November 14, 2017
Being young has some massive advantages.
You have plenty of energy for one thing. And you (hopefully) have a massive amount of time left on this earth.
But with these advantages, comes great responsibility.
The choices you make in your late teens and twenties, set you up for the rest of your life. This can be empowering or enslaving. It all depends on your decisions.
Saving at a young age puts the power of compounding on your side much sooner, quietly multiplying your money over time.
I’d say most young people would love to be rich and retire young. Instinctively, we tend to want to enjoy ourselves, instead of going to work.
Why is it that we tend to do nothing about it?
Surely, everyone would choose financial independence, over a never-ending workload.
So why don’t we?
I don’t have all the answers. But here’s my view…
The main reason is, it’s hard. But not hard in the sense that it’s extremely difficult. Hard in the sense that it’s different.
It’s almost the polar opposite of what everyone else is doing.
Since we have a hardwired urge to fit in, we’re often reluctant to break away from the pack and do our own thing.
Change in itself, is sometimes a challenge. For many, it’s difficult to build new habits and learn new things. Especially if our friends are encouraging us to keep doing the same-old things and be like them.
Yes, many people have great internal struggles changing the course of their lives!
It’s just so easy to continue doing what we’ve always done. And since everyone else is in the same boat, it seems normal, even sensible.
Let’s face it. Delayed gratification is not popular. In fact, my view is, it’s more unpopular than ever!
With the speed of technology growing at an exponential rate, we’ve become accustomed to things happening instantly.
24/7 news. Instant mail/messaging. Same-day deliveries. Instant loans. Buy now/pay later. Almost everything we want, instantly, with a tap of our smartphone.
Effectively, we are losing our ability to wait.
If our phone doesn’t load a webpage in 3 seconds flat, we think “what the hell is going on, this is ridiculous”.
As technology becomes faster and faster, this speed becomes normal. After a while, we learn to expect things to happen instantly.
Nowadays, we’re simply not used to waiting anymore.
So it should be obvious, nobody wants to save for financial independence, because hey – that shit is going to take years…and years!
And I’ve got all this juicy income, that I can spend now!
Patience is a very valuable trait. And unfortunately, it seems to be disappearing.
Some things just take time, we shouldn’t forget that!
Building wealth and achieving financial independence takes time, so patience is crucial.
Young people are typically very poor at thinking about the long-term effects of their decisions.
Since I’m only 28, I’m allowed to say this – it’s ok to bag your own generation 😉
The simple ability to wait is an unappreciated skill, that is a massive factor if you want to retire young.
There’s an increasing risk on the horizon, with the rapid advancement of technology, robotics and automation.
It’s happening already, but this change will likely get faster over time.
Technology is enabling more tasks and services to be completed with less and less need for human input.
Our economies are becoming more digitised. And this ends up reducing the need for staff, which dramatically lowers costs for business.
This is a scary thought for young workers today.
Ultimately, the main beneficiaries are business owners and investors.
Hint: become an investor to share in the spoils of the profit-boosting power of technology.
As I noted in an earlier post – every single day money is changing hands from consumers to owners.
Unfortunately, I think wealth inequality will increase due to technology. Business owners who benefit the most will be the ones who embrace new technology, as has always been the case.
Maybe you’re in an industry that isn’t likely to see much change from technology. But most people will be affected by it.
Since the future is unknown, it makes sense to squirrel away lots of cash, while you’ve still got your cushy well-paid job!
Sure, there will be plenty of new jobs and opportunities too. But unless you’re regularly retraining yourself with new skills, it’s likely to be a bumpy career ride, for the next 30 years.
Finally, there is a damn good chance that many of today’s jobs will be done by computers in 10-20 years time. So, think about positioning yourself for a future of accelerating change.
Wouldn’t it be great to retire young so you’re not so reliant on your job?
And instead, benefit from these changes as a long term investor (business owner)!
Yes, Captain Obvious here – to retire young, you must start early!
But more accurately, what I’m suggesting is, retire young before it’s too late.
Here’s what I mean…
The common belief is:
People should spend their 20’s travelling and having fun, with little regard for saving. Spending is to be celebrated and they should enjoy the fruits of their labour – usually with a luxury car and frequent restaurant visits, in between the clubbing and pubbing.
This is fine. I did a few of these things myself. But not all the time.
The catch-cry goes something like this… “you won’t get this chance again, so make the most of it”.
I completely agree. But from an opposing angle.
The way I see it…you only have this massive advantage to save while you’re young. Because after this, life gets in the way.
For most people, they’ve blown their earnings throughout their 20’s, or worse, loaded up with consumer debt.
When their 30’s come, it’s time to settle down and have a family. Also around this time, many would buy their ideal house and have a kid…or two.
With an expensive lifestyle to maintain, and now only one income, there is simply not enough cash to allow any saving, let alone aiming for financial freedom.
The early retirement ship has sailed!
Maybe this course of events sounds fine to you. But personally, I liken it to pouring concrete around our own feet. And after it’s poured, there’s little we can do!
In summary, most folks would say your twenties are for having fun and enjoying yourself. And they’d be right. At least kind of.
You can enjoy yourself and have fun, but just with a little restraint thrown in too!
If you approach your twenties with no regard for the future, you’d better love your job!!
Alternatively, you can retire young by putting in a good 7-10 years of aggressive saving and investing, then declare your freedom!
It can definitely be done, as you’ve seen from the post about our journey. Plenty of people have done it, we simply copied them.
Here’s the point: Get rich first. By being frugal and investing sensibly, you can retire young…before it’s too late!
It’s not hard, it’s just different. And precisely because it’s different, is the reason it works!
Think about it. To achieve better results than the rest of the population, we need to make better choices than they do.
Making smart choices in your twenties, is the difference between lifelong mandatory work, and lifelong freedom. I truly believe that.
So many of our habits and lifestyle choices are built in our twenties, which then rarely change.
If we build a lifestyle that gives us what we need to be happy, while still save a ton of money, then we’re set for life.
Maybe it’s the Scottish in me, that values freedom over everything else. And true to form, I’m an unashamed tight-arse too. (Some people just call it frugal)
To me, there’s simply no comparison…
10 years of working, saving and investing, for a lifetime of freedom. That’s totally worth it in my book!
At that point, your everyday needs are met. You can then work on your passions, start a business, volunteer, travel or just hang out with your family.
Most importantly, you’ve already done the hard work and created your freedom. The next 70 years is up to you!
Or 10 years of fun and excess, to end up stuck with a pile of bills and no options, like the grumbling masses.
Now, I know it’s not as black and white as that. But it’s such a common life pattern that each generation gets stuck in. And it really can be that simple!
As usual, this post is longer than planned!
My main point is, we should be working hard and saving even harder, especially in our 20’s.
Unfortunately, for most people, if they don’t build the right habits and save in their 20’s…they never will.
If we don’t, we run the very real risk of never being able to get ahead. Make no mistake, it does take self-discipline to build financial strength.
Despite some suggesting you’re missing out, the reality is far from it. By making financial freedom your priority, you can retire young and wealthy. And after this, your choices are limitless.
Let me say it another way…
If you choose spending in your 20’s, you’ll join the masses and have limited freedom for the foreseeable future.
If you choose saving in your 20’s, you’ll join the wealthy and have freedom for the rest of your life…