When you choose to spend on the latest gadget, or experiences such as food and travel, you may derive a great deal of satisfaction from the expense. But you’re also choosing to enjoy your money now at the cost of its future potential value.
This isn’t necessarily a bad thing. If you’re retired, for example, you’re probably entitled to relax and enjoy your savings. And if you have plenty of disposable income, you can certainly afford the occasional indulgence. But for younger people, spending too much without setting aside enough for the future is a problem.
Rethinking your sense of time
We live in an age of instant gratification. With a device in our hands at all times and easy access to resources over the internet, we can look up information on demand. Social media allows us to post thoughts, reactions, and experiences in the moment, and quickly receive validation from our peers.
These collective changes in behavior have taken place rapidly. Often, we aren’t even aware of these effects as they influence our actions. But shallow consumption choices are increasingly becoming a dangerous downside of modern hyper-connected living.
You need to recognize the problem to overcome its effects. And at the core of the matter lies a distortion in our perception of time. The importance of the present is overly magnified, while the challenges of the future are made to seem distant.
Present expenses aren’t everything
At any given point in your life, the present is the most critical. As the pandemic has so bluntly emphasized, the best-laid plans of years before 2020 can go astray; you need to survive to have a future.
But the concerns of the present also need to be put into perspective. Learning how to manage and value your time will help you do that.
When you receive your paycheck, how do you break it down? The majority of expenses go towards sustaining the present. You need to cover housing, food, and energy bills; those are vital needs for our survival.
However, you can also allocate money to the future. By paying off part of a debt, you’re cutting down on the cumulative interest. Regular dryer vent cleaning and similar maintenance activities help your appliances consume less energy. And setting aside money in a savings account or equivalent will give you greater flexibility in the future.
Debt represents future costs
If you have a dollar bill, what exactly do you possess? A piece of paper, but what does it signify? In his book, Debt: The First 5000 Years, anthropologist David Graeber demonstrates that money is a measure of debt. And debt itself is an exchange that hasn’t been completed.
It’s easy to borrow money, in the form of a loan or a line of credit, and use that to finance your present expenses. But debt isn’t simply an IOU; a creditor isn’t an entity you can keep pushing away indefinitely. When you incur debt, you’re really shifting the costs of the present into the future. Again, you need to be aware of the nature of the problem to approach it the right way.
Valuing time as a resource
Most people see time as a one-way flow. There’s the past, which informs us but also can’t be changed. We live in the all-consuming present. And the future, which we know is essential but can be so vague and unpredictable that we trivialize it.
To change this, we need to see time as a resource, just like money. The money you set aside in the present will buy you more time in the future. Not only will you have enough funds to afford the purchases you want, but you’ll have more time with which to enjoy them.
On the flip side, spending more of today’s disposable income is a drain on your future time and money. With less financial flexibility down the road, you’ll have to spend more time at work or possibly taking on side hustles to earn money. And if you use debt to fund your present expenses, you’re consuming even more of your future time.
Develop a system to help you quantify the value of your time. Track how much of your time goes into revenue-generating activities, and divide your total income by that number.
Continue to adjust that value as circumstances change, such as your salary or working hours. It will let you evaluate expenses, not only by their price tag but in terms of the time they effectively cost. By changing the way you perceive time, you can change how you view and manage your finances, and give proper focus to the future.