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The Ultimate Millennial Question: Should you spend money on experiences?

Started by girgawyn, September 10, 2018, 10:48:43 AM

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girgawyn

Hello all,

I've been wanting to reach out to this community about this for a while and now I finally have the chance to! 

My question is do you think that spending money on experiences ( travel, activities, etc.) vs saving that same amount is worth it in the grand scheme of things?

I'm a young guy in my mid 20s and I'm constantly being invited by friends to go on trips and as a typical millennial, I have a strong sense of FOMO, but also want to become FIRE. However, being young and probably naive, I believe that experiences with people close to you are really what matters in life and one big reason to even become FIRE.  So I'm torn, should I spend the money on these trips or save the money to become FIRE earlier? 

I love this community and thank you for the help in advance!

N

P.S. I don't have kids or a wife or anyone to take care of but myself.

Sam

I think you've got to enjoy your 20s while also aggressively saving and investing for retirement. It's a hard balance, but the reason why people get in trouble when they are in their 30s, 40s, and 50s is because they  didn't sufficiently forecast their misery.  And given there is no rewind button in life, the only thing left to do is to work at a job that you probably no longer enjoy doing, or getting angry at others who did plan ahead.

At the very least, I would be maxing out my 401(k) and or saving at least 20% of my after-tax income and investing it.

Although age 40 or beyond seems old to you now, I promise you that it will come quick, but you'll also be able to enjoy so much of life once you've got your financial stuff together.

Finally, you don't know how wealthy your friends who live it up really are. Any of them might have trust funds or tremendous family well they don't tell you about. I've seen this so many times with people with big jobs who just really live off their parents money.
Regards,

Sam

girgawyn


Leigh

My favorite resource is a little one sheet excel spread comparing a 20 year old investing $200 per month for 9 years, a 30 year old investing $200 per month for 35 years, and a 40 year old realizing his folly and doubling up to $400 per month for 25 years. I always ask the twenty something client, "Who do you think has the most at age 65?"

No one can touch that compounding magic the 20 year has access to. I tell them, "You have something I can't get, my friends can't get, heck the majority of American's can't get. 45 years of compound interest starting at the age of 20!"

Take advantage of this fantastic opportunity!

Invest in yourself first AND take those vacations!

But find deals! Add milk to a black coffee and forget the lattes! Make sure your car tires are correctly inflated, use a cash back web site to order items online....do whatever it takes to take advantage of all the 'free money' that's available to you right now.

And yes, take a vacation, but for the love of everything that's good and holy, don't travel like you'll be dead at 60 cause most likely you'll be alive and kicking yourself for not socking away money back when you were a young whippersnapper!

girgawyn

You make a very good point Leigh.  I was just doing the math and even just waiting a few years to buckle down and save will cost me a huge sum of money when I retire.  Thanks for the insight!

Leigh

Quote from: girgawyn on September 10, 2018, 02:28:26 PM
You make a very good point Leigh.  I was just doing the math and even just waiting a few years to buckle down and save will cost me a huge sum of money when I retire.  Thanks for the insight!
[/quote

You are welcome, and you are wise.

I'll be honest with you. I have never in all of my life, seen a generation travel and travel well, like your generation. Do you know that I'm 57, very well off financially, and I am still waiting to take that grand tour of Italy? "The Horrors!" you may think...but no...we take a great beach vacay every summer, go to disney once or twice a year, eat out at very nice restaurants but...we fully fund our 401Ks, invest in rental property and have our eye on the prize.

You generation is grabbing the prize now and using it, eating it, drinking it, driving it...and I can't understand why yall can't wait just a bit and get yourself in a safe, solid, financial footing and THEN indulged a bit. If you can pull back and make that choice for 40 year old you...now...then in just a few years, a VERY few years, when you are 40, you will be sooo very happy and content and secure in your thoughts towards the future.

Your friends, maybe not so much. That's when I generally see people say, "Oh, crap, what are we going to do????"

What a unique and wonderful opportunity you have!  :)


girgawyn

I really appreciate the kind and inspiring words.  Honestly, the life you explain is definitely my goal and if I have to forego some trips now for freedom sooner, it is definitely worth it :)

Thanks again this has been very helpful,

N

defomcduff


Great topic and question!

I think it's important to do both (save + experience).  So, what that means practically, is that you should get experiences cheaply.  Travel cheaply, go to shows but pick worse seats.  Don't waste money on "luxury" expenses, but you can still get amazing experiences without overspending.
DeForest
Boston, Massachusetts

girgawyn

That's a very good point deomcduff.  Looking back, paying for the "luxury" expenses adds a very minimal benefit, if any, relative to the overall experience.

KAT1809

It is possible to travel AND save for your retirement.

Probably my biggest life regret is not traveling internationally during my single college years.  I guess I thought I was too poor? Maybe the real reason was because I was just too afraid to travel by myself?

There are many ways to "hack" travel to reduce costs (e.g., use a mileage credit card or a cruise affiliated credit card, travel "off-season" or during the "shoulder season", travel to a lower cost of living country (Portugal?) rather than a higher cost of living country (the UK?), take shorter trips rather than longer ones). 

I'm sure there are many web sites out there with low cost travel tips. My pre-retirement plan was to just look at what's on sale and go there.  It turns out me and my significant other are not at all spontaneous, so that travel strategy hasn't quite worked out for us!  LOL  But I'm sure you could find some great travel deals to some great travel destinations if you put your mind to it!

I would definitely recommend traveling when you are younger rather than waiting until your are older.  You never know when you might have a serious health issue, or just get too grumpy to put up with all the hassles that come with flying these days.

One final thought: Studies show you get the most enjoyment out of simply PLANNING your vacation travel.  So spend a LONG time researching and planning a trip! Guess that's why I plan our trips a year in advance. LOL  Advance planning also gives you more time to save up for your trip. ;)

Rdizzle

It's really important to both invest in your future and your present, both financially and spiritually. I found most people who said they couldn't afford experiences in life were spending too much on daily luxuries that most people won't remember. Yes, I'm a huge proponent of giving up the daily 5 dollar coffee etc vs those that say it won't matter in the long run. Small daily savings add up to affordable life experiences so it's really up to you to decide which is more important.
Saving 5 bucks a day for a year is almost 2000 dollars of experience money. With that much I guarantee you could travel to anywhere on the planet short of the South Pole.

lndlhldn

 You asked about spending money on experiences ( travel, activities, etc.) vs saving that same amount.

I think this is the wrong question to ask. The question to ask is: is it worth spending money on experiences ( travel, activities, etc.) vs spending the same amount on material objects (things, expensive clothes, cars, art objects, furniture etc.). you should definitely spend your money on experiences instead of things.

the issue of spending money now on experiences vs saving the money to invest for future experiences is a question of what are your goals. you should definitely be saving your money early for future experiences but at the same time you don't want to be miserable and pass up life on the way. it's a question of balance between immediate gratification versus future rewards. I think it's important to be strategic about the experiences you choose to have when you are young and hopefully spend todays $ on todays experiences that will hopefully pay off with some added benefit in the future (new friends, learn something etc) but at the same time you don't want to miss out on the "miracle" of a long investing time horizon. Be like a chipmunk, eat a few nuts on the way but be sure to put more away for later when its cold outside and your kicking back in your hole while the squirrels are running around trying to find some acorns.

PDXOregon

I have been working for the same employer for over 20 years.  In that time period, I have taken two sabbaticals.  The first was 3 months at age 29 and the second was age 36 for about 6 months.   I have been fortunate enough to have an employer that allowed me to take these leave of absences and allow me come back to full time employment after each adventure.  When I look back at my career,  I don't remember my professional accomplishments as the first things that come to my mind, but the time away and good health I had to explore the world.  My biggest regret is not doing it more and not developing a career earlier that allowed me to do this more easily such as a career in medicine, the trades, etc.  My colleagues and clients are looking forward to retirement in 5 years or so and have never taken more than two weeks off from their careers during the 20 plus years that they have worked to date. They are burned out and merely resigned to just making it to the end.  They are closer to dead than being alive.   Luckily, I can say I have a different experience than they with a much better result.  My wife and I have raised our daughter and now have the chance to go explore and have the health to do some of it. We plan to take 6-12 months off and travel in the next year or two.  At each step of the way, I live below my means, maintained a budget, invested conservatively, watched spending, etc.  and still have been able to continuously build wealth a little bit every year.  If you take the time to step away for months at a time to experience the world, you will be better at planning for future experiences with practice and be motivated to work towards the next adventure.  You will gain confidence doing it.  It is almost like developing a skill in itself. . . learning to be free and master of your time.   It is easier to accomplish than you think with some discipline, planning and focus.   

TacosAndBurritos

It's a doubled sided question. Yes and no.

Spend money on experiences now because just imagine how awkward it would be to be 45 and camp at Coachella or Bonaroo. Even then, your body will not have the same energy as to when you were in your 20s. Psh, I could handle liquor better when I was 17 than now at 26.  At the same time, plan things out and budget. Experiences can hold a couple of months if it means avoiding debt. A lot of my acquaintances talk about their experiences but then moan about their savings or think having 4K in a 401K is a lot. It's like watching a slow train wreck....all because they want to eat at the nice restaurant for some likes on the 'gram.

P.S - Shout out to the IG models in Gucci belts!

Cheezus

Who ever made the decision that experiences have to be expensive?

TacosAndBurritos

They don't have to be expensive, but the frequency makes it expensive. Brunch every weekend + happy hour + music festival. At my old job there would be folks who live paycheck to paycheck just to splurge on the weekend or go on the weekend trip. Even in Mexico, go to a club on a Friday...people buying bottles. When the fast forward 8 days later, they're asking for a loan.

Remember, if you can see/feel it...it didn't happen.

Cheezus

Quote from: TacosAndBurritos on January 15, 2019, 08:45:55 AM
They don't have to be expensive, but the frequency makes it expensive. Brunch every weekend + happy hour + music festival. At my old job there would be folks who live paycheck to paycheck just to splurge on the weekend or go on the weekend trip. Even in Mexico, go to a club on a Friday...people buying bottles. When the fast forward 8 days later, they're asking for a loan.

Remember, if you can see/feel it...it didn't happen.

You could say it another way.... Europe once a month, Ritz Carlton long weekends, etc.  It adds up....  It just sounds more absurd that way but it's the same point.

So these people don't go to brunch, happy hours, and music festivals.  Hang out at apartments, the beach, parks, etc.  Who said experiences have to be expensive or cost anything at all?  Tons and tons of free or cheap national parks.  Camping, hiking, kayaking, scuba diving, whatever.  Even where we live there are always tons of things going on, concerts and what not that are free.  Or a great live band at a dive bar with a beer bucket special.  Or you go to the concert and skip happy hour and brunch.  Even pro sports you can buy cheap seats often for $10 on game day.  It's just doing things a little differently.