Should You Spend All Your Money When You’re Young?

Should You Spend All Your Money When You're Young?“You’re young, why don’t you just enjoy your money now?”

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!


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? 


Frugality And Ethics – Are You Being Cheap, Frugal, or Stealing?

Frugality And Ethics - Are You Being Cheap, Frugal, or Stealing?Last month, I published Frugality And Ethics – When Is It Stealing? The post was very popular and everyone had an opinion on what was stealing and what was not. Also, many of you gave me new ideas, and I wanted to hear everyone’s input on the situations below. So, I, of course, wanted to publish a Part 2 to the post!

I don’t think that there is anything wrong with saving money (this is a personal finance blog after all), but I do wonder how far people will go to save money – whether it be $1 or $2 or a few hundred dollars.

No one is perfect, and I definitely am not. However, when does frugality or cheapness cross the line and turn into stealing?


Using another person’s wi-fi.

This is something that probably a lot of people are guilty of, or have been guilty of in the past. This is where you use someone else’s wi-fi so that you can get on the internet for free.

Some of you said that if there is no password to the internet account, that it’s free range for anyone to use.

However, I think that you should always pay for your own wi-fi. You might be slowing down the internet for someone else, and they might not even realize that their wi-fi isn’t password protected.

Always protect your wi-fi account! - I also remember discussing a case when I was in college about someone who had unprotected wi-fi and it turned out that their neighbor was searching something illegal. The SWAT team showed up at their door, created a huge scene, took the computers, and destroyed the person’s house all because the neighbor was searching something illegal.


Sharing accounts with others.

This is where someone has an account and multiple people/households share that one account so that only one person is actually paying for the service or product. I have heard of many people doing this with Netflix…

Netflix and other companies have specifically stated that it’s stealing, so yes, I believe it is stealing.


Drinks at a restaurant.

There are three different situations that I would like to share with this one…

1. Paying for one drink and sharing it between two people. The first person might order a soda and the second person orders a water. However, the second person never actually touches the water and only drinks the soda. – I think this is stealing.

2. Asking for a water cup but filling it up with something besides water (such as a soda). - I think this is stealing.

3. Asking for water, a bowl of lemons (I’m talking 4 or 5 whole lemons), and sugar so that you can make your own lemonade. - I think this is being cheap/frugal. I wouldn’t do this though… I know waiters and waitresses hate it when customers do this.


Signing up for something to get something for free.

There are a couple of situations that this applies to. This is when you sign up for something knowing that you won’t buy anything, so that you can get a product or service for free for trying something out. Since Wes used to work in sales, I wouldn’t do either of the situations below just because I don’t like to waste people’s time…

My first example applies to timeshares. Many people listen to timeshare presentations even though they know they will not buy a timeshare, so that they can get whatever it is for free that the timeshare workers are pitching (free movie tickets, free vacation, etc.).

My second example applies to getting professional makeup done. Usually makeup counters/companies at the mall and/or department store will offer free makeup applications as long as you buy something for from them. Some require that you pay upfront, whereas others give you the “option” to pay at the end. I have heard of some people getting a free makeup application knowing full well that they do not plan on buying any makeup afterwards.


Taking condiments.

This is where you go to a restaurant and take a bunch of condiment packs so that you can bring it home and put it in your fridge.

I have received extra packs before (such as from a takeout order), but I have never gone out of my way to take condiments.


Disputing items on your credit card.

In many cases, you can dispute a transaction on your credit card bill that is less than $25 and your credit card company will just automatically refund you because it’s not worth their time to investigate the problem.

I have heard of people who dispute many transactions each year and take advantage of this…

I don’t do this. I believe it is stealing. I have only ever disputed one item on my credit card bill before, and that was because a restaurant accidentally charged me twice for the same meal.


Have you ever done any of the above? What do you think of these situations?

What other examples can you think of?


Photo via Flickr by Britta Frahm


Big Money Mistakes You May Be Making

Big Money Mistakes You May Be MakingWe’ve all made money mistakes. I don’t think anyone has ever said “I’ve never made a money mistake in my life.” If so, I’d like to meet that person! :)

Even if you have made money mistakes, it’s never too late to change your life around. Below are a few money mistakes that you may be making:


Taking Out Too Much in Student Loans.

I’m guilty of this one. Luckily my student loans are now paid off, but I would have had thousands of dollars less if I wouldn’t have taken so much out when I was in college.

My problem was that I would always take the full amount out each time. With student loans, the money goes towards your tuition, but whatever is left over is just deposited into your bank account as cash.

I never really thought about how taking an extra $1,000 or $2,000 each semester would hurt me, but it did!


Thinking You’re Too Good To Save Money.

When I had my day job, I used to always bring my lunch. There were two reasons for this: a) I wanted to save money; and b) in order for me to get lunch it would have meant that I would need to get in my car and actually go somewhere (I was too lazy for that).

Occasionally, I was made fun of for some of the things I would do to save money. Some thought I couldn’t afford to eat and I even had people offer to buy me lunch.

This also applies to coupons. I know so many people who think that they will be looked down upon for using coupons. I just don’t understand that. WHO CARES IF YOU USE A COUPON?

Anyone can save money, and there should be no shame in doing so.


Not Thinking About The Full Cost.

I have seen this many times. You buy an item without thinking about the full cost of it – you only look at the sticker price. You may be able to afford the sticker price, but can you afford the whole thing?

Many things have additional costs:

  • If you buy a house, other costs include home insurance, property taxes, utility bills, repairs, and so on.
  • If you buy a car, other costs include car insurance, gas, maintenance, taxes for buying the car, yearly personal property taxes, and so on.


Spending More Money Than You Make.

If you are spending more money each month than you make, then you are making a money mistake. You need to figure out what is going on so that you can fix this problem.

Are you trying to keep up with the Joneses? Are you not making enough money each month to support basic life necessities? Do you have too much debt?

Whether you are spending $100 over your budget each month or $1,000, you need to fix this money mistake.

You can start fixing this money mistake by creating a budget. You need to list your income and realistic expenses and see where your problem is.


Buying Things Because You Think You Deserve It.

Don’t get me wrong, I think that money is meant to be enjoyed. However, if you are going into thousands of dollars of credit card debt because you think that you deserve to own things, then you may have a spending problem.

Something that you may want to think about is why you think you deserve things. Is it because another person can afford it so you think you should be able to as well? Or, is it because you want to buy things to cure a bad mood?

Also, does buying things actually make you happier? Or does it just lead to you buying even more things?


What money mistakes have you made or seen?


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