This is something I have heard quite a bit.
Sometimes when I tell someone that we try to save more than 50% of our monthly income, I am asked why we would want to do that.
Most of the time, they think we eat Ramen noodles everyday and that I must hate my life because I like to save our money. However, I think it's possible to both save money and enjoy your life, but not everyone I talk to thinks the same way.
Here are some of the reasons I have heard for why you should spend all your money when you're young (in italics):
- You can start saving later. – I have heard this quite a bit. Why should I wait to save later though when I know I can start saving now?
- You won't enjoy your money when you're old. – I'm not sure how I feel about this. Yes, I could spend all my money right now, but is having more material things something that I actually care about?
- Bad things are less likely to happen now. – Bad things can still happen though! What if I can no longer work one day, a medical issue arises, or something else bad happens?
- You have others to fall back on when you're young. – I don't have others to fall back on, and even if I did, why would I spend all my money just to mooch off of others?
Below are my reasons for why I think you should start saving now.
You can still enjoy your life and save money at the same time.
I don't know why some people equate saving money to hating your life. I save money and I love my life. I used to spend all my money and I definitely was not happier then.
If you think you cannot be happy unless you spend all of your money, then you may need to access what the problem is. Does buying things actually make you happier? Do you feel happy for a second and then you're down again so you feel like you need to keep buying things?
You might think – oh well I don't make enough money to enjoy life and save money at the same time. Well, why is that?
You might need to create a budget, work to eliminate your debt, start being more frugal, work towards making extra money, and so on. But, it can be done!
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Saving even just a little bit can add up.
I have heard people say that they don't save money because they don't think it will amount to anything, so instead they just spend all their money each month and live paycheck to paycheck instead.
Why would you spend just to spend? Come on!
Even just $50 or $100 each month can add up. No need to buy things that you don't care for just because the money is there.
Compound interest is your friend. The money that you save now can earn interest and equal a much greater amount when you are ready to retire.
Here is an excerpt from Get Rich Slowly's article The Extraordinary Power of Compound Interest:
“For example, if 20-year-old Britney makes a one-time $5,000 contribution to her Roth IRA and earns an average 8% annual return, and if she never touches the money, that $5,000 will grow to $160,000 by the time she retires at age 65. But if she waits until she’s my age (39) to make her single investment, that $5,000 would only grow to $40,000. Time is the primary ingredient to the magic that is compounding.”
What if an emergency happens?
Many people (especially young people) like to believe that they are invincible and that bad circumstances will never come into their lives. While I do think that being positive about life is great, you should also be prepared for what life throws at you.
You never know if you may lose a job (no matter how stable you think a job is, it can happen), a medical condition arises, something happens to your home, and so on.
Anything can happen, and it might strike when you are young. What would you do if that were to happen?
Saving when you're young can take the stress out because you will be more prepared for it.
What do you think? Should you spend all your money when you're young?