Make money while you're young When you're young, you have the enthusiasm to learn. You also have a higher risk tolerance because you have much less to lose. As a young person, you probably don't have a lot of dependents or any depends either.
I've written before that your first million dollars might be the easiest. The reason is for these same reasons I've just mentioned. When you are young, you can swing for the fences. If you miss, you have a lot of time to try again.
When you're old, time becomes your enemy. If you are down 30% on a $5 million portfolio, you are down a whopping $1.5 million. Your portfolio would have to gain about 70% just to get back to even.
Why You Must Try Hard To Get Rich While You Are Young
The abridged CNBC-version of my post, The Biggest Negative To Paying Off Your Mortgage, caused somewhat of a ruckus on social media. Please read my original version with a lot more meat and details.
Some were angry about my belief that paying off debt could cause one to chillax and not maximize one's true wealth-building potential. I get it since being able to enjoy life more is the ultimate goal. However, what if you are still in the wealth-building phase?
For all you young guns questioning my logic, there is really only about a 20-year window before your fire to earn and hustle dies out. By the 20-year mark, you will no longer have the same amount of enthusiasm to work long hours, go above and beyond at work, suffer through office politics, take entrepreneurial risks, and more.
If, for whatever reason, you don't try and maximize your wealth-building potential when you have the most energy and motivation, you may end up regretting your choices when you're older.
Eventually, you will get sick of the grind. You may also eventually have dependents and elderly parents to take care of too. Taking care of people properly costs a lot of money.
If you are still at the beginning or middle of your financial independence journey, please take heed of my warning. You will build much more wealth from your day job, side hustles, and investments than you will by paying off debt during your prime earning years.
Of course, you can always do both, as I suggest in my FS-DAIR framework. By paying down debt and investing at the same time, you are always winning in some way.
Make money while you're young to relax while you are old!
Work Hard To Make Money While Young To Hedge
Try hard to make money while you're young because you cannot fight the inevitability. It's better to put in years of hard work up front so you have more optionality when you're older.
For most of us, life is long and short. The YOLO lifestyle is fine. The YOLO retirement philosophy is fine too. Just make sure you are OK with the repercussions that come out of it. After all, everything is rational.
I'm in my 13th year of writing on Financial Samurai. I'm beyond tired. This global pandemic has really kicked my butt!
I see the same cycle of burning out repeating itself after spending 13 years working in finance. Therefore, my 20-year window is really more like 13 years.
I bet for many of you, your 20-year window of enthusiasm is much shorter as well. In order to be set for the rest of your life, don't waste your hunger! Make money while you're young so you won't have to stress about money in the future.
If You're Lacking Motivation
Let's say you're under 40 and burned out. Or maybe you feel like the world owes you more than it should. Totally normal! I feel like I deserve 6-pack abs all the time while writing this newsletter instead of working out.
To gain back that hunger, you must seek different perspectives. Hedonic adaptation is real. Our minds are always playing tricks on us or making excuses for us.
For example, in a pandemic, we all know we should maintain an ideal body weight to increase our chances of living longer and healthier lives. But most of us don't because we lose motivation when life gets a little too comfortable (parallel to paying off your mortgage early).
Now, every time I'm feeling lazy or need a wake up call, I read these posts to help get going again.
The psychology of money is always throwing us for a loop. But at least it makes slicing through money's mysteries more fun.
We are living in the greatest bull market ever. It's up to you to decide whether to maximize the current times by making bank or take it easier because your investments are doing most of the heavy lifting.
Learn From Your Past Mistakes
I should have hustled a little harder after that one mortgage was paid off in 2015. If I did, I would have been less stressed about taking care of two young kids with no job or subsidized healthcare once the pandemic began. But I can only learn from my past and move forward.
Today, I won't make the same suboptimal move. I plan to focus on building as much wealth as reasonably possible while most things are shut down and then re-retire once there is herd immunity. Hopefully, the bull market will cooperate until that time comes.
Please don't waste your youth. Not only is being young amazing for your health, being young is amazing for potentially making a lot of money.
Check out my Top Financial Products page to help you make more money and save more money while you're young.
Personally, I'm investing heavily in real estate to take advantage of lower valuations across America. Thanks to the pandemic and work from home technology, more people are spreading out across the country. As a result, rental yields and capital appreciation is faster in 18-hour cities.