A friend of mine sent me an article this week that basically is the poster child for the YOLO generation. The YOLO generation or ‘you only live once’, espouses the merits of spending more while saving less. The title of the article even states that if you’re saving in your 20’s then you’re probably doing something wrong. Another quote I’ve heard is: “Saving is for people that don’t believe in themselves”. I must admit, their argument is compelling. Our future earnings will dwarf the little pay we earn now, and you might as well enjoy your money while you’re young and can travel, eat and drink as we please. As much as I’d like to, I just can’t get on board with such a mentality, and wanted to address many of what I consider fallacies of the our indulgent generation. Let’s talk through some of the main points of the article:

“Not having a safety net forces to you achieve”

What? Not having a safety net means that when you inevitably face a real crisis in your life, you’ll crash and burn. We’ve become a generation of young people trust that our parents will be there to welcome us back when we fall. Emergencies will certainly come in our lives, whether you lose your job and face unemployment for months, or whether your car gets stolen and you don’t have insurance to cover it. Life is hard and we can’t rely on others to always take care of ourselves. Having an emergency fund doesn’t rob us of happiness now; it provides us with the assurance to know that things will be ok when stuff inevitably goes wrong.

“Saving now is pointless, we’ll make so much more later”

The author touts that $200/month would better be spent networking to get a better job with a big salary rather than saving. Saving $200/month isn’t the point here, saving in general is. What makes you think that you’ll be able to manage a large paycheck in the future when you can’t manage a small one now? Your desires and expenses will find a way to grow with your paycheck and if you’re not in the habit of saving now, you certainly won’t be when you have ‘more’ money.

“When you care about your 401k, you miss out on life today”

Saving for retirement in your 20’s will lead you to being sad and regretful in your 40’s is how the author puts it. Nice. Absolutely, let’s forgo the beauty of compounding interest and save when we get a little older. The YOLO generation often forgets how compound interet works, and how it’ll work on even a small amount of money, saved over a long period of time. Check out this article and graph I found, ironically disputing the same mentality I’m trying to dispel here. The article shows the responsible young investor saving $300/month starting at age 25 and how they’ll have 33% more saved for retirement as compared to the person who takes the advice to save later, even with the later person saving double, $600/month.

“Spend money now to enjoy life”

So much of what we spend is quickly forgotten. How many bags of clothes do find yourself no longer wearing and taken to Goodwill? How many beers of cocktails do you find yourself regretting the morning after? How many paychecks have you wasted seeing movies you don’t actually like, eating meals at sub-par restaurants or on gadgets that quickly become obsolete? Now, I am an advocate for spending money on experiences, such as travelling, as I believe those will last much longer than that new shirt from Banana Republic will. What’s foolish about the YOLO mantra is not only that you’re not saving money, but also our money is spent on regrettable things!

“Enjoy life now, figure it out later”

In conclusion, I believe that following the author’s advice for saving later will find you at 40 broke, unhappy and full of regret for all that spending that you have nothing to show for. Although this may be working right now for the author, in the real world it doesn’t work like that. In the real world, emergencies pop up, it takes money to retire and we don’t always get a huge paycheck from our dream job. In the real world, ‘not having a plan and figuring it out later’ often will lead to nowhere. Retirement is a real thing and it’ll take real money, likely more than we’ll be able to save in our lifetime, which means we’ll need some growth to come from compound interest, aka saving early.

Being financially smart doesn’t mean staying in your apartment every night eating ramen and watching Netflix. Being financially smart means you’re looking after yourself and that you’re building wealth. It means you will spend your money and have fun on things that are important to you, while saying no to things that you don’t necessarily like and will regret later.

You only live once, so do it right and be smart!