 It’s a quiet Sunday afternoon and you’re scrolling through the Lululemon website. The new Scuba Oversized Full-Zip Hoodie jacket catches your eye. It’s sleek and looks extremely comfortable. $148.
You hover for a moment. It’s not outrageous... but it’s enough to give you pause. The price is just a bit too much to stomach. Then, right beneath the price, a soft gray line appears: “Or 4 payments of $37 with Afterpay. Interest-free.” Your mentality shifts. That $148 doesn’t feel like $148 anymore. It feels like $37, a number small enough to slide past your internal budget filter. The hesitation fades. You’re not deciding whether to spend $148; you’re deciding whether to part with $37 today. And that’s easy. Click. Add to Cart.
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 Today, I’m another year older, which feels like a fitting time to talk about the intersection of money and age.
Sometime or another, we’ve all felt ourselves racing against an invisible clock built on cultural milestones: the house, the car, the wedding, the job, the travel, the retirement. It’s human nature to chase these benchmarks and compare our progress to those around us. We crave certainty, and age offers a convenient marker. When you’re 25, you’re supposed to be building. At 35, stabilizing. At 45, optimizing. By 55, coasting toward independence. And at 65, freedom.  In the 1970s, CEOs were paid well, but not obscenely so (around 36 times as much as the average worker)¹. Compensation was high, but it wasn’t outrageous. Pay packages were opaque, boardrooms benchmarked internally, and the public wasn’t aware of the numbers.
By 1993, however, CEO pay was beginning to balloon, averaging about 131 times as much as the average worker². That year, in an attempt to stop the rise in executive pay, federal securities regulators required firms to begin disclosing this information publicly³. The idea was that once executive compensation was public, boards would be reluctant to give executives outrageous salaries and benefits out of fear of stoking outrage. What happened next was the complete opposite.  This past summer, my wife and I decided to take a trip to Europe. She had never been before, so I was especially excited. While browsing for plane tickets, I spotted what I thought was a steal: a round-trip flight for $617 per person. Score!
But then came United’s dreaded Basic Economy warning. No flexibility, no checked bags, no real seat selection. I couldn’t stomach the restrictions, so I upgraded to the much more ~luxurious~ ‘standard economy’. The squeeze didn’t stop there. Next, I found myself agreeing to pay extra just to sit next to my wife on both legs of the journey. A couple clicks later, I looked at my cart, only to find that the cost had ballooned to $986 per person. What on earth happened?  I noticed this sign on my way to the gym the other day (I changed the phone number for privacy). I’ve seen plenty of these signs before, but this was the first time I really stopped to think about the business model behind them.
These signs target a very specific kind of homeowner: someone under pressure. It might be foreclosure risk, divorce, job loss, relocation, or major repairs they cannot afford. The common thread is distress and a willingness to accept a cash offer at a steep discount in exchange for immediate relief. This is a textbook example of the liquidity gap: the difference between what you think your asset is worth and what you can realistically sell it for when you need cash quickly. Selling a house is rarely fast, smooth, or cheap; under pressure, people often trade price for speed. What does this tell us? There is an entire industry built on profiting from the moments when people are in financial distress and lack the liquidity buffer to overcome their struggles. Need some evidence? Just ask the managers of Yale’s endowment fund.  Mental accounting is one of my favorite concepts in money psychology. It’s the act of automatically assigning different values to our dollars based on context. Traditional economics tells us that a dollar is a dollar. But if you’re human, you know that’s not how it feels.¹
You don’t have to look far to see this concept in action; the proof is in our daily spending quirks. If you’re anything like me, you’ll pat yourself on the back for skipping a 50-cent coffee upgrade… then think nothing of dropping $20 on a ballpark beer that sells for $3 at the grocery store. We grumble at paying a $3 ATM fee, then happily tack on $12 for an app at dinner. We’ll wait in a long line at Costco to save $5 in gas, but pay a premium to board a flight slightly before anyone else.  My wife Katelyn teaches second grade. When friends ask how insanely challenging it is to work with that age group, she usually says, “Their attention spans last about ten minutes.”
Now imagine standing in front of a room full of seven-year-olds and giving an hour-long lecture. How well do you think that would go? If you were to list the most effective ways to teach elementary students, lecturing would be at or near the very bottom. Instead, great teachers focus on understanding students’ diverse backgrounds, recognizing their strengths and weaknesses, and tailoring their approach accordingly. For some reason, when we seek out education as adults, we forget that the same principles still apply. Just because we’re older doesn’t mean we automatically retain information better. We assume that reading or hearing something is enough to absorb it and act on it. But knowledge, on its own, isn’t enough. Being told something isn't the same as internalizing it, and it's certainly not the same as living it. I see this disconnect all the time in the world of money... 
If you had to guess, how much money would you say you spend on monthly subscriptions?
...It’s hard to remember without looking at a statement, right? For reference, my household spends $133/month on subscriptions before counting gym memberships, Wi-Fi, or cell phone bills. My point is: the subscription model is so seamlessly woven into our daily lives that it feels normal. Streaming platforms, fitness apps, software tools, meal kits, medical products, even toothbrushes! Behind the convenience lies a system that exploits human psychology. And the financial consequences may be more damaging than you realize. At The New Diligence, I like to explore how subtle behavioral patterns shape financial behavior. Few systems illustrate this better than the modern subscription economy.
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AuthorAndrew Lancaster, CFP® Categories
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