Every financial expert worth their salt has long ago memorized mantras like, “Pay yourself first,” and, “start savings while your young and watch your money grow.” In most cases when these testimonials are presented with religious fervor they are accompanied by slick presentations that include multi-coloured bar graphs, arcane mathematical computations (well, arcane if you were educated using today’s public school mathematics curricula anyway, but I digress), and promises of a life of plenty. The only thing you have to do in order to one day walk in this promise land is start saving a little bit of money, make it automatic, put it in a jar, reinforce frugal habits, something about 10%, no wait 15%, or is it 20%+? Yes the only thing you have to do is look at the world with the hard-fought wisdom of a forty-year old financial advisor when you are 20. That shouldn’t be so hard right?
Of course the “eternal optimist” George Bernard Shaw revealed a much more realistic view of young people and personal finance when he stated, “Youth is wasted on the young.”
While the charts and projections that we personal finance know-it-alls love to throw up are statistically true, they fail to take into consideration the most important factor in the equation – humanity. Sure, logic and reason have their place in the minds of most young adults that I know, but they aren’t the only ones setting up shop there. In fact, immediate gratification, YOLO-ing, and material satisfaction (Google “flossing”) might have the run of the place as it pertains to most of us.
This represents an unfortunate reality. You can hardly blame the logical and reason-driven angels on our shoulder for investing their energy into the more important matters like getting an education, pursuing a career, and maybe even finding a long-term mate. Personal finance often gets delegated to the dark side. This is how luxury trips abroad get put on credit cards, 3,000 square foot homes get purchased with that maximum amount the bank will give for mortgages, and brand new luxury cars purchased with only “84 monthly payments of $299” end up in garages that have been built with home equity lines of credit (HELOCs). Continue Reading →