(Bloomberg Opinion) – Our current generation of 20s – the majority of whom are Gen Zers – have apparently embraced the age-old tradition of “partying” while being young and not caring about money.
A social media trend that recently took over TikTok features people sharing videos or photos of trips abroad with the superimposed text: “I’ll get my money back, but I never will…” The blank at the end looks something like “…turning 20 and swimming again on a secluded beach in Albania.
This feeling seems to go back to every generation. (In 2015, it took the form of a viral article, “If you have savings in your twenties you are doing something wrong. ”) The problem is that it’s misguided.
It’s a myth that you have only two choices when it comes to money in your twenties – either you’re completely locked in, frugal and saving for your future, or you’re stomping your YOLO way through life, accumulating invaluable experiences. (and probably debt) and plan to become more financially savvy later on.
In fact, you can save for your future and swim in Albanian waters or eat a pie on a train through the Swiss Alps. (Or, depending on your particular financial situation, your “YOLO-ing” may be more profitable.) to meet them.
Taking stock of your cash flow and creating a spending plan can help you avoid volatile financial swings between always splurging or always saving. Instead, you can prepare for a life of stability and choice.
An important TikTok trending truth is “I will get the money back”. It is true that many people will see raises and promotions during their career. But it’s also worth remembering that life doesn’t tend to get cheaper as you get older. Your expenses usually increase too – your future self might want to buy a house, save a few dogs, plan a wedding, go on lavish trips, buy nicer clothes and food, have a kid or two, maybe take a sabbatical from work. And it becomes more likely that you are going through a health crisis or need to support a loved one financially.
Spending too early in life can set a precedent that you may not be able to maintain without hurting yourself financially in the future.
Let’s take an example: having children. A favorite line from one of my husband’s co-workers, who is married, childless, and in his 50s, is: If you don’t have kids, your 30s are your 20s, but with silver. Growing a family is a huge expense, especially in the United States, which has experienced a increased maternal mortality rateoffers no mandatory paid leave after childbirth and offers extremely expensive childcare options for working parents.
That doesn’t mean you shouldn’t experience it in your twenties. You can still go on an adventure and live a full life while working to build a solid financial foundation. It could simply mean making daily financial choices that allow you to set aside money for your future goals or opting for a profitable version of your dream today instead of total luxury that will weigh on your savings.
The key is to be intentional. If you want the freedom to take a two-week vacation to the #1 destination on your to-do list, put some money aside for it. This should be part of your spending plan (or budget). If you can, set aside money each month for a trip in addition to setting aside money to pay off any debt, build an emergency savings fund, and invest in a retirement plan.
Here’s how it works in practice: Start with a list of your necessary monthly expenses (rent, utilities, transportation, groceries, dog food, student loan payments, etc.). Write down your monthly net income and subtract your monthly expenses. You should contribute to your retirement plan before the money is coming to your checking account, so it’s already checking an item on the to-do list. In an ideal situation, your income is greater than your necessary expenses.
Assuming a surplus, you can decide exactly where you want to direct that money each month after you meet your basic needs. This can include savings for your next adventure and a budget line in your budget for dinners out or shows. This can include anything you want, but the goal is to stay within your means.
Will you be able to do absolutely everything or buy everything you want all the time? No. But keeping track can help you prioritize and make sacrifices you won’t regret later.
Such planning allowed me to travel abroad in my twenties while saving, investing, and helping my husband repay his student loans. It also helped me to have hustles all the time and direct that income towards my “fun goals”. There is no need to delay “the money will come back”.
It’s easy to get caught up in the binary of frugality in relation to life. But it’s much more rewarding to discern what you actually find important. We are constantly bombarded with messages about what we should value and seek out, but a lot of it is marketing and social pressure. (Does swimming at a secluded beach in Albania even sound appealing? Maybe traveling isn’t your thing and you’d rather invest more money in a hobby.) By focusing on your values, you will shed light on how you should spend, save and invest. your money. Say no to what you don’t want and budget for what’s important.
The future is not promised, so yes, please make memories and live life as you go. But hedge your bets financially, just in case you live to a ripe old age.
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Erin Lowry at [email protected]