We all have that one friend who insists on dragging you to any event regardless of your own plans. Be it a shopping spree, a wedding in the Caribbean, a night out with the girls or expensive holiday. To them, FOMO (Fear of Missing Out) is the greatest tragedy in life and always use YOLO (you only live once) to justify their behavior. This leaves you feeling bad about your decision to say NO.
YOLO (you only live once) is something we can all relate to, after all no one knows tomorrow. After the hit Drake song I find myself always using YOLO a way to justify my daily decisions. However, there is someone or something who can care less about your YOLO justification, your student loan, credit card debt, future responsibilities and investment are some of the issues that you need to think about as you spend your money like there is no tomorrow. Most people live and die poor due to making wrong judgment about life and money, especially in early 20’s when you have money to spend, freedom and no responsibilities. Instead of saving and investing during this peak period, they would rather pay to visit exotic places, buy an expensive fuel guzzler that they don’t need or move to an expensive suburbia apartment, not that there is anything wrong with these things, it’s just a matter of priorities. I won’t lie, I definitely got caught up in this during my early twenties.
The truth is YOLO is keeping you broke. There are many ways in which YOLO is hindering you from gaining financial freedom; here are the 3 reasons why.
Reason #1 Using debt financing to finance lifestyle
There is nothing wrong with living a good life, eating well, and dressing in the latest fashion, living in a good neighborhood and visiting a new place every month. However, there is a thin line between living well and living beyond your means. YOLO might be what allows you to justify financing your lifestyle. I remember barely being able to make my car payment, but I stayed at happy hour with friends. Let’s not mention the many sales I caught while avoiding, I mean deferring my student loans. I had available credit, which in my mind meant I had money… WRONG! If you must take on debt to finance your lifestyle, then you are digging a financial hole that will take you years to
get out of. Any financial expert will tell you that debt should be used only in an emergency. Well it depends on the expert, some will tell you to NEVER take on debt. If you cannot pay your credit cards in full at the end of the month, you should not be adding a balance to them. So what happens if you used a loan or a credit card to buy an expensive phone? You might end up paying far more than that phone is work. You should be striving to live below your means, in the end you will afford all that you desire, if you make a sacrifice now and work towards that dream.
Reason #2 Impulse spending
So you are out window-shopping, you spot an expensive pair of shoes that you really love, deep inside, you know that you can’t afford it but that one friend can’t stop convincing you with words like YOLO, you deserve it, but it’s on sale, live a little, and other reckless statements. In the end you end up dishing out you credit card to pay for something that you don’t need and continue sinking in debt. Impulse spending is a leading cause of debt, and the invention of social media such as facebook, snapchat and Instagram does not make it easier for you to avoid it. You say No to a road trip only to be tagged photos of your friends with hash tags like #enjoyinglife #YOLO, #livinginthemoment, #havingfun,
and you end up feeling you missed out. Discipline is required to fight this habit, budget for everything and have specific financial goals to live by. If you want a road trip, plan and save in advance, or take up an extra job to earn the extra money. Have a play account for when fun activities with friends come up, and don’t ever spend on something you had not planned for, trust me the feeling of paying for something you don’t want in the first place is the most painful thing.
Reason #3 Overindulging
So your friend gets the last two tickets to a concert, and the tickets are on the 4th row. She needs someone to go with her and invites you to come along and pay for the ridiculously expensive ticket. You know that it unreasonable to spend an amount equivalent to your three months rent on a ticket to a music concert, but it is BEYONCE performing so its okay, you convince yourself and pay for the ticket. There is nothing wrong with watching Queen B. I myself am so inspired by her performance and work ethic. In an case, I have to put my finance coach hat on, and ask you “Can you really afford those tickets?” You know the answer to that question, and now it’s more important than ever that you get your finances in FORMATION so the next time Queen B comes to town, you will be ready. Don’t put a financial strain on yourself because you convinced yourself that this is a financial emergency. Beyonce’ is about her money, and you should be too. This is an ideal example of using YOLO to justify unreasonable expenditure that will just make you broke. If you feel it’s not worth it, stop looking for excuses to overspend and regret later. Know your limits, daily, monthly and yearly and stick within the limits.
Truth is, you live everyday and everything you do now will have long term impacts on your finances. Further, your credit cards, mortgage, car, and student loan payments have a monthly life cycle which you need to plan for. You can achieve a balanced life, have fun, save, invest, and live well without getting yourself into debt.
Here is how:
1) Prioritize, know the most important thing in your life and satisfy that need first. As a general guide, spend what is left after saving not the other way round.
2)Have a budget and stick to it, make annual, monthly, weekly and daily budgets.
3) Have a financial goal and strive to achieve it. Whether it is buying a car, a house or paying for your MBA, having a huge financial goal motivates you to push yourself and avoid being victim of YOLO.
4)Watch your company, if you have a friend whose life revolves around shopping, partying and traveling at the expense of their financial future, then you need a new friend. Or try having a conversation with them about your financial commitments and mention that you might not be available for every event that they invite you to unless you have planned for it.
I hope you are ready to overcome YOLO so you can achieve financial freedom, and live the life of your dreams. Money won’t make you happy, but neither will being broke. You deserve and can have it all. So be rich in happiness. Be rich in love, and BE RICH IN MONEY. Until next week Moguls!
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