Analysis | Gen Z thinks, “The money will come back.” Will it? – The Washington Post | Candle Made Easy

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Our current generation of 20-year-olds — most of whom are Gen Z — seem to have embraced the time-honored tradition of “living it” and not worrying about money when they were young.

A social media trend, recently adopted by TikTok, shows people sharing videos or photos of trips abroad with the overlaid text, “I’ll make my money back, but I’ll never…” The blank at the end reads something like “… being 20 and swimming again on a lonely beach in Albania.”

This feeling seems to creep in with every generation. (In 2015, it took the form of a viral article: “If you’ve got savings in your 20s, you’re doing something wrong.”) The trouble is, it’s misguided.

It’s a myth that in your 20s you only have two choices when it comes to money – either you’re totally locked in, frugal and saving for your future, or you YOLO your way through life and gain priceless experiences (and probably in debt) and plan to become more financially cautious later.

In reality, you can save for your future and swim in the waters of Albania or eat cake on a train through the Swiss Alps. (Or, depending on your particular financial situation, your “YOLO-ing” may be more cost-effective.) All you have to do is think strategically about your money and your ambitions—that is, setting goals and sticking to a budget that allows you to meeting.

Taking stock of your cash flow and creating a spending plan can help you avoid volatile financial swings between always splurging and always saving. Instead, you can adjust to a life of stability and choice.

A key truth of the TikTok trend is “I deserve the money back”. It’s true that many people will experience raises and promotions throughout their careers. But it’s also worth remembering that life doesn’t get cheaper with age. Your expenses usually go up, too — your future self might want to buy a house, save a few dogs, have a wedding, take lavish trips, buy nicer clothes and food, have a kid or two, maybe take time off work. And you become more likely to be going through a health crisis or needing to financially support a loved one.

Spending too much early in life can set a precedent that you may not necessarily be able to maintain without damaging yourself financially in the future.

Take an example: having children. A favorite phrase from a colleague of my husband’s who is married, childless and in his 50’s is: If you don’t have kids, your 30’s are your 20’s, but with money. Expanding a family is an enormous expense, particularly in the United States, where maternal mortality rates have risen, mandatory paid leave after childbirth is not offered, and outrageously expensive childcare options are available for working parents.

That doesn’t mean you shouldn’t live it in your 20s. You can still adventure and live a fulfilling life while working to build a strong financial base. That could mean making daily financial decisions that allow you to set aside money for your future goals, or opting for an inexpensive version of your dream today rather than all-out luxury that strains your savings.

The key is to be intentional. If you want the freedom to make a two-week vacation the #1 destination on your bucket list, put money aside for it. This should be part of your spending plan (aka budget). If you can, set aside money for a trip each month, and set aside extra money to pay off debt, build an emergency savings fund, and invest in a retirement plan.

This is how it works in practice: Start with a list of your necessary monthly costs (rent, ancillary costs, transport, groceries, dog food, student loans, etc.). Write down your monthly net income and subtract your monthly expenses. You should contribute to your retirement plan before any money gets into your checking account so it already ticks an item off your to-do list. Ideally, your income is higher than your necessary expenses.

Assuming a surplus, you can decide exactly where to direct that money each month after you reach your basic needs. This can include saving for your next adventure and a line item in your dinner or show budget. It can contain anything you want – but the point is to stay within your means.

Will you be able to do absolutely anything or buy what you want all the time? no But staying on top of things can help you prioritize and make sacrifices you won’t later regret.

This planning allowed me to travel internationally in my 20s while also saving and investing and helping my husband pay off student loans. It also helped that I had side hustles all the time and was able to direct that income toward my “fun goals.” There’s no need to delay, “the money will come back”.

It’s easy to get fixated on the dichotomy of frugality vs. joie de vivre. But it’s far more rewarding to recognize what you really find important. We are constantly bombarded with messages about what we should value and strive for, but a lot of it is marketing and social pressure. (Does swimming at a secluded beach in Albania sound appealing to you at all? Maybe traveling isn’t your thing and you’d rather put more money into a hobby.) Focusing on your values ​​will make you realize how you’re spending, saving and should invest your money. Say no to what you don’t want and plan for what is important.

The future is not promised, so yes, please make some memories and live life as you go. But hedge your bets financially just in case you reach old age.

More from the Bloomberg Opinion:

• Pension spending is too hard to predict: Teresa Ghilarducci

• Spotting recessions is more art than science: Stephen Mihm

• Sweating when afraid of chills: Andreas Kluth

This column does not necessarily represent the opinion of the editors or of Bloomberg LP and its owners.

Erin Lowry is a Bloomberg Opinion columnist covering personal finance. She is the author of the three-part Broke Millennial series.

For more stories like this, visit bloomberg.com/opinion

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