“YOLO!” Yeah not so much.

The definition of YOLO is:
You only live once (expressing the view that one should make the most of the present moment without worrying about the future, and often used as a rationale for impulsive or reckless behaviour).

I hear the term often, mostly around friends, and mostly in a light hearted manner.  It’s often the battle cry of friends looking to live it up in the here and now.  But in doing so, it’s easy to spend your money as fast as you make it, cramming in as much fun as possible while still working for the man.  This is how we live life to the fullest, right?  But the saying has a somber undercurrent of “retirement planning is for old people, I’m young and I’ve got time” or “saving for financial independence restricts my lifestyle” or my favorite, “I’ll probably die young anyway, so whatever.” Taking these sentiments to heart can have dire financial consequences later in life.  Hopefully I can address these points and help you to realize by planning sooner rather than later, you actually have have more time to “YOLO!”

This is the typical year for your average working Joe/Jane.  We start with 365 days in a year of which there are 124 days they don’t have to work during vacation, holidays, and weekends.  But unfortunately like a lot of working folks out there, they have to give back one weekend out of every month because they may be required to participate in an on call rotation, there are upgrades to do during off-hours, or they just can’t keep up with their corporate overlords so they put in extra time.  So with 267 working days for the year, the average person works most of their waking hours, almost 3/4 of the time.  If we extend things out a bit over the course of a typical career it looks like this:

Only getting 27% of the time to ourselves over the next 40 years is a little depressing, but at least we have the weekends for YOLO, right?  Well maybe there’s a better way…

Now we’re talking!  Only working ~1/4 of the time seems reasonable.  Here we have someone who works the same as in the original scenario, but only for 15 years and then they reach financial independence.  They can retire, volunteer or start a career they have a passion for because they no longer need an income.  But how the heck did they do that working the same amount of days those 15 years?  It is done with a high savings rate:

By saving 54% of your income and investing it in low cost index/mutual funds, the beauty of compounding (the calculator assumes 5%) and shoveling fist fulls of cash into your investments every paycheck takes over and you can quit your job after 15 years because your investment returns can support your spending needs.  If I had only gotten on this path sooner…OMG, I’d sooo be done by now traveling the world as a nomad.  *sigh* But this was not a goal back then as it is now and maybe this math can get you interested sooner rather than later.  The earlier you start the quicker you can live the good life.

About that good life, typically defined as your Golden Years, ages 65-80.  That is what it’s all, right?  Hell no, being 65+ is no fun, it’s a crock of you know what.  I’ve got plenty of aches and pains at age 38, do I have any confidence you or I will be running around on the beach, riding bicycles in the morning and playing tennis in the afternoons at ages 65 and up?  Maybe if we’re lucky.  Yes,  I do believe in the progression of modern medicine and investing in my health by eating well and working out, but the real golden years are from 40-65.  That’s 25 years of able bodied exploration, learning, and travel (if I weren’t me, I might consider this a good time to raise a child).  There’s a reason all retired folks say “I wish I retired sooner.”  Your typical Golden Years are only 15 years long!  Even if money were tight, I’d rather grab a part time job during my Golden Years while I am more stationary and save ages 40-65 for the good stuff.

The notion of retiring at age 65 is fleeting these days as well as the pension, they are directly related.  Just because your parents were lucky enough to retire at age 65 with little to no financial planning because of their pension, does not mean you too can stick your head in the sand and ignore your financial planning as well.  Us “kids” these days do not benefit from a pension and the onus is on the individual to save, plan, and save some more if you ever dream of retiring at all some day.  Just saving 4% or whatever your company matches in your 401k ain’t gunna cut it, not even close.

But let’s not get carried away about thinking of our future too much…back to reality.  The nature of the beast is that we have to be back to work on Monday.  Sunday the fun ends whether you are ready or not.  What happens if you are YOLOing at the ski resort but it’s icy and raining all weekend?  You lose, no soup for you!  But if you were retired or semi-retired and transitioned to some lower stress consulting part time, you could choose to stay another day for better conditions… or better yet, don’t even go during the weekend with higher motel rates, higher lift tickets and more traffic.  Go during the middle of the week and time the weather to whatever works best!  Another thing about these weekends, they really limit our range too.  I really enjoy driving twisty back roads with my friends in our MINIs, but there are only so many twisty roads and sites to see within a few hours radius (remember, we all have to be back for work on Monday!).  There are so many other things to see and do in this world, weekends are limiting.  Now a 300 mile radius covers some pretty good stuff in the Northeast, but don’t you think we’re all missing out a bit?

“But what if I die early?” I hear it all the time.  “If I spend all my time saving and never have any fun, I might die early and be unfulfilled!”  Ya know what, that might just happen and it would suck, but we’re not talking about having no fun at all.  I don’t just sit in my little studio apartment twiddling my thumbs all day, but I do curb my costs (especially the big three) while having fun with my eyes still on the long term prize, FIRE.  Sure dying is a real possibility, I almost died in a motorcycle accident in 2007, but how small of a possibility is it?

Click on the pic to download the full spreadsheet

In 2012 you had a 0.16% chance of dying if you were 40 years old and you have 40+ years ahead of you if you’re the average white guy or girl (for figures on males/female and other races take a look at the PDF).  I’ll take those odds and I’ll call your bullshit for just not doing the homework on your retirement planning.

So there are 1100+ words on why “YOLO!” is crap.  Get your head in the game.

4 thoughts on ““YOLO!” Yeah not so much.

  1. You said it in your first paragraph really. YOLO is just an excuse to do stupid stuff in the moment. Even spending 75% of your time working really isn’t 75% of your time, it’s 75% of days. That’s a big distinction, since most of us work 8 hours at a time or 1/3 of a day. 1/3 of 75% is 25% – so really even your working time is only 25% of your time spent at work or less time than we spend sleeping (33%)

  2. Thanks for stopping by Jackie. I covered the whole “working days” vs. “working hours” in the third paragraph. Myself I got up and prepared for work at 7:30 and worked until 6:30, then was home by 7pm today. I get 4 hours to stuff some leftovers down and unwind from a stressful day. Not exactly quality time, hopefully you get to cram in a bit more fun during the workweek, but for me and a lot of colleagues there isn’t much time for anything other than vegging on the couch each worknight . As for your comment about sleeping time, I’m not much use to anyone let alone myself while sleeping, and I do that each night so it was neither here nor there in my calculations. Any time we’re still working, regardless of the percentage of day, we’re still required to be back in the office on Monday and I’d rather be looking forward to my Mondays in the near future if I can help it. 🙂

  3. All things in moderation.

    I don’t believe in either extreme — not planning for your future because you’re spending frivolously in the now & not living your life because you’re too busy saving for the future.

    There are certain opportunities/moments you’ll never be able to get back if you miss them now because you’re too busy stockpiling — your bff’s bachelor(ette) getaway, a vacation with aging members of your family, a last hurrah group trip before you/your buddies all start having kids & are locked down for the next X years, etc.

    But on the flip side, I agree with you on not spending frivolously at the expense of your future.

    Don’t go and buy that $5k Coach bag without thinking about how that money might better serve you being invested.

    Don’t go partying VIP style every wknd, popping bottles like it’s nothing.

    But don’t skip out on your crew’s trip to Cancun in your 20’s because you’re too busy saving. You’ll never get that opportunity for those same memories again at 45 when *you’re* retired but everyone has their kids & aren’t really interested in raging til dawn anymore.

    Basically, I’m in favor of periodically spending, within reason, on experiences and memories that will last me a lifetime but also making sure I’m saving & investing in my future. Best of both worlds, in my opinion.

    While yes, I’ll still be working at 45 and you won’t, I’d rather that than regretting missed opportunities for experiences/memories later on. You just have to weigh those opportunities & pick the ones that are worth it before committing to spending on them.

    1. I agree. Even I start to go nuts if I never spend any $ and leave the apartment. And yes, if you are going to climb Everest, doing it in your 20s is certainly the time to do it. But each person has to evaluate their work/life balance and if going on an extra vacation a year is worth the extra time you’ll need to work, no sweat. In my head, money spent now, is converted to extra time I’ll have to work later. I wrote an article on the 4% rule…. so another way to look at it is $2500 spent now (instead of invested) is $100/year (2500 * 0.04) for life I am giving up. Sometimes it’s definitely worth the expenditure as you’ve stated, I just want people to conscious of those spending decisions they make today that affect tomorrow.

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