The media likes to poke fun at my generation. Oh, us Millennials.
I’m on the older end of the generation, and still remember things like cassette tapes, VHS, and floppy discs. Sometimes, there are “millennial” things that even I don’t quite understand.
One of these is the propensity for acronyms. I find myself Googling things a fair amount. I learned in medical school what YOLO and FOMO were, and I think that was on the late end of things XD
Interestingly, YOLO and FOMO seem to be applied in a carpe diem sort of way. Expensive trip and line of credit already ballooning? YOLO! Deciding between after work dinners out vs. going home to eat? FOMO!
Let’s see how this would work with a financial independence lens.
YOLO
You Only Live Once.
Therefore, you might like to live with:
- Comfort
- Creativity
- Autonomy
- Love
So, what’s the real thing to say “YOLO!” to? That Maserati…or your freedom?
Side note: You can always say yes to the Maserati later, when it has far less impact on your financial status, if you still feel it would really complete your life. Returning to compounding as an example:
- The Maserati might cost you $99,000 or more.
- If the same $99,000 spent today is allocated instead to the market, that turns into $198,158.14 after 10 years of compounding quarterly at 7% annual interest. That’s if the market is bleh. If one is a little more optimistic with 11% annual interest, $99,000 turns into $293,027.52. Dayum. The opportunity cost of not investing this money is huge!
- The Maserati, on the other hand, is depreciating in value as soon as you drive it off the dealership.
FOMO
Fear Of Missing Out.
Given you only live once, you might say that you have a fear of missing out on your best possible life.
Okay, let’s not get into paralysis by analysis on what’s “best”. Let’s take a step back and say – fear of missing out on what could be a significantly better life.
A life where you are the captain of your ship. There will be waves and there will be storms, but you are the captain and you choose your direction. There are no chains pulling you back and no anchors down unless you choose to drop anchor.
You can steer your ship towards family. You can steer your ship towards personal development and/or creative endeavours. You can steer your ship towards charity. You can steer your ship towards work. You can steer your ship towards restorative relaxation.
You are the captain.
No more FOMO.
Think of the Possibilities
Framing YOLO and FOMO from a financial independence perspective works. When I consider all the big-ticket possibilities that come with financial independence, it immediately makes that cute pair of ankle boots or mouth-wateringly gorgeous clutch fade in comparison and I put my wallet away. It makes the sleek convertible and the dream “doctor” home look like a flashy set of financial ball-and-chains than an immediate, early-staffhood goal.
The financial FOMO is real for me! When I think of a future of time-freedom and the ability to give of myself in whatever direction and whatever time-proportion I choose, I get all fired up (pun intended, hehe) about financial independence.
But Live Your Best Life Today
This might sound a bit contradictory. But there is an important consideration on the journey to FI(RE), which is this:
All things in balance.
It is possible to go too far in the direction of frugality, and live only in the financially independent future rather than enjoying the present day as well. Other FIRE people have spoken about this. For example, both Mad Fientist and Millennial Boss have discussed on their podcasts about their regrets of having saved a little (or a lot) too hard and missed out on valuable experiences (such as the bachelorette of a really close friend) or felt so much pressure that their health suffered.
There is too much value in enjoying as many current days that we have, as well as the future days we will have. Today will never come back. Every moment of “now” becomes the irretrievable past.
I remember being “time-rich” and “money-poor” in high school, undergrad, and medical school. Now, even as a resident, I’m starting to feel more “money-rich” and “time-poor.” There are these cool trips I want to take, and now have the money for, but don’t have the time for. My parents are far, and I want to visit more often, but each visit, the journey is an 10-hour endeavour on the way there and on the way back. My suspicion is that the pendulum can swing even further into the direction of “money-rich” and “time-poor” as a staff physician.
So, the goal right now is to try and enjoy as many days “today” that I can, while still investing money and investing in learning so that future-me can enjoy the tomorrows that will become todays.
So, how does Dr. FIREfly balance employing dollars to the best advantage and still enjoying today?
- Invest in relationships
- Including having those difficult conversations – facing is better than avoiding.
- And while I don’t go to every friend group outing, I definitely try to make it to most and simply decrease spending elsewhere (e.g. avoid needlessly strolling through the mall, a.k.a. Land of Temptations)
- Build in quality leisure time
- Employ travel hacking
- Updates are coming in a couple months about how the first attempt went!
- Pay down debt
- Some student loans gather 0% interest remain. Instead of paying those down, I’m now funneling money into a high interest savings account (HISA) to try to let my money not get eaten up too much by inflation in the next two years. Would like to pay off the student loans in one swoop when I enter staffhood.
- Invest through the TFSA
- TFSA might actually get maxed out soon – will figure out what to do with money after! Am open to suggestions from readers 😊 My first thought is to contribute to RRSP next, until more space opens up in the TFSA when 2020 starts.
Are you feeling the Financial FOMO? Would love to hear your thoughts!
-Dr. FIREfly
Great reminder that we need to reflect a little more deeply about the consequences of our financial decisions.
Most people with financial stress don’t understand that, more often than not, spending is the problem, not income.
Some people who sucessfully identify spending as the problem don’t understand the difference between a Maserati and a gym membership; they are blindly frugal. But things that add value to our lives and relationships are worth the money – they are investments that pay a different kind of dividend. The trick is in clarifying the difference between the two and not convincing ourselves that the Maserati (or big fancy house, or new iPhone every year) is actually going to make one’s life better. It’s easy to justify unnecessary expenses, even large ones, as “treats” we are entitled to.
Do you have a rule of thumb that you use to check your spending and avoid the YOLO/FOMO temptations?
Absolutely agree! You know, I’m not sure that I have a rule of thumb to check my spending with. I avoid the mall and with online shopping, I tend to add things to the cart and then sit on it for days. Ultimately, when push comes to shove for spending on material “treats”, I typically decide against spending the money.
Social spending is a little harder. I tend to track my spending as opposed to budgeting, and if I notice that I have spent too much on eating out one month (given that 99% of the time, this only ever occurs for me and Mr. Sparks in a setting with friends), then the next month I will pull back a little.
I guess the rule of thumb is repeatedly asking myself what you identified, “Does this truly add value to my life/the lives of my loved ones?” and giving myself time to mull it over. Monthly drop-in dance pass? 100% worth the money. Another mint-condition consignment store cashmere sweater? I could make the argument that it’s useful for our Canadian winters…but also have enough of them XD
How about for you? Do you have a rule of thumb that you use to avoid the temptations?
I asked because I don’t feel like I have a good-enough spending rule of thumb 🙂 But I think your focus on prevention is wise: avoiding the mall, enforcing a waiting period to avoid impulse purchases, and holding yourself accountable by reviewing your spending (much more sustainable than budgeting, IMO) are all actionable and effective means of ensuring our spending is more intentional.
I try to think about what the evidence says actually adds to human happiness: relationships, health and fitness, flow experiences (serious hobbies), and acts of kindness . . . If the primary purpose of our spending is not to support one of those things, chances are it is money better saved.
I have almost never had a budget but I tend to dislike clutter so that helps immensely. Then I made my husband and kids deal with their own clutter and that has stopped them from mindlessly buying as well.
I think we are just a truly lazy family. Hee hee.
And I bought my husbands new BMW with all cash. That’s when he was allowed to get one.
The vast majority of docs with money problems have a spending problem NOT an income problem.
Haha, how did you made your and children deal with their own clutter? I’m all ears! And as far as I can see, this is “laziness” in the best possible way.
Agreed with the spending problem as opposed to income problem. There are some cases, I hear, where overhead costs combined with type of practice that really eat into earnings – but that seems to be exception rather than the rule.
We had a budget early on when there was little wiggle room. We still do, but it is more about the big items (housing, taxes, trips, charity, saving) – our basic living expenses are small in comparison and fixed. Not having a tight budget now or sweating small purchases is one of my favorite things about having built a solid financial base.
Sitting on bigger purchases (could be a savory clutch for a resident or a fancy bike for an attending) and reflecting on them before purchasing is a very good strategy. The larger the purchase, the longer the thought period. Not only does it cut down on the impulse buying and avoid buyers remorse, but it also allows you to savor it more. I remember as a kid (pre-Amazon), we would look at a catalog, dream, and talk with each other about a purchase – and then if we ordered something, we’d anticipate it for weeks before it actually got delivered. There was a degree of pleasure from the whole process.
-LD
I could never get the budget thing right >.< That's awesome that it worked well for you and your family, and that you continue to use a modified version these days! Looking forward to the day when Mr. Sparks and I also have a solid financial base 🙂 The pleasure of anticipation for a purchase is not something I had thought about before. I've felt it when it comes to trips and trip planning - the joy of finding cool places to explore, of learning when the line ups for more popular sites are shorter, local tips and secrets, gathering a picture board to daydream over. Even the sometimes-long-and-minimally-comfortable flight towards the destination. But I have not actually thought about the same thing for object purchases. Another safeguard to put against the hedonic treadmill!
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