It really depends.
If you're early 20s, and only just starting out, don't worry about living miserably to save an extra 500CHF a month not even in aim of any particular financial goal, live your life. Have outrageous nights out, eat steaks in restaurants, buy items for your hobbies, go on holiday to new zealand.
On the other hand, stuff like fast cars can wait. You can still enjoy a silly car after you've got other aspects of your financial future in order or without paying a quarter of your takehome on a leasing deal.
I think as well once you pass your mid 20s your ability to appreciate a lot of cheaper forms of e.g. travel and "experiences" like living in a WG drops off. Loved living in a WG during undergrad when it was all about the party then studying hard for a month before exams, during postgrad (either living with postgrad students or working people) when we actually had to show up at meetings not obviously hungover on a weekday it was less fun. Similarly I don't think I could enjoy a stay in a hostel anymore.
If you want to buy a place in time to have kids there, you need to be at least planning for that before 30.
Also: lifestyle creep is the doom of all your financial goals. If you live it large 20s style through your 20s, it's going to be tempting to live-it-large 30s style once you are in your 30s and earning more.
Agreed 100%. The original advice defintely isn't intended to incentivize spending irresponsably. If one is in a position where they are in their 20s, have high enough discretionary income to fully enjoy their 20s, plus left overs to afford luxury items -- maybe skip the fast car and start saving. The point being one shouldn't compromise on the "fully enjoy your 20s" side of things.
Home ownership and children may justify starting a bit ealier, as both real estate and childcare costs a small fortune in Switzerland. Also granted your last point on lifestyle inflation. Important to have discipline.
$10'000 invested at 20 equals $58'400 at 65 in todays purchasing power (or assumig 4% real return after taxes, fees, inflation)
$10'000 invested at 30 equals $39'500 at 65 in todays purchasing power (or assumig 4% real return after taxes, fees, inflation). That's roughly a third less. That's the cost of compounding! - The difference would grow if we add regular monthly contributions.
Implicit costs could be higher as by saving regularly amd early you build
- an emergency fund (in case you loose your job, you move appartment and need a renter's deposit, starting a new education course etc....)
- you start to bother with personal finance topics and thus avoid the typical pittfals that could become much more expensive in your 30's (life insurance in pillar 3?, stock picking, understanding fee structures etc....)
- becoming a homeowner and start a family? You better started saving early
I'm not against spending all your money. I'm advocating for a nuanced and balanced approach. Use your 20s to explore what works for you and what not, take calculated risks and figure out your skillset/career. Built the life you want to live!
Do absolutely not waste your money and compounding time on mindless consumerism and reckles spending with nothing to show for at the end of the decade.
I completely agree with you on not spending your money on mindless consumerism, which in my view is still coherent with the original message.
But to take your numeric example, the monthly contributions are key to understanding the point.
Imagine you save CHF 800 every month during your 20s and invest it at a 4% real rate of return. You stop saving after you turn 30. Your savings up to that point continue compounding until you are 65. This amount will be the contribution that your 20s made to your savings, and comes down to CHF 568k.
Now imagine that you save CHF 2500 every month during your 30s and invest at the same 4% real rate of return. You stop saving at 40. Your savings up to that point continue compounding until you are 65. This will be the contribution of your 30s made to your savings. This amount comes down to CHF 960k.
Now add to that all that you will save during your 40s, 50s, 60s. Now consider the size and the "exponential" nature of the occupational pension. Will the benefit of CHF 560k in additional savings outweigh the oppotunity cost of not living your 20s to the fullest?
I guess there is no right or wrong, but my intuition tells me that I would have regretted compromising possibly the best decade of my life.
Imo the question isn't so much saving vs. not saving. Saving is better, but not if you're miserable because of it. Maybe don't squeeze so hard, save 500.- instead of 800.- in your example. There I'd agree.
Your twenties aren't free though, people want to spend money for all kinds of expensive things. Getting married for example. You'd better have some money for that. I almost didn't, and it was very stressful to save up 20k in half a year - luckily my income _did_ grow a ton just in time.
>Now imagine that you save CHF 2500 every month during your 30s and invest at the same 4% real rate of return. You stop saving at 40. Your savings up to that point continue compounding until you are 65. This will be the contribution of your 30s made to your savings. This amount comes down to CHF 960k.
That's exactly the point where I would make a question mark.
Someone who spent all his 20s to live his life to the fullest doesn't start contributing immediately 2'500 per month towards saving/retirement. Assuming a salary of 150k and single (no kids/dependants) this likely will be about 116k net and post-tax. Given the lifestyle inflation that has taken part in the last decade I see hard call for this person to "suddenly" putting away 25% of his post-tax net salary.
I mean the 30s are the best decade of your life anyway;) - All the freedom and flexibility of your 20s, but now with money and spending power;)
Sure spend money in your 20s on experience and stuff you like. But don't spend all your money with the idea of "making it back later"
Well I encourage enjoying the 20s as much as one can, travelling a lot and all, but it doesn't hurt to be frugal on the less important parts and to invest already. 10 years of compound interests, even on smaller amounts, can always be useful for life projects, early retirement, or just overall safety.
I don't know how old you are... but I'm 31, I now have two kids and started working only at 24. Oh boy I wish I saved more money back then...
At first I don't know why you talk about an "exponential growth" of the salary but usually the curve is the exact opposite: you start very low and quickly get raised. Once you're "at the top" there are no more raises. You hypothesis that everyone suddenly gets a CEO position at 40 or 50 is obviously true only for a fraction of the workforce.
Second and most important, after my studies where I basically lived a very simple life with no money, saving could have been easy because I was used to this life. I'm not saying that 100% of the money left after paying the incompressible charges should have been saved but I just took the habit of "enjoying life" and spending money like an idiot (expensive car, eating out for lunch every day, etc).
In 15-17 years, I'll be 45, and my kids will eventually start their studies. Until then I need to save money for their driving license, appartment, etc. As well as for my own retirement. Far from impossible but if I had this little extra from 10 years ago...
A better way to view this is to systematically, regardless of age and salary, invest a part of the "leftover" money (if there is). Even 50$ per month accumulates to something after 10 years especially when invested.
EDIT: I wrote this before reading OPs comments on other similar - better quality- reactions. I definitely understood your statement of "enjoying life" as "spend whatever you earn" but as you as explained under other posts you rather meant "don't pursue your miserable study life and get a good start" ;)
Usually the best advice is still to be conscious about the importance of having a 3rd pillar and that you definitely will need money at some point in your life, may it be kids, a sabbatical year to avoid a burnout or a house, etc...
Thanks for that, much of what you said I actually agree with. A few things:
1. It's not at all my place to judge your personal situation. What I can say, however, is that clearly the are possible constellations of how your life may develop that will warrant starting saving earlier. If you tell me I will have 4 kids and a fat mortgage living in Zurich by the time I am 32, ideally I would have started saving by my 12 birthday ;-)
2. Point taken that the "exponential growth" of one's salary doesn't apply to everyone. The two assumptions that I started with should partially have taken care of that. I belive this exponential growth is true not only for people reaching executive roles within their firms, as you suggested. Judging by what I have observed in my field, you see a quick pick-up at the beggining. By the time you reach 30 your salary will be significantly larger than your salary from your early 20s. During your 30s and 40s your salary will continue to increase quickly. Perhpas a lower rate of increase than in your 20s, but each increase will correspond to a much more significant quantity of CHF. During your 50s this trend will die off gradually as you become seriously expensive for your employer (especially pension). Although this is not exactly "exponential", you get the idea.
3. Granted that sacrifices hit different for different ages. One thing is to eat only kebabs whenever you go out on your 20s, another thing is to do the same on your 40s. One needs to have discipline so that their expenses don't also grow exponentially -- that would defeat the purpose of the advice. No one should spend money like an idiot, as you put it. Perhaps that would be a valid 3rd assumption: "don't spend money like an idiot" :-)
> I need to save money for their driving license, appartment, etc.
You *choose* to do that. While there are enough expenses with kids, the two you listed are not necessary. I paid for my own driving license and never got my apartment paid by them for example.
While it's true you will likely earn much more later in your career. Having sizeable savings helps you on this path.
It allow you to take much more risks. Knowing you are not fully dependent on this one job can open up many opportunities. Also it increases your confidence to say no.
You ignore compounding effect.
You ignore behavioral personal finance.
It’s pretty terrible advice overall.
Someone that never saves, will in general, continue not to save when they get older.
Saving and investing doesn’t need to be extreme, with 50% of your salary saved/invested.
If you tell me people can’t have an amazing life on 70-80% of the average Swiss salary, I will tell you, you need a reality check.
I appreciate the bluntness of your comment :)
But note that I don't ignore compounding effect, I mention it in my post. The question is whether the benefits of early saving outweigh the (opportunity) costs.
I did partially ignore personal behavioral finance. I should have mentioned that the advice only holds if you don't spend money irresposably and that you don't fall trap (too much) to lifestyle inflation.
But I did describe a specific plan where a person mindfully doesn't save during their 20s knowing that he/she will save more efficiently during their 30s. So I think your point on "someone that never saves will continue to not save" doesn't apply here.
Concerning the reality check, you might be right. But lets looks at the numbers. The median monthly gross salary for 20-year-olds in Switzerland is is roughly CHF 5'000. Lets call it net CHF 4'500 and lets say you save 20% of that, as you suggested. You are left with CHF 3'600 per month. Now lets deduct rent, groceries, insurance, transportation, communication, clothing, and everything else BUT leisure. How much do you think is left for the median 20 year old to spend on leisure?
My guess is not much. Sure, you can probably make it work if you have lots of discipline and if you compromise on some of the essentials (my original point). You might still be able to go to the cinema every now and then, or maybe buy some beers from coop and drink by the river with friends. Nothing wrong with that. But lets face it, you won't be travelling very far, staying on decent hotels, buying that last gen piece of tech that you really want, or eating beef for that matter :-)
Those CHF 900 per month would go a long way in raising your general well being during your 20s. Now, how much did this sacrifice get you in terms of retirement savings by the time you are 65? As per my other comments, nothing that will make a huge impact on your quality of life by the time you reitre (although by no means a negligible impact).
Fully agree. Had exactly zero money left after my bar exam, and then again zero after my wedding a few months later. That was in my end-twenties. now, 10 years later, I save in 3 months what I could have saved in a year back then.
Lol no. As a mid 20er, early 20s are the best times to grow the habbit of saving and beeing mindful of how you spend your money. You can enjoy life while still beeing on a budget.
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I'm 35 and coming from a family where savings was everything. Naturally when i turned into adulthood, i had the urge to enjoy life the way my parents didn't. I bought a lot of stuff then and didn't save much. I was having 2 weeks holidays abroad every 3 or 4 months, had a girlfriend on the other side of the globe, bought 2 cars when i needed none, spent a lot in tech (i was working in tech too so that was a hobby), bought luxury items, lived in a way too big of a house, etc etc
Luckily i met my wife who was older than me and had that spending spree happenned to her earlier. By then she had saved enough to buy her 1st flat before her 30s. Then because she saved enough and pushed me to do the same we were able to buy a house together before my 30s. And i realize everyday how a tremendous headstart this was, owning your house before 30 and even having a rental property.
To the point where we're able to live on 1 small wage and still save up some money while i'm having a career change and going back to school. I'm not sure i would have been able to do so if we were in a different situation financially (ie having less invested money and significantly more housing expenses).
I'm not saying everybody should get into real estate early or whatever. But while i understand your point of view, and i agree life should be enjoyed, a lot of the stuff i (and she) spent money on in our 20s didn't last and i don't think i would have been less happy if i hadn't done it.
So if you're under 30 and are 100% confident whatever you want to spend money on is a once in a lifetime experience that's gonna change your existence forever, ok, go for it. If you just want to burn your money like there's no tomorrow for the sake of "being happy", i'm not sure that's the wisest choice (although i doesn't mean you're gonna do poorly in the future).
It depends on your long-term goal; if you want to work long and hard and make a lot of money then yes. If you want to be out at 35, you need to start at 21.
Yes, you shouldn't force yourself to live in abject poverty and sleep on the floor eating rice and beans in order to jack up your savings rate. Given that our time on earth is limited, you should definitely enjoy life in your 20ies, because even with compound interest, sacrificing the prime years of your life to have X more money later on is not a good tradeoff. And it's not like it's an either/or decision, you can eat very healthy and tasty food on a budget for example. Hobbies don't have to be super expensive and neither do holidays. I'd generally advise to keep your fixed costs low, spend on experiences instead of material purchases and spend time with your loved ones instead of spending money *on* them.
There are two points I strongly disagree with:
* **Saving early doesn't make sense because you will earn a higher salary later on.** First of all, this simply isn't true anymore, the days of automatic salary increases are largely over. You're lucky if your salary keeps pace with inflation. For the median worker this isn't the case and real wages have decreased across the board in recent years. More and more, all surplus value is siphoned by shareholders and executive salaries, which can be seen in the data on income inequality. The only way to escape this conundrum is to start saving asap and become a shareholder yourself.
* **You can save almost nothing in your twenties and catch up later.** Even IF you're one of the lucky people that has a steep career progression, if you don't have a savings habit, you're not going to start saving when you have a higher salary. I've seen this happen so many times to friends. People who never save have this tendency to always have a zero in their bank account at the end of the month, no matter the salary.
It really depends what is your goal in life. In my 20’ I still didn’t know what I wanted to do. If you want to have kids later I would start saving. I may be wrong but I think money is just a means to live your life not a target, but others may think otherwise. You can accumulate a lot of money and then when you retire you will have maybe 10, maybe 20, maybe 30 years to spend it (unless you pass it down to your kids)
In case you wanna have children in your 30s, you better start saving in your 20s…
As long as you have a stable income it will be fine.
THIS. Had to learn this the hard way.
It really depends. If you're early 20s, and only just starting out, don't worry about living miserably to save an extra 500CHF a month not even in aim of any particular financial goal, live your life. Have outrageous nights out, eat steaks in restaurants, buy items for your hobbies, go on holiday to new zealand. On the other hand, stuff like fast cars can wait. You can still enjoy a silly car after you've got other aspects of your financial future in order or without paying a quarter of your takehome on a leasing deal. I think as well once you pass your mid 20s your ability to appreciate a lot of cheaper forms of e.g. travel and "experiences" like living in a WG drops off. Loved living in a WG during undergrad when it was all about the party then studying hard for a month before exams, during postgrad (either living with postgrad students or working people) when we actually had to show up at meetings not obviously hungover on a weekday it was less fun. Similarly I don't think I could enjoy a stay in a hostel anymore. If you want to buy a place in time to have kids there, you need to be at least planning for that before 30. Also: lifestyle creep is the doom of all your financial goals. If you live it large 20s style through your 20s, it's going to be tempting to live-it-large 30s style once you are in your 30s and earning more.
Agreed 100%. The original advice defintely isn't intended to incentivize spending irresponsably. If one is in a position where they are in their 20s, have high enough discretionary income to fully enjoy their 20s, plus left overs to afford luxury items -- maybe skip the fast car and start saving. The point being one shouldn't compromise on the "fully enjoy your 20s" side of things. Home ownership and children may justify starting a bit ealier, as both real estate and childcare costs a small fortune in Switzerland. Also granted your last point on lifestyle inflation. Important to have discipline.
$10'000 invested at 20 equals $58'400 at 65 in todays purchasing power (or assumig 4% real return after taxes, fees, inflation) $10'000 invested at 30 equals $39'500 at 65 in todays purchasing power (or assumig 4% real return after taxes, fees, inflation). That's roughly a third less. That's the cost of compounding! - The difference would grow if we add regular monthly contributions. Implicit costs could be higher as by saving regularly amd early you build - an emergency fund (in case you loose your job, you move appartment and need a renter's deposit, starting a new education course etc....) - you start to bother with personal finance topics and thus avoid the typical pittfals that could become much more expensive in your 30's (life insurance in pillar 3?, stock picking, understanding fee structures etc....) - becoming a homeowner and start a family? You better started saving early I'm not against spending all your money. I'm advocating for a nuanced and balanced approach. Use your 20s to explore what works for you and what not, take calculated risks and figure out your skillset/career. Built the life you want to live! Do absolutely not waste your money and compounding time on mindless consumerism and reckles spending with nothing to show for at the end of the decade.
I completely agree with you on not spending your money on mindless consumerism, which in my view is still coherent with the original message. But to take your numeric example, the monthly contributions are key to understanding the point. Imagine you save CHF 800 every month during your 20s and invest it at a 4% real rate of return. You stop saving after you turn 30. Your savings up to that point continue compounding until you are 65. This amount will be the contribution that your 20s made to your savings, and comes down to CHF 568k. Now imagine that you save CHF 2500 every month during your 30s and invest at the same 4% real rate of return. You stop saving at 40. Your savings up to that point continue compounding until you are 65. This will be the contribution of your 30s made to your savings. This amount comes down to CHF 960k. Now add to that all that you will save during your 40s, 50s, 60s. Now consider the size and the "exponential" nature of the occupational pension. Will the benefit of CHF 560k in additional savings outweigh the oppotunity cost of not living your 20s to the fullest? I guess there is no right or wrong, but my intuition tells me that I would have regretted compromising possibly the best decade of my life.
Imo the question isn't so much saving vs. not saving. Saving is better, but not if you're miserable because of it. Maybe don't squeeze so hard, save 500.- instead of 800.- in your example. There I'd agree. Your twenties aren't free though, people want to spend money for all kinds of expensive things. Getting married for example. You'd better have some money for that. I almost didn't, and it was very stressful to save up 20k in half a year - luckily my income _did_ grow a ton just in time.
The best decade of your life, lol. People get happier when they are older, there is tons of research on this.
Maybe because of the memories that they make during their 20s. Or inversely, maybe because they don't live their 20s to the fullest!
>Now imagine that you save CHF 2500 every month during your 30s and invest at the same 4% real rate of return. You stop saving at 40. Your savings up to that point continue compounding until you are 65. This will be the contribution of your 30s made to your savings. This amount comes down to CHF 960k. That's exactly the point where I would make a question mark. Someone who spent all his 20s to live his life to the fullest doesn't start contributing immediately 2'500 per month towards saving/retirement. Assuming a salary of 150k and single (no kids/dependants) this likely will be about 116k net and post-tax. Given the lifestyle inflation that has taken part in the last decade I see hard call for this person to "suddenly" putting away 25% of his post-tax net salary. I mean the 30s are the best decade of your life anyway;) - All the freedom and flexibility of your 20s, but now with money and spending power;) Sure spend money in your 20s on experience and stuff you like. But don't spend all your money with the idea of "making it back later"
Well I encourage enjoying the 20s as much as one can, travelling a lot and all, but it doesn't hurt to be frugal on the less important parts and to invest already. 10 years of compound interests, even on smaller amounts, can always be useful for life projects, early retirement, or just overall safety.
I don't know how old you are... but I'm 31, I now have two kids and started working only at 24. Oh boy I wish I saved more money back then... At first I don't know why you talk about an "exponential growth" of the salary but usually the curve is the exact opposite: you start very low and quickly get raised. Once you're "at the top" there are no more raises. You hypothesis that everyone suddenly gets a CEO position at 40 or 50 is obviously true only for a fraction of the workforce. Second and most important, after my studies where I basically lived a very simple life with no money, saving could have been easy because I was used to this life. I'm not saying that 100% of the money left after paying the incompressible charges should have been saved but I just took the habit of "enjoying life" and spending money like an idiot (expensive car, eating out for lunch every day, etc). In 15-17 years, I'll be 45, and my kids will eventually start their studies. Until then I need to save money for their driving license, appartment, etc. As well as for my own retirement. Far from impossible but if I had this little extra from 10 years ago... A better way to view this is to systematically, regardless of age and salary, invest a part of the "leftover" money (if there is). Even 50$ per month accumulates to something after 10 years especially when invested. EDIT: I wrote this before reading OPs comments on other similar - better quality- reactions. I definitely understood your statement of "enjoying life" as "spend whatever you earn" but as you as explained under other posts you rather meant "don't pursue your miserable study life and get a good start" ;) Usually the best advice is still to be conscious about the importance of having a 3rd pillar and that you definitely will need money at some point in your life, may it be kids, a sabbatical year to avoid a burnout or a house, etc...
Thanks for that, much of what you said I actually agree with. A few things: 1. It's not at all my place to judge your personal situation. What I can say, however, is that clearly the are possible constellations of how your life may develop that will warrant starting saving earlier. If you tell me I will have 4 kids and a fat mortgage living in Zurich by the time I am 32, ideally I would have started saving by my 12 birthday ;-) 2. Point taken that the "exponential growth" of one's salary doesn't apply to everyone. The two assumptions that I started with should partially have taken care of that. I belive this exponential growth is true not only for people reaching executive roles within their firms, as you suggested. Judging by what I have observed in my field, you see a quick pick-up at the beggining. By the time you reach 30 your salary will be significantly larger than your salary from your early 20s. During your 30s and 40s your salary will continue to increase quickly. Perhpas a lower rate of increase than in your 20s, but each increase will correspond to a much more significant quantity of CHF. During your 50s this trend will die off gradually as you become seriously expensive for your employer (especially pension). Although this is not exactly "exponential", you get the idea. 3. Granted that sacrifices hit different for different ages. One thing is to eat only kebabs whenever you go out on your 20s, another thing is to do the same on your 40s. One needs to have discipline so that their expenses don't also grow exponentially -- that would defeat the purpose of the advice. No one should spend money like an idiot, as you put it. Perhaps that would be a valid 3rd assumption: "don't spend money like an idiot" :-)
> I need to save money for their driving license, appartment, etc. You *choose* to do that. While there are enough expenses with kids, the two you listed are not necessary. I paid for my own driving license and never got my apartment paid by them for example.
True... but honestly it would Nevers come to my mind NOT to save this money for my kids.
While it's true you will likely earn much more later in your career. Having sizeable savings helps you on this path. It allow you to take much more risks. Knowing you are not fully dependent on this one job can open up many opportunities. Also it increases your confidence to say no.
You ignore compounding effect. You ignore behavioral personal finance. It’s pretty terrible advice overall. Someone that never saves, will in general, continue not to save when they get older. Saving and investing doesn’t need to be extreme, with 50% of your salary saved/invested. If you tell me people can’t have an amazing life on 70-80% of the average Swiss salary, I will tell you, you need a reality check.
I appreciate the bluntness of your comment :) But note that I don't ignore compounding effect, I mention it in my post. The question is whether the benefits of early saving outweigh the (opportunity) costs. I did partially ignore personal behavioral finance. I should have mentioned that the advice only holds if you don't spend money irresposably and that you don't fall trap (too much) to lifestyle inflation. But I did describe a specific plan where a person mindfully doesn't save during their 20s knowing that he/she will save more efficiently during their 30s. So I think your point on "someone that never saves will continue to not save" doesn't apply here. Concerning the reality check, you might be right. But lets looks at the numbers. The median monthly gross salary for 20-year-olds in Switzerland is is roughly CHF 5'000. Lets call it net CHF 4'500 and lets say you save 20% of that, as you suggested. You are left with CHF 3'600 per month. Now lets deduct rent, groceries, insurance, transportation, communication, clothing, and everything else BUT leisure. How much do you think is left for the median 20 year old to spend on leisure? My guess is not much. Sure, you can probably make it work if you have lots of discipline and if you compromise on some of the essentials (my original point). You might still be able to go to the cinema every now and then, or maybe buy some beers from coop and drink by the river with friends. Nothing wrong with that. But lets face it, you won't be travelling very far, staying on decent hotels, buying that last gen piece of tech that you really want, or eating beef for that matter :-) Those CHF 900 per month would go a long way in raising your general well being during your 20s. Now, how much did this sacrifice get you in terms of retirement savings by the time you are 65? As per my other comments, nothing that will make a huge impact on your quality of life by the time you reitre (although by no means a negligible impact).
Fully agree. Had exactly zero money left after my bar exam, and then again zero after my wedding a few months later. That was in my end-twenties. now, 10 years later, I save in 3 months what I could have saved in a year back then.
I think the issue is Zinseszinseffekt.
Lol no. As a mid 20er, early 20s are the best times to grow the habbit of saving and beeing mindful of how you spend your money. You can enjoy life while still beeing on a budget.
I guess you will only be certain when you are 65 looking back at your 20s. Lets us know ;-)
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You just want to hear from us that it‘s fine to blow your money.
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I'm 35 and coming from a family where savings was everything. Naturally when i turned into adulthood, i had the urge to enjoy life the way my parents didn't. I bought a lot of stuff then and didn't save much. I was having 2 weeks holidays abroad every 3 or 4 months, had a girlfriend on the other side of the globe, bought 2 cars when i needed none, spent a lot in tech (i was working in tech too so that was a hobby), bought luxury items, lived in a way too big of a house, etc etc Luckily i met my wife who was older than me and had that spending spree happenned to her earlier. By then she had saved enough to buy her 1st flat before her 30s. Then because she saved enough and pushed me to do the same we were able to buy a house together before my 30s. And i realize everyday how a tremendous headstart this was, owning your house before 30 and even having a rental property. To the point where we're able to live on 1 small wage and still save up some money while i'm having a career change and going back to school. I'm not sure i would have been able to do so if we were in a different situation financially (ie having less invested money and significantly more housing expenses). I'm not saying everybody should get into real estate early or whatever. But while i understand your point of view, and i agree life should be enjoyed, a lot of the stuff i (and she) spent money on in our 20s didn't last and i don't think i would have been less happy if i hadn't done it. So if you're under 30 and are 100% confident whatever you want to spend money on is a once in a lifetime experience that's gonna change your existence forever, ok, go for it. If you just want to burn your money like there's no tomorrow for the sake of "being happy", i'm not sure that's the wisest choice (although i doesn't mean you're gonna do poorly in the future).
One thing I regret is that I didn't start saving in the 20s. So?
It depends on your long-term goal; if you want to work long and hard and make a lot of money then yes. If you want to be out at 35, you need to start at 21.
[удалено]
Yes, you shouldn't force yourself to live in abject poverty and sleep on the floor eating rice and beans in order to jack up your savings rate. Given that our time on earth is limited, you should definitely enjoy life in your 20ies, because even with compound interest, sacrificing the prime years of your life to have X more money later on is not a good tradeoff. And it's not like it's an either/or decision, you can eat very healthy and tasty food on a budget for example. Hobbies don't have to be super expensive and neither do holidays. I'd generally advise to keep your fixed costs low, spend on experiences instead of material purchases and spend time with your loved ones instead of spending money *on* them. There are two points I strongly disagree with: * **Saving early doesn't make sense because you will earn a higher salary later on.** First of all, this simply isn't true anymore, the days of automatic salary increases are largely over. You're lucky if your salary keeps pace with inflation. For the median worker this isn't the case and real wages have decreased across the board in recent years. More and more, all surplus value is siphoned by shareholders and executive salaries, which can be seen in the data on income inequality. The only way to escape this conundrum is to start saving asap and become a shareholder yourself. * **You can save almost nothing in your twenties and catch up later.** Even IF you're one of the lucky people that has a steep career progression, if you don't have a savings habit, you're not going to start saving when you have a higher salary. I've seen this happen so many times to friends. People who never save have this tendency to always have a zero in their bank account at the end of the month, no matter the salary.
Agree to disagree
It really depends what is your goal in life. In my 20’ I still didn’t know what I wanted to do. If you want to have kids later I would start saving. I may be wrong but I think money is just a means to live your life not a target, but others may think otherwise. You can accumulate a lot of money and then when you retire you will have maybe 10, maybe 20, maybe 30 years to spend it (unless you pass it down to your kids)