Is The Deck Stacked Against Us?
Regular readers know I focus on the behavioral aspects that affect personal finance a lot. On a bike ride recently a thought struck me. It might just be harder than ever in 2019 to maintain good behaviors in life that benefit your finances. The deck might be stacked against us.
Let’s look at how some things have changed over time:
- We used to compare ourselves to friends and neighbors. Now it’s to the world.
- Advertisements have existed for a long time, but they’re now scientifically engineered to convince the brain.
- In the 1970’s, people were exposed to about 500 ads per day. At present, people see roughly 5,000 ads per day.
- We have more and more gadgets, toys, and conveniences than ever to take our attention and money.
- Houses are bigger than ever and keep growing, even though price per square foot has basically stayed the same and families are shrinking.
- We have one-click shopping from anywhere that makes products magically appear on our doorsteps, sometimes in a few hours.
- Mental illness, depression, anxiety, and isolation continue to rise.
- We’re more overweight and unhealthy than ever, and chronic diseases are increasing rapidly.
At this point you might be thinking “But we have more great financial tools now than ever before too! We have 401Ks, IRAs, HSAs, and index funds. These things didn’t exist 40 years ago.”
This is true. And we have endless access to knowledge and information as well.
But these are just tools, and they don’t work if they’re not used. All the best tools in the world don’t do a damn thing if you’ve succumbed to societal pressures to not use them.
So my big thought on that bike ride was that cultivating good financial behaviors in 2019 requires one to overcome societal hurdles at levels never seen before.
Body Hurdles
It also struck me that it’s the same situation for good health. I exercise really hard around 10 to 15 hours a week just to stay thin and fit. Here’s the thing – people didn’t have to do that as recently as the 1940’s or 1950’s.
Why not? Because life was drastically different then. We’ve created more and more hurdles to prevent us from being healthy and active over time.
Look at how different 2019 is than the 1940’s. The prevalence of sedentary desk jobs, the ubiquity of toxic and shitty foods, car dependence, too many conveniences, too much TV, and too many screens are penalizing us and making it harder than ever to stay thin and healthy. All of these were less common or nonexistent in the 1940’s and 50’s.
So I have to work out like a madman to overcome these impediments that have accrued over time. I ride my bike about 100 miles a week, and I’m guessing the first 75 of those merely get me to “calorie neutral”, meaning a state where I’m burning as many calories as I’m taking in.
Only then, after 75 miles already ridden, can I start to actually reap the greater rewards to my body and muscles.
A person in the 1940’s was burning way more calories in everyday life, and eating whole foods all the time. That lifestyle is an anachronistic novelty to most. It is still possible to make it happen, but it takes a ton of effort and the discipline to live very differently than everyone else.
I think it’s the same for our financial lives. Modern life simply demands way more discipline than ever to overcome a cultural environment that encourages poor financial habits. In 2019 you have to overcompensate for the barriers society has put up just to START saving.
It Doesn’t Look Good
There are lots of data out there that highlight the somewhat bleak financial status of most Americans. Here’s two that are depressing.
- According to Federal Reserve Data, nearly 40% of Americans can’t cover an unexpected $400 expense.
- The average American in their 50’s has $117,000 saved for retirement.
Wow. If you’re reading this blog or similar ones it’s likely you’re in better shape than most or are taking action to get there.
But is modern society dooming our financial futures in addition to dooming our health? Is the deck stacked against us?
I’m not married to this hypothesis, it’s just that, a hypothesis. And since that bike ride it’s been something I’ve been mulling around in my brain.
I do think the unlimited access to information and our modern wealth building tools such as 401ks and IRAs serve as a great counter argument against my hypothesis. But the data are what the data are, and it seems these great tools might not be moving the needle to get folks to a better financial situation.
I’m willing to be told that I’m full of crap and totally off base. Or that I’m right, or somewhere in between.
So financial warriors, let me know what you think. Do you agree that there are more societal hurdles to overcome in 2019 than ever before to be financially healthy?
In terms of food, the deck is definitely stacked against us. I’ve read that even potato chips are engineered to give the right “crunch factor.” Then we have the bliss point. And that’s just the beginning. It’s tough to shut out all that noise and focus on what truly improves our lives. Nice topic!
I have a weakness for the crunch factor. In summer when I’m sweating a lot in my workouts it’s hard to resist the crunch and the sodium that chips deliver at the end of the day. They’re one of my kryptonites for sure.
I wish my chocolate habit was only a summer problem.
Mmmmm crunchy foods.
Tell me about it…
Ah, that explains my chip addiction problem ……
Scientifically engineered crunchy goodness… there’s people who probably get college degrees in that
You really are on to something here Dave.
The problem is there are so many forces that lead us to unhealthy lifestyles. Food that is bad for you is typically less expensive than that which is good for you.
Things that are convenient condition you to want to do things with the least amount of effort.
Doing the right thing health wise and financial wise does take effort and that is the main barrier for most.
Comfort and convenience are the easy way out. Society gives us tons of it, and it becomes a huge barrier
The “too many screens” is one of my biggest concerns here, particularly with teens growing up with smart phones. I don’t think we know what the long term effects of those will be. Walk around a campus or airport and just look around, it is pretty wild.
As for body hurdles, it also seems like we are relying too much on prescriptions for things diet and exercise can probably resolve.
Max
I agree, I don’t have kids but I’ve read a lot of the recent studies about teens and phones/social media. They don’t look promising.
a friend of mine got a little heavy during her first couple of years of college. that’s common and it’s cold up in plattsburgh near the canadian border. then she went home to long island and worked on a potato farm one summer. i saw her at the end of that summer and it was like seeing a different fit person. she was no workout fiend. she only went to work…old school.
same thing happened to me when i moved to nola. i was puffy when i got there but only drove my truck about 2000 miles over a couple of years. i got skinny just from not driving and walking around everywhere. i also always found that developing an active contempt for advertising and products helps fight the good fight. active contempt for the win.
Great example Freddy! I read recently that the average weight of a WW2 draftee in the 1940’s was 145lbs. Think of that – 145lbs! No one is going to tell me that we’ve evolved to something different genetically in 70 years. We’re the same species as those draftees, but now the military can’t even find guys who aren’t overweight or obese.
Those WW2 draftees worked on farms and in factories. We can’t go back to that. But the key takeaway is that they moved all day. That’s the lesson. We need to find a way to make that happen, and if that means hard exercise for desk job types like me on the off-work hours, then that’s what ya gotta do.
Thought provoking post. All in the mindset. If we viewed it as more societal opportunities to be financially healthy, then we can truly be beneficiaries. We have faster and better access to online content to live healthier lives. We have more opportunities to work from home and eat healthier meals. FaceTime technology has allowed us to connect with customers from home vs. take a flight somewhere and thus more opportunities to eat healthier and have more time to workout vs telecommunicating. AirrBnB types of accommodation with kitchenettes have given us a way of traveling healthier and at a lower cost. Not to mention, we have free online workout videos, access to healthier recipes, and free financial accountability tools such as Mint and etc. I guess it is up to the individual to seize it as an opportunity vs a hurdle.
What a great comment – I didn’t focus as much on the positive but you are spot on! It seems the extremes at both ends are at all time highs, there are more great tools than ever to do good things and be financially healthy, and also more than ever to throw your money away and go into debt.
I know for me, the one click, delivered to your doorstep in a day is a big thing that probably makes me want to buy things. And all the algorithms that go along with it like when you go to facebook and because they know your spending habits, they suggest things for you. Crazy times! I guess the good news is now I think as a society we smoke less? lol
Thank for the positive Tonya, smoking is at it’s lowest levels ever and keeps going down. I need to be more of a glass half full guy 🙂
Very thought provoking, Dave. I guess it’s kind of a glass half empty vs. half full argument. Used properly, the information available to us give us more opportunity to learn have to live healthier lives with all of the distractions and competing viewpoints.
Sadly, confirmation bias creeps in for too many of us. We seek those views that validate our own, rather than opening our minds up to the possibility that there might be a better way.
At the end of the day, it’s always a choice we make. It’s just that the number of choices that come our way can be overwhelming. And, as you rightly point out, some of those things are manipulative in nature to get us to move in the direction of whatever it is they’re selling.
The word ‘manipulative’ stands out in your comment – I think manipulation, especially from large companies, is at all time highs and will probably keep going up. It’s by algorithm now, and the Googles, Apples, and Facebooks are leading the charge
I think you’re right in the US. But probably wrong globally. In the past, it was really hard to make money in most parts of the world. Now, there are more opportunities for a lot more people. That’s globalization.
In the US, it’s harder to make good money and we have many more ways to spend money. Poor people’s income is funneled to the rich. Inequity is getting worse.
Thanks for that perspective Joe, I’ve done a ton of international travel but not so much in the past 5 years. I’d love to go back to some of the really poor 3rd world countries I visited over 10 years ago and see how it’s changed and gotten better.
No one makes money off of someone eating less and going for a run outside. However, over consumption sure creates revenue. Then when we are all diabetic with heart issues we spend another 3 trillion (about 18-19% of US gdp) on healthcare. In 1960 we spent 5% gdp on healthcare. Something for me to think about while I am drinking this 48 ounce coke (39 tsp of sugar) to wash down my large fries. Yum
Ha – sounds like you might be at McDonalds!
“No one makes money off of someone eating less and going for a run outside.” – love this line!
There are more distractions and lower quality food and more conveniences than ever and on and on for the negatives. And you are also correct that we have more good options than ever with 401ks, information at our fingertips (good and bad,) etc.
My view on it is that it creates a larger gap between the haves and have nots. Between those who start snowballing good choices and live, by most measures, a better life against those who make bad choices over and over. The modern world seems to accelerate these things. Our lives can be very efficient today and this can lead to efficiently good or efficiently bad lives.
Your comment and DenverOutdoorsGal are saying the same thing and it’s a salient point. The disciplined have more great ways than ever to get ahead, and the undisciplined have more ways than ever to screw things up. So the gap between the two keeps getting wider. I find this fascinating from a sociological perspective.
Glad to see I’m not the only one who thinks about blog topics while exercising. And…speaking of blogs…while modern society may present more obstacles, it also made blogs possible. And, isn’t life better with blogs!? Pros and cons to everything in life. The secret is to pursue the pros and run from the cons. I suspect that’s always been true …
I think all my best thoughts while exercising, the endorphins and chemical release just work. And yes, life is better with blogs, mine has enriched my life in many ways I would never have imagined.
Remember that before 401ks, pensions were far more common. So that’s yet another way modern life is stacked against us: we have to be far more active in saving for retirement. And meanwhile expenses just keep going up, making it harder to save and harder to survive in retirement. Yet another way the deck is stacked against us to an extent (since you can choose lower COL areas technically).
That said as you pointed out we have a lot going for us. I think consumers are savvier these days because we have so many choices. (Now if they’re just be choosier about which products to buy at all.) amAnd we have a lot of investment vehicles these days. That’s huge.
True tools are only as good as the workman who wields then, but maybe you the good PF word will keep spreading and eventually educate said workmen.
Great point about pensions. The savings rate has been insanely low, as well. So getting a return on everything has been slower to snowball.
Yes – let’s keep trying to spreading the word to people. And thanks for mentioning pensions, that’s something that didn’t occur to me to list in the opening of the post!
We have an entire generation encouraged to get jobs in factories that no longer exist, as well.
referring specifically in the transfer from the boomer to the x’er generations.
Good point, I think there is definitely something to be said about the trades and blue collar jobs, but to your point there’s just not that many of them left, sadly.
Thanks, Dave. The saddest part of the point is the encouragement to pursue increasingly obsolete “safe jobs” by the generation that those jobs did serve well. I do realize that I am mostly trying to find a voice for my own experiences and I should probably start my own FI blog, lol.
Start the blog!
There’s definitely some truth to what your saying. There’s more ways than ever to spend time and money that are not productive or healthy pursuits. To think about this in a positive light, we’re given more choice than ever.
Ultimately that’s my view — it’s a choice. Most people don’t have the mental or psychological strength to make choices that differ from the herd, but a few of us do. I attribute much of my own financial success to stepping away from the herd and finding a different path.
“mental or psychological strength” … that says it all. That’s why I blog so much about behaviors. To me it comes down to harnessing those strengths, and why can some of us do it but not others? No easy answer, but lots to contemplate in finding the answers
Excellent post Dave. I wonder though if we’re forgetting it wasn’t a pretty picture in the past as far as retirement savings. While your readers are clearly above the averages for saving rates and balances, they are the exception, not the norm as you point out. But this under coverage and lack of savings may have been the same back in the 50’s as well. Back then, only 25% of Americans were covered by a defined benefit (DB) plan. That left a huge gap for those retiring without a plan. As late as the 1980’s less than 40% of American’s were covered by a corporate pension. That leaves a huge gap in coverage. Even if you were covered, your length of service with the company had a huge impact on what benefits you’d receive at retirement age if the pension were still viable then. It’s a little better today in the defined contribution (DC) world as just over 50% of Americans have coverage and participate in some sort of DC plan. But it’s not enough as you know because employees under save despite the advice out there. Over the past 20 years or so, plans began automatically enrolling employees to get them in. Plans began defaulting employees more often into target date funds because of poor engagement to select appropriate investments. Plans are more often employing an auto-escalation feature to increase contribution rates over time. Each of these features aids in directing employees to a better outcome. But like you say, the truth of the matter is, people are too distracted by everything else going on. Folks need to focus, make active choices and engage to have better than average outcomes. Those average balances in your post won’t last very long in retirement…
Awesome comment P2F! I I hope I didn’t give the impression that it was better back in the 1950’s overall, you make some great points. Back then folks depended on a pension and if they didn’t have that it was tough. But as I pointed out they also didn’t have a lot of the cultural impediments that we have now that make your money magically disappear, or never appear in the first place. It’s complex
Prepare2FIRE,
While it may be true that retirement savings has always been problematic, there is one HUGE factor that stacks the deck against modern citizens trying to be financially responsible:
CREDIT.
Credit cards didn’t even exist until the Diners Club Card debuted in 1950.
Previous generations had no ability to purchase items costing more than their current cash savings except for primary residences and maybe automobiles.
While today’s median income levels may be at all-time highs; so is DEBT.
I suspect that 70 years ago (before welfare and personal credit existed) most citizens had a positive net worth (even if only slightly so).
Today, a large percentage of Americans have a NEGATIVE net worth, with well over 40% of the population depending on at least one means-tested government entitlement program.
This is a great point and thanks for chiming in. Obviously my intention in the post was to go off a general laymen’s line of thinking that I had and not to research in detail all the differences between “then and now”. Had I done that I would have jumped on this point as well. A to be honest I actually thought credit cards dated back a little further than that. But yeah, it’s much harder to go into debt without them
It takes an incredible amount of discipline these days to get ahead in so many aspects of life. It’s easier to spend money instead of save. Easier to sit on the couch watching Netflix instead of going to workout. Easier to eat as much as you want instead of monitoring your calories. And so on. The deck is certainly stacked against us, in more ways than one, but a lot of people don’t want to commit to that level of discipline and change their lifestyle for the better.
Even lower income people have access to 500 channels and endless movies on Netflix for $11 a month. That could come off as sounding snobby but I’m just making the point that the middle and even lower classes have access to so much more these days, and a good portion of those things are bad influences on their money.
100% man…and all this convenience and privilege is not only killing us but its destroying the planet along the way. I’ve been thinking about these things a lot lately and keep striving to live “smaller” and of course healthier. As like you, I think about these most on my runs and bike rides 🙂
“Live smaller and healthier”, you just gave me another shirt idea 🙂
cheers brother….