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Are you YOLO’ing your finances?

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Before we had the Kardashians to keep up with (yes, there was life before the Kardashians), we kept up with the Joneses. The Joneses were more figurative than literal and didn’t have their own TV show; they represented the people next door who owned more (and better) gadgets than you.

The Joneses and the Kardashians – along with social media, celebrity culture and reality TV – are responsible for creating the #YOLO attitude: You Only Live Once. It’s a lifestyle choice that millennials often buy into, and is epitomised by the @richkidsofinstagram. (Haven’t seen them before? Go on, have a look. We’ll wait.)

YOLO culture says, don’t worry about later on, just live for the present. It’s all about pursuing great life experiences, and you don’t want to end up with FOMO (Fear Of Missing Out).

Many young Aucklander’s buy into YOLO culture, for example, because they’re locked out of the housing market. Owning property is an impossible dream, so why even bother trying? I know one guy who does actually own, but he doesn’t think he’ll ever be able to pay off the large mortgage, so he spends all his available cash after mortgage payments on frivolous holidays to Vegas and eye-wateringly expensive bottles of wine.

There’s an emphasis on taking on debt to fund your lifestyle, which leads to sometimes unnecessary student loans, maxed out credit cards and high-interest consumer debt.

 

So how do you deal with YOLO and FOMO culture?

1. Envision your YOLO future and pay your future self first
It’s not necessarily having a YOLO approach to life that’s bad, but the lack of acknowledgement that your choices today create the life you live tomorrow. Sure, you do only live once, so you need to make sure that your whole life is great, rather than screwing up your future. Retirement Commissioner Diane Maxwell uses a future-oriented mindset to keep focused on her spending and think about what she’ll want later on in life:

“Sometimes I say to myself, rather than doing something now, I’ll buy that for myself when I’m older,” Diane says. “Rather than having a bottle of wine now, that’s a bottle of wine put aside for when I’m not earning. Rather than having a coffee in a café now, I might say I’ll donate that coffee to myself when I’m 70.”

2. Start seeing debt as a disease
Tackle your debt as soon as you can. No amount is too much! Start with the smallest debt and it will create a snowball effect; you’ll feel proud and achieved for having paid off even a tiny debt and it’ll motivate you to keep going.

3. Say no, not YOLO
Start living within your means and practice saying no to expensive outings, holidays and possessions. Just because someone else can afford it doesn’t mean you should have to keep up. Got a friend who likes to go out for dinner and split the wine bill equally but you only ever drink a glass? Push back. Don’t be afraid to say, “I can’t afford it”. There’s no shame in being financially sensible.

4. Downsize your expectations of greatness
Do you really need the latest and greatest of everything, or can you trim your possessions and spending? If your pay cheque doesn’t allow you to spend freely, figure out what’s really important to you and put your money towards that. For example, say you don’t care about clothes but you love wine and music; stop buying new clothes and start visiting op shops. Or if you don’t care about wine, grab a cleanskin.

5. YOLO within your means
Budgeting is key here. Split out your pay cheque into expenses, KiwiSaver/retirement, building your emergency fund, your ‘saving for X’ fund, and what you have left is your YOLO money. Go wild!

 

This article contains general information and does not take into account your individual requirements. Please seek advice from a professional financial adviser for a free personalised consultation.

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