Back when I was in my early 20s, I had a friend by the name of Dave.
Dave was slightly older – and slightly more handsome than the rest of our loosely-knit group of friends.
As a result, he was also more popular with girls than the rest of us. It didn’t hurt that he would spend all the money he made in his entry-level, yet relatively well-paid job as an IT consultant.
Nights out in high-end clubs. Summer trips to Europe. And a very nice sports coupe – the kind of car I really wanted but felt would be irresponsible to buy.
Dave was a smart guy. He clearly appreciated the concept of saving and investing. And yet, he did none of it.
At times, I’d wonder – does he know something we don’t? Is there a large inheritance coming his way? Or is he just so confident he’ll be able to make even more money in the future?
As it turns out, Dave did know something the rest of us didn’t.
Two years later, he was in a hospital, booked in for a liver transplant – his last chance at fighting off a degenerative disease.
And three years after that, Dave was dead, ending up on the wrong end of survival rate stats.
He wasn’t even 30.
A Time To Live
I thought about Dave when I was at a car dealership over the weekend.
After many car-free years, I was in the market for a ride again. And after a bit of browsing, a lot of soul-searching, and some negotiation, I ended up driving away in a very nice sports coupe.
It was the exact same make and model that Dave used to drive. The one I really wanted but never bought twenty years ago.
I’m sure we could go into a lot of psychoanalysis on why I chose to get the exact same (save for the year) car.
But instead, let me just tell you this:
It just doesn’t feel the same.
Yes, it’s a great ride. It certainly turns heads and provokes compliments.
But it simply doesn’t feel nearly as exhilarating as it would have twenty years ago, heading for the beach on a sunny Saturday morning with my girlfriend in the passenger seat and my favorite track on the stereo.
And if I was to take a punt, I’d say it will never feel as good again.
Here’s something to ponder on for a moment (and distract you from analyzing my upcoming mid-life crisis!)
If you were to give someone $5,000, what would be the best time to do this?
It certainly wouldn’t be when they are 80 years old, when most people are squaring off against a severe decline in health and mobility.
But think about what a 22-year-old could do with five thousand bucks. Smartly used, that kind of money funds three months of travel anywhere in the world – and memories that last a lifetime.
It’s worth keeping that in mind as you think about the trade-off between spending vs. investing.
The basic math of personal finance usually tells you to save a hundred bucks today – so that you can have two hundred in ten years’ time.
The implicit assumption is that the utility you will get from having more money in the future is higher than what you’d get from spending it now.
Oftentimes, that’s certainly true. It’s extremely important to take care of your financial future, so that you don’t end up destitute and doing things you don’t want in order to put food on the table.
But it’s equally important to remember that there’s a time and a place for everything.
And to the extent you are not being fiscally irresponsible, there are things you absolutely need to experience when you are in your twenties and thirties (and possibly forties!) – because they will never feel the same again.
This is why I cringe when I see yet another article advocating extreme frugality.
Yes, it’s very important to live within your means. And yes, there are people whose personal situation means they need to cut expenses to the bone, at least temporarily, in order to steady the ship.
But unless you are digging yourself out of a hole – or happen to enjoy extreme frugality (hint: most people don’t), that is just not the way to design a rewarding life for yourself.
I much prefer Ramit Sethi’s philosophy which advocates spending extravagantly on the things you love – and cutting back mercilessly on the ones you don’t.
If I was to add another aspect to it, I’d say:
Stop being so damn focused on achieving early retirement.
It’s okay to give yourself a bit more runway.
You are MUCH better off spending 30 (or more) years doing something you enjoy than grinding through 15 unhappy years, retiring at 40 – and wondering where the hell the good years went.
In other words, time is precious. You never get it back.
And if you need to spend some money to enjoy life today, it’s probably worth doing so.
As always, thank you for reading.
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Banker On FIRE is an M&A (mergers and acquisitions) investment banker. I am passionate about capital markets, behavioural economics, financial independence, and living the best life possible.
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