I try to read about investing and personal finance issues for at least an hour and a half to two hours a day. And while I was doing my perfunctory reading today, I came across an interesting article written by a 22 year old - Cliff Mason - on theStreet.com. Here's the URL in case you're interested in reading the full article:
The gist of this article, jocularly entitled, "Rescue Yourself From Reckless Saving", was that contrary to popular personal finance advice, it's responsible to spend your money freely during your 20s. This way, you get all of the recklessness out of your system when you're supposed to and avoid a midlife financial meltdown. Mason cites the scores of 40somethings he knows who "infest suburban New York" and squander their nest eggs "trying to recapture their youth". According to him, these people didn't have a prolonged period of non-responsibility that theoretically all middle- to upper-class emerging adults are supposed to enjoy. This is why he advocates not saving, and spending one's money on life's pleasures, right now, now, now!
I know Mason's article is meant to be sensational and to elicit a strong reaction, since it's so contrarian. And in some respects, I agree with his theory. Generation Y is an overworked and overscheduled generation. It's hard to come from the pressure cooker of college where kids are vying for lucrative and high-status jobs, and start acting like a 'responsible adult' by saving for retirement, and to purchase your first home. During this period of emerging adulthood, 20somethings are trying a lot on for size. (Check out this link to learn more about that:
In this period, we don't have many people relying on us, like children or spouses or elderly parents. What better time to take a year or two or three and enjoy the fact that you're actually making money and live like a 20something's supposed to? Yep, if you try to stick to a plan of fiscal austerity in your 20s, without any fun, you'll certainly snap somewhere down the line. And when you snap, like Mason points out, it's likely to have dire consequences for you and the people closest to you, since you'll be older and have more responsibilities.
Enjoying your 20s and preparing for the future are not mutually exclusive though. By all means, I encourage you to go out with your friends and spend your money on what makes you happy. You only live once. But that new pair of True Religion jeans will only make you happy for so long. All of that furniture for that apartment without roommates in a chic neighborhood that you really can't afford can only lift your spirits so high for so long. If you're going to seize the day, financially speaking, seize it by taking a Portuguese class or going scuba diving with your best friend in the Florida Keys or catching the Montreal Jazz Festival with your significant other. Experiences and human interactions make us significantly happier than material possessions.
Mason's right in that you can't be so future-oriented that you don't live for today. If you don't take time to smell the roses every once and a while, you'll go crazy later on when what you do with your money really counts. But what you do with your money now really counts also. Your 20s allow for compound interest to work wonders for you, and saving at this early stages programs you for good habits. So seize the day, but don't seize it all. You'll have to seize some later on in life.
Thanks for reading and until next time...