Workforce: The Cost of Living
I was exploring the Bank of Canada's Inflation Calculator and was struck by the phrase, "the cost of living." Here, the sense of the word cost refers to an amount of money required to buy a fixed basket of goods. For example, a basket of goods costing $100 in 1954 now costs $742.86 revealing a 4.09% rate of inflation. The percent change is 642.86% overall. This also means that a $100 investment in 1954 at a rate of return less than 4.09% would result in a negative real rate of return (the amount of your investment left after subtracting inflation). Yet there are other senses to the phrase cost of living...
A cost, or price paid for doing something, can come in many forms. Recently, I read about a research study that has in some manner linked commuting to an increase risk of heart attack, regardless of the manner in which the individual commutes. So an inflation calculator in this example might focus on the probability of dying by heart attack rather than purchasing a basket of goods.
We read about the increase of consumer debt load in Canada:
Consumer Debt in Canada: The average Canadian adult owes more than $4,500 in consumer installment debts. Ten years ago, the consumer debt load was 15 percent of income after taxes. Now it is 20 percent, as it is in the United States.
Ten years ago, Canadians saved about 12 percent of their income after taxes. Now Canadians save only 9 percent. Incomes have risen 126 percent in the past decade. But since costs have risen similarly, families cannot buy any more than they used to.
Inflation has disguised some changes. Savings have almost doubled in dollar amounts, but the value of those savings has fallen 25 percent. Canadians, like many others around the world, are poorly prepared for an unexpected job or personal crisis, or another recession. [Are You Living Beyond Your Means?]
But is there also something we might refer to as a mythological debt load? Are you living beyond your means? is an interesting question to ask. So relatively speaking, everyone has less money now than in previous generations. Given the low interest rates of recent here in Canada, we have seen an increase in the purchase of homes, yet when interest rates rise and mortgages come up for renewal I wonder if we'll see an increase in people walking away from their homes. The increasing use of installment debt (e.g. - credit cards) is an ode to financial suicide. Yet, the "means" to live is not something exclusive to money matters, and it may be the money matters less than we think.
I wonder about the cost of living, inflation, and debt load in mythological terms. In other words, what is the cost of living a life that does not originate in our individual sense of purpose and meaning. Too often, this question is left until our own death becomes recognizable. Once we develop a healthy sense of the transient, we see our lives differently. The cost of living might be the price we pay for not listening to ourselves. Inflation might be the increase is stress and anxiety that results from ignoring the inner voice. And a debt load can be as much if not more about emotions and wellness than money.
Of course, financial matters need to be dealt with effectively. Money obviously matters in a practical sense, but it is not the primary focus of living. It is unfortunate that our education systems do not help our youth prepare for the financial planning and management of their lives in a practical manner. These are skills easily acquired. Would consumer debt load be as significant if people clearly understood some basic principles around wealth? But at the same time, it seems that so much of our culture embraces the financial as a primary focus that phrases like the cost of living, inflation and debt load become the exclusive province of money.
The link between commuting and heart attacks is symbolic of a culture(s) that places money, something vacuously referred to as "progress," and the pursuit of materialism ahead living a vibrant and rewarding life. The purpose of commuting, after all, is to go to work. And the purpose of work, at its most primitive level, is to earn money. And one reason to earn money is to buy a house, often in an affordable location far from work. And so the age of commuting, and now increased risk of heart attacks arrives. We read stories like these in the news and, I suspect, the trend toward commuting will only increase over time.
I live in a small town approximately one hour from Toronto, that is one hour without traffic. It is interesting to see commuters moving in and out of here. One winter and four to five hours per day in the car is often enough for them to sell their recently purchased home to seek something closer to work, albeit far more expensive. It's probably a sane move, however, for my now infrequent experiences with rush hour traffic into Toronto are a clear and present reminder of what the cost of not living might be.