. No money? No problem. Just sign here.

Average U.S. auto loan = $28,948

3 – Student Loans: It’s been shown that college graduates earn more money over their lifetimes. Education can be a great investment. However, college tuition expense has far outpaced regular inflation. Since the money has been easily borrowed (not unlike the mortgage crisis), we are now experiencing a student debt crisis. 

You want to go with your fraternity friends to the best private college. No money? No problem. Just sign here.

Average U.S. student loan debt = $49,000

4 – Home mortgage: It’s been called the American dream to own your own home. Certainly there are some benefits to people and society in home ownership. However, over the decades as two-income households have become the norm, the median home prices have ballooned to meet this increased income. Add that to easy loan money, and many people have misjudged how much of an impact this one choice has on their lifetime finances.

You want to live in the best neighborhood with the best schools. No money? No problem. Just sign here (and here and here and here . . . oh and here too!)

Average U.S. mortgage = 176,000

*Statistics from Nerdwallet.com

With the normalization of this amount of debt, it is no wonder people feel like they are slaves to their jobs.

Time to Wake Up

It’s time to wake up and realize what is going on. Frictionless is to finances as mindlessness is to mental well-being. Strive for mindful spending as a way to “wake up” to the realities of your spending decisions. We need to educate ourselves and our children about the true cost of what we consume in terms of our future life. The balance in the bank account matters. Be deliberate about your spending. Don’t spend money you don’t have.

If you are part of this culture of “normal” debt, set a goal today to do what it takes to get yourself out. You may be “a victim” of all of societies influences and pressures, but you can change that starting today. Boost your income and reduce your expenses. If you are a parent, commit today to teach your children about the dangers of debt. Remember, Money = Time.

Take Home Points

• People used to work to live, now many of us live to work (how dumb is that?).
• One reason we have a poor work life balance is that many of us have disconnected what we earn from what we consume.
• Credit today is so “frictionless” that it’s easy to get into a big hole that takes a lifetime to get out of.
• If you are in debt, decide today to do what it takes to become debt free.

Take Action:

1. Assess the way you approach spending. Are frictionless transactions getting you into trouble? Are you in a hole?
2. Check out my How to Become Financially Fit: From (sub)Zero to Hero in 4 Steps. It’s like an exercise class for your finances, except without all the dudes admiring their own biceps in the mirror.

 

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Matt Morgan, MD writes about how mastering the first habit is like pushing the power button on your life. Subscribe to his e-mail list and follow him on Twitter and Facebook.