Why think about life in your 30’s when you’re not even 30? The Financial Sequel

“You’re still young! You should leave the worrying till when you’re older! Live life, travel, party, do something fun!” One of the most cringeworthy pieces of ~~stupidity~~ “advice” I hear parroted around by many young people (20-35 years old). Is it any surprise that you have to wonder out loud whether your employer will pay the month’s salary before Christmas, so that you can shop for the holidays, while “when will I get paid” is something I’ve never had to think about?

This is a part of a series that I’m writing on why I like thinking long-term at a young age, when most people my age don’t. In my previous and first post in the series, I talked about the serialized process of finding a relationship to get into and starting a family.

To preface, I already have plenty of hobbies and things I consider “fun” that I’m doing in my life. The emphasis on “traveling” among people my age is particularly irksome: I like traveling when there’s good company but I don’t like traveling alone or with “friends” I barely know. I have racked up enough airmiles from moving countries. And I see no reason to become a sheep and follow what everyone else is doing, just because they’re doing it. I will travel to places I’d like to go to, but generally my mind just doesn’t crave visiting specific places very often.

Stability and certainty

I hate worrying and having a cloud over my head that keeps me awake at night. There are things beyond anyone’s control that people have to worry about, but money is not one of those things. Here are some problems people my age worry about:

Debt, usually in the form of student loans
When their employer will pay for that month, when it’s barely the middle of the month (or pay cycle)
How they can’t/won’t pay for something until they’ve received that month’s paycheck (related to above point)
Having to consciously be frugal for the weeks/months after spending a decent but not excessive amount of money (say $1,000) or taking a break between jobs without pay
Eating out at a decent (not posh!) place because they’ve gone out a lot that week
Having to be a docile “yes man” (or yes woman) who discards any form of self-respect and goes all-out in doing their employer’s unreasonable bidding (e.g. working excessive hours and/or doing stunts like a circus monkey) because they’re worried about having no job and income
Having to buy something used (that may or may not be nasty) because they can’t afford new

Most, if not all, of these problems are completely avoidable if one actually was thinking about their future, even as short-term as 1 year ahead in terms of savings. Yes, 1 year is short-term for me; I find it troubling a lot of people’s idea of “long-term” is “the next few months to a year” and anything beyond that is just in the land of “crazy thoughts”.

If only that vacation to a faraway place, to get those Instagrammable narcissistic stories and selfies, wasn’t essential.
If only the idea of “a great time” wasn’t tied to “spending a hundred bucks in a single night” or “getting so drunk that you forget what you did or how much you spent”.
If only that job was more “fun” and “fulfilling” that one didn’t have to ragequit after a year before having a new job lined up.

Cry me a river.

Having a consistently pleasant life without worrying about factors within my control is something I’ve enjoyed having. I never want to let go of that, which is what keeps me thinking 5, 10, 20 years ahead.

The earlier, the better

Compounding interest and doubling money

Did you know that money doubles every 17.5 years, assuming an interest rate of 4%? That’s right, every $1 you save today as a 25-year-old will become $2 just after you turn 40. Although the results are not immediately visible, thinking about life after 30, before you’re 30, will give you a massive head-start in leading a more comfortable life when you actually get to that point. The way annual compounding works is – the earlier, the better.

Refuse to be nickel and dimed

When I express that I’m not going to order another drink or that I don’t pay for subscription services (I’ve never had Netflix or Spotify), people my age look at me like I’m a crazy cheapskate. “Why not? It’s Germany, another beer is ONLY $4. And you’re working, not a student!”

Short-sighted is what people are. They’re only looking at things from a narrow point-of-view, such as “today”. “Come on, lunch is only $10″ say your coworkers. But if you were pressured into “only $10” twice a week, that’s over $1,000 over the course of a year. Multiply by the number of years where you caved in to such guilt-trips.

I once knew someone who asked me why I have never bought any music from iTunes. “They’re only 99 cents (a song)”. I asked him how many songs he’s bought through iTunes, he answered something like 1,200. Well, 1,200 songs multiplied by 99 cents isn’t 99 cents anymore, is it?

The renting money pit and snowball effect

There’s a 2-part reason on how renting causes many people stagnate in terms of financials. Most of the time, renting/leasing is a money pit – meaning you’re throwing money down a hole where you’ll never see it again. There are very few reasons for renting/leasing something:

You don’t see yourself using the item often or for very long (such as renting a gas-guzzling box truck for moving)
You are uncertain about the frequency or duration of an item (such as renting a place to stay in a foreign country)
You can’t afford the down-payment or full payment of something (such as buying a house)
You perpetually want to be using a new-ish item, usually because to show off (such as a new phone) and/or you don’t want to bear repair costs (such as an unreliable luxury car)

The problem is many young people LOVE renting, leasing and everything with low upfront costs (partly thanks to lack of critical thinking and gobbling up everything corporate marketing machines push to them). They:

Rent their apartments and entertainment (Netflix and Spotify). Great when they try to justify renting with “it’s cheaper than buying” (same kind of bullshit is propagated on the Internet) – Do you really think landlords are renting out property for fun? How do you think they turn a profit?
Put arbitrary expiry dates on items like their phones and laptops (“I must have the latest iPhone with the highest quality camera so I can take more narcissistic selfies to show everyone on Instagram what a great life I’m having!”)
Buy low-quality garbage (such as “fast fashion”) that breaks so quickly and often, they might as well rent their clothes (or you know, do proper research, pay 5X the price for a legitimately high-quality thing that lasts 10X as long)
Bonus: Lots of people I’ve met while living in Berlin (locals and foreigners) also enjoy literally burning their money away with smoking. Only 7 EUR a pack, only 2 packs a week, only 750 EUR a year! The number of smokers in Germany is an order of magnitude higher than anything I’ve seen in America or Malaysia.

I also assume they put zero thought into long-term ownership of everything since these people have to ask me “why are you thinking about buying property? You’re not even 30!” and similar short-sighted questions.

Understandably not everybody, especially young people, can afford to make large purchases (like a house) right off the bat. But the longer one throws their money into a pit, the more difficult it becomes to save enough to outright buy something to escape the potentially endless cycle.

Likewise, any money that’s put to a productive use (saving, building equity) will snowball into an even larger amount thanks to compounding explained above. So the sooner you escape from the cycle, the better and hence the importance of thinking long term.

Independence and other nice things

With all that said, I’m not a hardcore money hoarder who hates frivolous spending in all forms. I look at spending on a case-by-case basis:

I would gladly spend 80 bucks in an afternoon without a second thought to hang out with a genuinely good friend who enjoys the company just as much. I would pay for his lunch just for the heck of it, with zero expectation for him to return the favor in any shape or form.
I would consciously feel bad and that I’ve wasted money if I spent even $5 on my own coffee while meeting a crappy friend who couldn’t even pretend he was involved in the conversation and chooses to spend most of the 2 hours texting, Snapchatting, even making a 15-minute phone call (!) during the coffee session that he arranged. This happened 3 times in a row before I decided to stop hanging out with him.

Thinking far ahead allows me to treat myself to nice things, like my fancy wardrobe and high-resolution PC monitors, while gaining independence from situations such as:

Not having to live with an authoritative, manipulative, and physically-and-mentally abusive parent who takes a crap on his own kids in front of everybody he knows (“Yeah he’s useless and has no discipline and won’t make it in life” – said countless times in the 2+ decades I’ve been alive) while praising everyone else’s kids (“Le Conman’s son makes $100,000 working in New York! See, other people are so capable!”)
Paying a landlord rent that goes to paying his property mortgage while I am left with ownership of nothing at the end of the day
Being a truly free human being, and not living under the thumb of the modern form of indentured slavery that is employment

Helping someone else out

Finally, I’d like to give other people (i.e. my kids when I do have them) a shot at some semblance of a normal life that I never have and never will be able to enjoy.

While I’ve had an upbringing which is, in some ways, above average compared to others around me, there are many untold downsides and outright crappy parts of it (and these will be told over time) that no modern day 20-something from a normal middle-class family has ever had to deal with when they were little.

A good family background and upbringing does wonders to raising kids who are successful and generally have a better life, because your offspring doesn’t have to depend on sheer luck and grinding if raised in a broken, suboptimal environment. Bill Gates and Taylor Swift are prime examples of this, and there are studies that prove it as well.

This is in contrast to having a father who despises you and tells all his friends that “you’re useless and will never make it in life”, what in the world will even make those people, in key roles in large companies, even want to hire you? Good luck with that, buddy.