Many millennials have embraced the ethos of YOLO, the acronym for “you only live once.” In many ways, the YOLO mindset is a healthy one. It sparks a sense of adventure and inspires creativity. There’s a downside, too, warns Jason Vitug in his book You Only Live Once. This way of thinking often spurs […]
Many millennials have embraced the ethos of YOLO, the acronym for “you only live once.”
In many ways, the YOLO mindset is a healthy one. It sparks a sense of adventure and inspires creativity. There’s a downside, too, warns Jason Vitug in his book You Only Live Once. This way of thinking often spurs millennials to spend money on stuff they don’t need – and to take on debt that ultimately undermines their YOLO dreams.
Vitug points out one obvious paradox of modern financial life: Millennials often are so loaded down with student debt that they can’t save. Yet despite all that money they spent on tuition, no one ever schooled them in the fundamentals of finance.
“Why do we learn how to calculate the area of a triangle but not the power of compounding interest?” he wonders.
An important question indeed. Essentially, when it comes to learning to manage money, you’re on your own.
Figuring out your finances is more important than ever. The sometimes-corrosive influence of social media means millennials too often splurge on concert tickets or trips in hopes of showing off on Facebook or Instagram. Millennials also tend to buy more consumer goods because businesses target them with great sophistication. In an era of big data, retailers know millennials’ personal spending habits better than the millennials do themselves.
Mindless spending dooms you to an out-of-control financial life – particularly if you incur consumer debt. If you fritter away your money on unimportant things, you’re living part of life mindlessly, Vitug writes. And if you accumulate debt, you’re swapping future leisure time for time spent working to pay it off. His mantra: “Eliminating debt doesn’t just improve your financial life; it improves your entire life.”
Mindfulness is a crucial part of financial decisions. Vitug suggests following several simple but powerful rules:
• “Spend less than you earn”– If you don’t, you jeopardize your future well-being.
• “Pay less for every purchase”– Buy in bulk, seek discounts, bargain hard and review every fee you pay for phone use, banking and subscriptions.
• “Buy what you love, not what you like”– When you are about to make a purchase, consider this priority list: “Love is greater than need is greater than want is greater than like.” Buy only those things you love or need.
• “Use credit for purposeful purchases”– Financial security springs from financial control. Use credit only for “long-lasting assets with short-term financing.” Don’t stretch financing out longer than the useful life of the purchase. Loan interest is an investment.
A final bit of advice: Happiness doesn’t come from possessions, but from living the life you want.