Don’t Be A Screen Junkie

Spending too much time in front of entertainment screens has negative effects on both your health and finances: it can turn your children into emotional basket cases and ruin your retirement plans.

A recent article in the NY Times entitled “Screen Addiction is Taking A Toll on Children”  fires a warning shot  and sounds an alarm about the consequences of this behavior. Adolescents suffer terrible side effects from too much screen time. Managing your finances in this manner will lead to similar results.

To be fair:   I am a freak. I do not own a cell phone (audible gasps and shrieks). If I mention this tidbit, people often look at me as if I am a hybrid mental ward escapee/hermit. While haters will always hate, my life is pretty good. My clients are happy knowing they can e-mail me, contact me on facebook or twitter or call my personal or business landline.

Since I have a home office and my two hobbies are gardening and working out in my garage, you don’t need a GPS to find me. If I am traveling, I bring my kindle. As a last resort, my wife has a cell phone so clients can always reach her if need be. She is my business partner and usually knows more of what is going on than I do, anyway.

While this system works for me, I realize I am an oddity. I am not here to judge people. I want to provide some perspective. People can make their own decisions about how much to use their devices. I just think it is a good idea they know the consequences of their choices.

The point being, much worse things can happen to your children and your money than walking through a glass door while playing Candy Crush or ordering some manure on Farmville. Screen addiction can have devastating long-term effects for both your children’s mental and physical well-being,  along with your financial goals.

Let’s begin with your kids. In a Kaiser Family Foundation study it was found that teenagers are exposed to 11 hours a day of screens. This includes various types of media from video games to smart phones. The recommended amount of usage falls between 2-3 hours.

Many parents provide little or no regulation regarding the use of these devices. This problem is worldwide. China actually has a term for these kids: “screen junkies.” These are kids who refuse to leave their screens to eat or even go to the bathroom!.  They wind up in rehab centers where all electronics are banned.

The substitution of technology for personal interaction can be deadly. Overuse of screens has been found to lead to a multitude of different types of aggressive behaviors at home and in school. This also leads to a disturbing lack of empathy; human beings’ most prized possession, which distinguishes us from the animal kingdom.  Violent video games often desensitize kids to carnage with some chilling effects.

Often valuable hobbies such as playing outside and reading books  are discarded for more screen time. This often leads to physical issues from being sedentary. These would include but not be limited to: obesity, vision problems, and back ailments.

These screens encourage multi tasking which inhibit adolescent’s learning potential. The discouragement of deep thought in exchange for instant gratification can be a catalyst for numerous career and personal relationship problems as these young adults grow older. The lack of emotional intelligence can be devastating to both professional careers and marital relationships.

As these kids grow up, the effect of constant screen stimulation on their personal money management can be just as damaging.

Addiction to financial websites or television often feeds the numerous emotional defects that are inherent in most of us. For example, we can look at recency bias. This means we are genetically programmed to think what is currently happening will continue indefinitely.

Imagine being glued to CNBC during the annual 10% (or worse) decline the markets encounter each year. This often leads you to believe that this will continue until the market reaches its fair value of zero!  The results will lead to the all-too-common trade of selling at the worst possible time and turning a temporary loss into a permanent one.

The opposite occurs when the markets rally. Now there is a perception that there is no limit to how high prices can go and a perpetual state of euphoria follows. This is due to our natural irrational feelings of overconfidence. This is the reason most surveyed drivers consider themselves above average.  We mistake the bullish market cycle for our own personal genius. We load up on stocks at the worst possible time and suffer the devastating consequences when the laws of gravity reemerge  from the darkness.

Many investors use their screens to confirm their own beliefs. This is called confirmation bias. This happens when you ignore all information unless it matches your pre-existing views, no matter how outlandish or preposterous they may be.

The internet provides a fertile ground for finding people to agree with you no matter how crazy your ideas may be. The easy access to a virtual community of conspiracy theorists can be more deadly to your portfolio than Bernie Madoff!

Contrary viewpoints, logic, and reason are some of the most important tools an investor can possess. If the screens are used to confirm your own viewpoints intstead of question them,  your investment capital will often disappear along with the logic and reason you chose to ignore.

In his recent book, Misbehaving,  Richard Thaler points out another severe drawback of constantly being a screen slave:  Investors are much more risk averse than needed when constructing long-term investing strategies. Even though stocks trump the long-term historic average return of most investments, many people are under invested in this asset class.

This mistaken belief could jeopardize their long-term financial goals. Thaler came to the conclusion the reason for this risk aversion is the average person checks the market way too frequently. This causes them to mistake risk for volatility to their own detriment.

While abandoning modern technology is a ridiculous solution to this problem, moderation can be a rational compromise. Limiting usage and setting ground rules can greatly enhance both your children’s welfare and your probability of achieving your financial goals.

Your children’s future emotional and physical well-being and your own financial success depend on knowing these limitations. Choose wisely and you can use the wonders of modern technology to enhance your life. This is a better alternative than going to “screen junkie” rehab.