The following article is from the Fargo Forum March 11th 2014
Don't Let #YOLO Ruin Your Financial Future
By: Sherri Richards
The young professionals downing drinks and nibbling small plates at
Fargo’s fine dining establishments always have confounded me.
It’s
a rare occasion I splurge on a $9 martini or an artisan cheese plate. I
couldn’t understand how peers could afford to do so regularly.
Then it hit me: They can’t.
They might argue with me. “Sure, I can afford it. I have $40 right here.”
But do you have money in an emergency fund?
Do you save 10 to 15 percent for retirement?
Is your credit card completely paid off?
A “no” to any of those means no, you can’t afford it.
I
suppose that kind of thinking makes me a stick in the mud. It certainly
doesn’t align me with the current #yolo crowd: those who post their
reckless antics to social media, proclaiming them acceptable because
“you only live once.”
More than an acronym, it’s a philosophy, one
that seems centered on shirking responsibility. Because what the heck?
You only live once.
The problem with #yolo is you’re also likely
to live a long time. And if you don’t want to eat cat food in
retirement, you need to think about the consequences of your spending
now.
By becoming more aware of your money during those #yolo
years, you have the opportunity to leverage the amazing ability of
compound interest.
Every dollar invested when you are 25 will be
worth $21.90 when you’re 65 (assuming an 8 percent rate of return, and
not adjusted for inflation).
Wait until you’re 40, and each dollar will grow to only about $7 by retirement age.
Now, take that $40 you would have spent on a night out once a month, and invest it each and every month.
If you start when you’re 25, you’ll have more than $130,500 stashed for retirement, just by staying in one night a month.
There’s
more to life than money, your #yolo status screams. But money has a
profound influence on our lives, present and future. It provides the
security to chase the dreams that really matter when you only live once.
Spending it on martinis and cheese plates now, instead of
dealing with debt and contributing to retirement funds, means you are
quite literally (after digestion runs its course) flushing your future
down the toilet.
.
