Have you ever gotten a bad piece of financial advice? You’re not alone. We’ve all had a “helpful” friend or relative that’s given us a pointer in the wrong direction. The good news about bad advice is that we can still learn from it - we can learn what not to do.
It’s time for Part 4 of our series about “The Worst Financial Advice You’ve Ever Received.” With each article in the series, we’ll share the bad advice you can get, the surprising and sometimes funny examples others have run into, and ultimately what you should focus on instead.
Bad Advice: “You Only Live Once (YOLO)”
Super-size that meal? YOLO
A round of drinks for the whole bar? YOLO
Pay for the cruise on a credit card? YOLO
But any and every one of these is dangerous. Here are some real examples from finance writers of the YOLO advice they’ve been given.
- J from Their Money Goals was challenged by a friend about his debt payoff plan: “I don’t know why you worry about paying off debt. You’re always going to be in debt. You might as well enjoy your money while you can.”
- My Twenty Cents was told to “Spend beyond your means. It’s just like borrowing from your future self. You will make the money back later.”
- Nick from Your Money Blueprint, the advice got downright morbid: “Spend all your money now because you never know when you are going to die”
Ok, so it’s true - you do only live once and you don’t know when you’re going to die. But what if that date is 65 years away? Maybe throwing caution to the wind isn’t the best way to go on every financial decision.
Good Advice: “Balance Life Today with Life Tomorrow”
While it can be hard, the best plan here is to find a balance. Save for your future so you can enjoy it when you get there, but don’t unnecessarily deprive yourself today.
Here’s an idea that can help you figure out the right balance for you.
Take an afternoon to write down what a “good life” would look like for you now. Not an extravagant one, but one you could feel genuinely satisfied with. Does it include travel, eating out, time with friends and family, or something else?
Then do the same for your life down the road. Picture yourself at retirement age. What do you think you’ll want to do with your days? How would you like to spend your time? What would you like to leave for your family or friends when you pass away?
When you take the time to picture yourself in both of these positions, you can start to compare the trade-offs between each. Saving for retirement now might mean not getting to eat out every week now, but that could very well be worth it. Traveling now, while you’re in rock-climbing shape may be a higher priority than when you’re older.
Once you put your ideas down and compare, you can create a budget to enforce your short-term and long-term values to make sure you have a great life today and tomorrow as well.