I’m currently in my 20s. My TFSA is maxed and I have a good career. However, I’m constantly watching my spending and thinking of ways to save more money. But why?
So that when I’m 50 I can retire and drive a fancy car and live and be bored all day? I’d rather travel and live while I’m in my 20s and 30s.
It might seem counter-intuitive to take money away from your present self and set it aside for your future self. Why bother saving up for things you might want 30 years from now when you’re here now and you have wants, needs, and plans today?
There are a number of reasons it’s a good idea to put money away for your future self. One big reason is that the money you save for retirement isn’t just so you can buy a nice car and do nothing. The money you save today for the future will likely be paying your rent or mortgage. It’ll cover the cost of your groceries, medicine, and transportation. In other words, it’ll pay for the same stuff you buy now, but in the future it’ll be more expensive and you likely won’t have a source of income beyond what you save now.
It’ll be nice if you can also afford a nice car and some travelling around the world, if those are things you’re into. But you primarily need to be able to have food, shelter, and medication (those get expensive in advancing years). They’re all going to cost more when you’re 60 than they do now, so how are you planning to pay for them? The alternative to saving now is likely to be homeless and hungry, which isn’t appealing.
I’d also like to point out that retirement doesn’t need to equate to fast cars and boredom. Lots of people travel the world in their 50s, 60s, and 70s. Look at any cruise ship or tour bus and you’re likely to see people enjoying their retirement. Lots of retired people have hobbies (some of them expensive ones). You might not be as physically active in your golden years, but you can definitely find lots of things to enjoy – travel, models, collecting things, martial arts competitions, taking up photography, getting your pilot’s license. These things cost money.
You probably feel you should squeeze the most out of life in your 20s at the expense of your future self because you’re in your 20s right now. You don’t have a basis for comparison yet with how you’ll feel at other stages of your life. This makes it difficult to make good life choices because you don’t know yet how you’re going to feel when you’re 65.
Maybe you’ll look back and wish you’d saved $100 more each month so you can afford to keep your own home and not move into a retirement complex. Or maybe you’ll look back and wish you’d gone on that European adventure with the one-who-got-away. Maybe you’ll regret not investing more because you don’t get enough healthy food to eat, or maybe you’ll wish you’d spent less time in the office and more time out with friends on the weekends.
It’s really hard to know what your future self will want, appreciate, or regret. However, it’s often a good idea to try to find the middle ground. Saving money now gives your future self options. It’s also true you should try to enjoy your life now, in the present. The key is finding a balance between the two – do a little that you love now, but also make sure future you has some money and options because you don’t know what tomorrow will bring.
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