Invest in yourself

    random_duck

    Yesterday I read a post on YouTube, that went in a way: “Why save all money until you retire, when you can splurge now and enjoy life while you are young.” It’s a very common way of thinking, especially when you are younger.
    I think you have to find the proper balance between both mentalities, as one is considered the mentality of a spender vs the mentality of a saver.

    Pros of being a spender

    The biggest pro of being a spender is you live in the moment, which is a double-edged sword. More on that later on… You don’t know what the future will bring, maybe you die before you hit retirement, your savings get swept because of inflation. The best argument for being a spender is, you have all the options when you are younger. You can travel everywhere you want, you are healthy, you probably don’t have a family yet. So when to use your money, if not now?

    Cons

    The cons of this mindset is, you are not as prepared as a saver for the future. You don’t have as much leeway, if things turn sour. You will definitely have to work longer before retiring, as with a saver mindset. Another huge con in my opinion is, you have to have a steady and preferably high income. If you spend more you have to earn more, compared to someone who earns more, but doesn’t spend the money and saves it instead.
    Another cons is lifestyle creep. It’s very easy to overspent what you earn, much easier than being frugal and not spending anything. Once you get used to a certain lifestyle, it becomes much harder to cut back on spending and way easier to go into debt. Which you can check: The average debt per household/generation in America.

    Pros of being a saver

    I admit I fall into this category, I like saving money and I hate debt. The biggest pro is you have the potential to FIRE(Financial independence, retire early). There are many variations of doing this, you can retire without working a regular job, you can Fat FIRE (having large amounts of money for early retirement). You can barista FIRE (having a part-time job for health insurance and extra money). This is great because compared to a spender, you can retire in your 30s, 40s or 50s. It depends on how well paid is your job and how much you are willing to work. That means you are still in a good age, to do all the things you could do in your younger years.

    Another nice pro is you have way more options, as in picking your jobs. You are living below your means, so you always have some money saved up. You can take a few months off, do something, and get back job hunting.

    The negatives

    The biggest negative is you biting the dust early, having all that money saved up. The other is inflation comes and wipes your savings useless. If the last point happens, the whole world has a problem on its hand. So not having money will be one of the last worries on your mind.

    Towards the first negative, it’s also not that huge of a deal if you have kids and family, they can make use of your savings.

    Another one would be the mindset itself. We are living in a spending economy, buy a new phone every other year, buy that new tesla car etc. It is hard to find a partner with the same mindset, it is not impossible, but much harder. So it can be lonely out there as a saver.

    Savers mentality can also be as addictive as the mentality of a spender. You start to save money, by not having any hobbies, not going out at all, just to save all your money.

    The best of both worlds

    Life is all about balance, it is very easy for the human mind to fall into a certain extreme. Controlling your mind and actions is a lifelong lesson. You should be having an emergency fund, regardless of what is your mindset. You never know in life, water leak in the house, big car repair, such things can put a big strain on your finances. How big of an emergency fund that is up for debate.

    Living with lots of debt is very common these days, especially in the states.

    Source: @visualcapitalist.com

    Some debt is good as mortgage or to a certain degree student loans – no pun intended. With both of those, I don’t mean you should buy a house you don’t even have the funds to pay the down payment. With student loans, don’t go rack up 100k student loans because that is your dream (or the dream of your parents.) Think twice about your budget before you decide to go into debt. Have a plan, for example, why take out 30k student loans if you can take out 10k and pay the rest while working a side job. I know that not every student can afford to do that, it’s just an idea.

    Don’t completely cheap out on things that fulfill you. Be it hobbies, fun, going out. If you have the money to do it, spend some money. I will always preach that the best investment a person can make in his life, is investing in oneself. With that, I mean on every facet of your life. You won’t be able to perform in the game called life if you are in a bad state of mind, you are out of shape, if you waste all your times on video games, or you surround yourself with toxic people.

    Achieving a healthy balance in your life is a lifelong journey, it’s especially hard in these stressful days. Take it one step at a time, one day at a time.

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