Our current crop of 20-somethings — the majority of whom are Generation Z — have apparently caught on to the time-honored tradition of “living it up” while young and not worrying about money.
A social-media trend that’s recently taken over TikTok features people sharing video or photos from traveling abroad with the overlaying text: “I’ll make my money back, but I’ll never …” The blank at the end goes something like “… be 20 and swimming on a secluded beach in Albania again.”
This sentiment seems to creep up on every generation. (In 2015, it took the form of a viral article, “If You Have Savings in Your 20s, You’re Doing Something Wrong.”) The problem is, it’s misguided.
It is a myth that you have only two choices about money in your 20s — that you’re either completely locked down, frugal and saving for your future, or you’re YOLO-ing your way through life, racking up priceless experiences (and probably debt) and planning to become more financially prudent later on.
In reality, you can save for your future and be swimming in the waters of Albania or eating pie on a train through the Swiss Alps. (Or, depending on your particular financial situation, your “YOLO-ing” may be more cost-effective.) You just have to think strategically about your money and your ambitions — i.e., set goals and stick to a budget that will allow you to meet them.
Taking stock of your cash flow and creating a spending plan can help you avoid volatile financial swings between always splurging or always saving. Instead, you can set yourself up for a life of stability and choice.
One important truth of the TikTok trend is “I’ll make the money back.” It’s true that many people will see raises and promotions over the course of their careers. But it’s also worth remembering that life doesn’t tend to get less expensive as you age. Your expenses usually grow, too — your future self might want to buy a home, rescue a few dogs, have a wedding, take lavish trips, buy nicer clothes and food, have a child or two, maybe take a sabbatical from work. And it becomes more likely that you’ll experience a health crisis or need to financially support a loved one.
Overspending early in life can set a precedent that you won’t necessarily be able to maintain without financially harming yourself in the future.
Take one example: having children. A favorite line from one of my husband’s coworkers, who is married, child-free and in his 50s, is: If you don’t have kids, your 30s are your 20s, but with money. Expanding a family is a huge expense, especially in the US, which has seen an increase in the maternal mortality rate, offers no mandated paid leave after childbirth, and offers heinously expensive child-care options for working parents.
This doesn’t mean that you shouldn’t be living it up in your 20s. You can still go on adventures and live a full life while working to build a strong financial base. That just might mean making day-to-day financial choices that allow you to set money aside for your future goals or opting for a cost-effective version of your dream today instead of the all-out luxury one that will strain your savings.
The key is to be intentional. If you want the freedom to take a two-week vacation to the No. 1 destination on your bucket list, put money aside for it. That should be part of your spending plan (aka budget). If you’re able to, set money aside each month for a trip on top of also putting money toward repaying any debt, building an emergency savings fund and investing in a retirement plan.