THE BLOG
09/15/2014 11:30 am ET Updated Nov 15, 2014

Your Money or Your Life? Why Not Both?

You may have heard some buzz circulating around the Internet about the idea of your money or your life. Sounds simple in theory, does it not? Yet, pause for a second and consider whether or not this is actually the wrong question.

It's like this; asking the question this way sets you up and you probably didn't even see it coming did you? It's like the boxer who suddenly nails his opponent with a quick left-right combination.

Take a look at the question again; your money or your life. Do you see that the way the question is asked presupposes this is a yes or no question. (That's the setup, a question is asked in a way to bring out a specific response.) Try another perspective. What if you start with the assumption this is a flawed question. Seriously, why can't it be rephrased this way: "your money and your life"?

Reality Check
That being said, there is some validity to the question. The reason is simple. In the modern world we live in, it takes money to live. Thus the phrase 'earn a living.' No question about it, unless you happened to be a member of the lucky sperm club and were born into a lifestyle like the Kardashians, you already know you need to do something to pay for the things you want. At the same time, you have probably already figured out you ain't gonna win that Powerball Lotto anytime soon. So, hi ho, it's off to work you go.

There's an App for that
However, this is exactly where many fail to grasp the reality of living. You already know that there only a limited number days remaining in your life. If you want to be really morbid, believe it or not, there is an app that will tell you in no uncertain terms how many days are left till your forecasted death date.

So, knowing and understanding you have to do something to pay your way here and also knowing you only have some much to time to do anything, much less follow your dreams, the million dollar question comes down to how are you spending your time and how are you spending your money.

If you, like the majority of Americans, are what we call an employee (wage slave), you have to work first to pay the taxes that come off the top. Then you have to work to pay the cost of you getting to work (planes, trains, automobiles). Then you have to work to pay the cost of a place to sleep at night so you can wake up refreshed to get back to work tomorrow.

Can you understand why being responsible with your personal finances is critical? No wonder all the personal financial experts urge you to set up a budget. Once you take the time to setup and follow a budget, you are less likely to go off track and end up working for something that makes no sense. Think something like the $3,400 you blew at the track last week. Was it worth it for the amount of time you had to work? Maybe it was, maybe it wasn't. The point is that you need to be in a position to know the trade-offs you are making.

Opportunity Cost
Really, this whole issue is all about what the economist refer to as opportunity cost. Comments about the state of public education system aside, opportunity cost is not such a difficult concept to understand. Opportunity cost is best defined as how you completing one activity or task prevents you from doing another. No, this is not about multi-tasking, it's a broader issue. Look at this opportunity cost example: working late Wednesday night to finish that report that absolutely positively has to be on your boss's desk first thing in the morning also means you won't be attending your six year old's performance in the school play. Neither choice is good or bad, this is just an example of real world opportunity cost.

Conclusion: As you can see, the real truth is that you cannot separate the two. Your money and your life necessarily go together. It's all about how you balance the two that matters.