Measuring Stick

One of the reasons that economics is so interesting is that it really gets at what makes us tick as human beings.As far as I can tell, this science is the study of human incentive.

Now I am not saying that human beings are motivated only by money . We are motivated by sex, and by the desire to feel like “good people,” and by our drive to experience pleasure, and to avoid pain, and to be accepted socially and by a million other things.

But money ends up being a pretty good measuring stick for all of that stuff.

For example if you want to see a successful director of a nonprofit, just look for the one who raises the most money.

Money can represent our own time, or our ability to take risk, or our willingness to delay gratification. In this way it is merely a substitute for our own human efforts. But it ends up being a very useful substitute for drilling down to the essential factors which drive us towards action.

And I think there is an important lesson in this; Money, in and of itself, is not that valuable.

You cannot eat money. And while I suppose you could make a roof out of money it would not be terribly effective at keeping out the rain (or cost-effective for that matter.)

Money is merely a way for us to keep score. Which implies to me that keeping score is very important to us as humans.

One of the interesting things that I’ve noticed in my own behavior during my recent evolution towards the pursuit of financial independence,  is that I have become very much more conscious of keeping track of where I stand.

Within the travel hacking game, I routinely look up my credit score, my credit card balances, my miles balances, and my spending patterns on each of my different credit cards.

And within the early retirement game, I frequently find myself checking on the balances in all of my accounts, my debt, my assets, my investment performance, and my net worth. (Personal Capital is a nice website for keeping track of all that stuff.)

And this constant checking of my progress, acts not only as a feedback mechanism, but as a motivator.

If I see I am getting towards a credit card bonus deadline and have not met my spending requirements, this spurs me into action to put some “spending” on the card in question.

Similarly, if I do not see a constant upswing in my net worth, I become ever more motivated to save more of my income.

And the crucial insight here is that the act of recording or becoming conscious of reality pushes me forward towards some pre-specified goal unconsciously.

Which I think can probably be strategically flipped on its side.

I am beginning to believe that if there is some change that you desire in your life, the first step towards your desired outcome is to begin systematically measuring and documenting where you stand relative to this change at each moment in time.

As an example, if you want to get out of debt, then measure and write down your total debt at the end of each week. Better yet plot your total debt on a graph so you can see whether your debt is going up or down. In this way your debt will stop being an emotion or a nebulous discomfort that resides somewhere in your stomach or chest, and it will start being a cold hard number which is subject to your own future decisions. (Which is empowering.)

Or let’s say you want to lose weight. Start measuring your weight every day. And maybe invest in a pedometer so you can see how many steps you’re taking. Here is a nice piece by Brad at Richmondsavers.com on that very intervention.

In terms of getting a hold of your spending patterns, signing up for a service like the mint.com can be very useful.(Sadly this application is not quite as useful for manufactured spenders like me as it will often say that I spend 50% of my income at drugstores because of Visa gift card purchases)

And if you want to track your net worth (which is a great idea if you’ve already figured out your number,) why not use this excellent application from mad fientist? He was good enough to do the work for you. You just need to plug in some numbers.

Or if you want to exercise more, why not hang a calendar in your room and make a big X on it each day that you exercise. As your string of consecutive days exercising gets longer and longer, you will find it more and more difficult not to exercise.

And in all of these pursuits having a smartphone in your pocket can be a great tool. Never before has it been so easy to measure and record and graph your data and in so doing to get constant feedback on how you’re doing.

If our own cultural obsession with money tells us any one thing it is that measuring is not just a sideshow, it is often the main event of our lives.

Which means we should probably be very careful about what we measure. And we should make every effort to train ourselves to be conscious enough to measure those things which are most central to our own happiness and health.

Which raises the question: how does one measure consciousness?