Want To Spend While You’re Young? 3 Reasons It’s Hard To Make That Money Back Later
Written by
Cindy Lamothe
Edited by
Chris Cluff
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
If you’re on TikTok, you’re probably familiar with the popular trend of young people posting their extravagant trips with a catchy line like “I’ll make the money back but I’ll never be 20 scootering around Paris at night again.”
It’s meant as a call to action to the younger generation: Live it up! YOLO!
But one observant and savvy TikToker, “Your Rich BFF,” called the trend out for misleading the youth about the realities of earning back that money in their later years.
“Okay hear me out, yes, I agree you should have fun experiences while you’re young, but it’s not as easy as just making the money back,” she said.
She says this is due to people not understanding the concept of time value of money.
“That flight on vacation at 25 may have only cost you $3,000, but if you needed to make that money back at 35 — 10 years later — you’d actually have to make $7,781.23,” she said. “If you didn’t make that money back until 45, you’d need to make over $20,000 to equal that $3,000 from your earlier years. Money has time value because it has earning potential.”
She noted that if you’re able to invest your money earlier on, you won’t have to work as hard in the future.
“This is all to say, if you can invest while having fun when you’re younger, you’ll have fun today and in the future,” she said.
Other experts agree.
“It is widely believed that the 20s are characterized by vibrancy, goal-getting, youthful exuberance networking, and generally the strength to create multiple and highly profitable sources of income,” said Mark Stewart, certified public accountant for Step By Step Business. “This belief is mostly true because people who start their careers in their early 20s are more advantaged to build wealth over time.”
He says that the same drive that could push people to make money in their 20s can also push them towards overspending due to wanting to enjoy life, peer pressure, and many other vices.
This mindset of forgetting that as time goes by, other factors can prevent them from making money back. For example: added responsibilities, accumulated debt, economic meltdowns, health challenges and generally reduced drive.
Here are some reasons why experts say it’s hard to make that money back later in life.
Expenses Go Up As You Get Older
“In my experience, it can be difficult to make back money you spend in your 20s simply because life gets more expensive the older you get,” said Carter Seuthe, CEO of Credit Summit Debt Consolidation. “For many people, myself included, in your 20s you’re probably living with roommates or your parents, splitting rent or not paying it at all — you have more money to spend.”
However, he says that as you grow up, you might meet a partner, buy a house, and maybe start a family. You might get pets, and want to begin contributing to a retirement account.
“Even though you may be established in a career, I have found that the cost of living increase means you might still never ‘make back’ money you’ve spent irresponsibly in your 20s,” he said. “This is especially the case if that irresponsible spending resulted in debt you’re still catching up on.”
The Time To Save and Invest Is Sooner, Not Later
“Although it may be fun to spend money freely in your 20s, building wealth is a time-consuming process,” said Jake Hill, finance expert and CEO of DebtHammer Consolidation. “Getting an early start on responsible spending, saving, and investing will allow you to enjoy decades of positive financial health.
He said that if you try to make up ground in your 40s, or even your 30s, you’ll be facing some tough numbers to meet your goals.
“This is especially true for long-term financial goals, such as savings for retirement,” he said.
Bad Financial Habits Stick
Mafe Aclado, the general manager of Coupon Snake, notes that individuals in their 20s are better able to achieve financial advancement opportunities, especially in today’s world of technological advancements.
That said, she says that while they might be great at leveraging opportunities, being generally carefree, and greatly influenced by their youth into thinking that they still have time — they tend more than others to make the financial mistake of neglecting to plan their finances at the start of their careers.
“Truth is, bad spending is one of the most difficult financial habits to break,” Aclado said.
She explained that this habit is mostly cultivated during childhood, and sustained when you’re in your 20s and just beginning your financial journey.
“This poor spending habit makes it increasingly harder for you to prioritize your financial goals, such that, even when you are actually making as much as or even more than you did in your 20s, you are unable to channel these funds profitably,” she said.
More From GOBankingRates
