I’m about to do something that’s nearly unheard of in the personal finance community: defend and make a case for more YOLO spending by introducing my Yolo Spending Savings Model (YSSM), which suggests that individuals should prioritize spending on experiences and enjoyment in their younger years and defer saving retirement until a bit later in life than commonly suggested.
Saving For A Future That May Never Come
One of the reasons for my shift favoring more YOLO spending is that as I get older, I can more clearly see the finish line of life approaching increasingly faster with each passing year. I don’t fret about dying, but I am aware of my mortality and mindful that once time is lost, it can never be reclaimed.
It reminds me of a Reddit post I saw some months back in the LeanFIRE community where a woman shared that her husband, who had spent his entire life saving, tragically died in a car accident before ever having a chance to enjoy any of his money.
Since she is anonymous, I feel comfortable sharing her full story below:
“My husband (33) was very obsessed with FIRE. He had an entire plan for us to retire early by our early 40s. He saved every penny. We both worked excruciating hours; our dream was to spend many years traveling once we retired.
One morning last year, we had breakfast, he kissed me goodbye and said he’d see me for dinner. He died in an accident later that morning. He never made it home for dinner.
He had been saving like crazy his whole life. He worked brutal hours for this FIRE dream. Luckily, in the year or so before the accident, I’d finally gotten him to spend some money. We went to the Alps, we went to the beach, we had nice dinners, we got a new camper. I’m so glad we did those things. I’m so glad he got to enjoy some of the money he saved. It breaks my heart that he is not able to enjoy the fruits of all his incredibly hard work. Thinking about it makes me feel physically ill.
Remember to live fully, even while saving for the future. The future is not guaranteed at all, even though we might somehow convince ourselves that it is when we are in our 20s and 30s.”
The YOLO Spending Savings Model
This woman speaks from the wisdom she’s gained from placing saving for an uncertain future above enjoying life to the fullest—to only realize how finite life actually is. Stories like these make me question of whether there is a better way than what’s traditionally been pescribed of diligently saving for retirement—hoping to enjoy our money later in life?
It’s a radically different and possibly scary way of thinking, but I believe we should flip the traditional retirement savings model on its head by adopting what I’m coining as the YOLO Spending Savings Model (YSSM), which suggests that individuals should prioritize spending on experiences in their younger years and defer saving for retirement until later in life—perhaps as late as their 30s or even 40s.
Here is a rundown of why YOLO spending at younger ages is optimal over saving for retirement:
Unpromised future: We cannot predict what the future holds. Life is happening today.
Steep future earnings: For those who anticipate higher future earnings, it’s optimal to delay saving until later when those future higher incomes can better accommodate saving.
Inflation & Low Real Interest Rates: The current environment of low real interest rates and inflation is punitive for savers who would be better served by YOLO spending to enjoy their money today versus saving for future growth that may never come.
Avoids Liquidity Constraints: Investing too much early on may put a squeeze on your daily finances. Saving less keeps more of your money free to enjoy today.
Higher present utility of spending: YOLO spending, especially while young, positions us to enjoy more of our money before age-related issues set in that could limit our ability to get the most from our money in the future.
Traditionally, we’ve been taught to start saving as early as possible by enrolling in employer-sponsored retirement accounts, which usually match our contributions to a certain limit. Saving earlier indeed leads to more wealth and, presumably, a better retirement, but this advice often ignores the trade-offs involved.
By prioritizing saving for the future, we may find ourselves missing out on key life experiences—like travel, hobbies, personal development, or building meaningful relationships—that are most accessible in our youth. These years are typically filled with more energy, freedom, and fewer responsibilities, yet we’re asked to put them on hold in exchange for a potentially more comfortable future.
The problem with deferring gratification for too long is that the future, which we plan for, is uncertain and may not look as we expect. While we delay, life moves on, and we might look back and realize we’ve spent our most vibrant years waiting for tomorrow – if tomorrow even comes at all.
This isn’t to say that saving for the future isn’t important—it’s about finding a balance between securing our future and embracing the opportunities we have today.
Balancing YOLO Spending With Long-Term Financial Goals
So if the YSSM suggests we should forgo saving for more YOLO spending today, how will we ever reach our financial goals? The important thing to remember here is that life is both long and short, depending on perspective.
On one hand, life is too short to spend it saving everything we earn for the far-off day in the future when we can finally enjoy the fruits of our labor. On the other hand, life is long enough for us to enjoy many years of YOLO spending while still having enough time to shift to saving and a focus on the future.
I’ve already decided that early retirement isn’t worth it for me and that I will work for as many years as possible. This means that I will have plenty of earnings years to hunker down. And since I plan to work until 80 and beyond, I won’t need to pinch pennies as I would if I planned to retire at closer to 60.
Either way we slice it, 10–20 years is enough time for most of us to build substantial wealth. Therefore, we can comfortably start the aggressive march toward financial independence after 30 (or in my case, around 40) and still get there all the same.
Spending For Today, Done Right
Before some of you run out to rejoice in your newfound freedom for YOLO spending, I want to point out that there is a right and wrong way to go about it. There’s a reason most Americans are broke, and that’s because they’ve essentially been YOLO spending all wrong for far too long.
Let me be clear: YOLO spending and being broke/irresponsible with money are two very different things. Because of this, there are some ground rules to the YSSM that must be followed to ensure we get it right:
Be Debt-Free: YOLO spending while in debt makes little sense. Doing so means you’re essentially squandering money that technically isn’t yours in the first place as your creditors lay claim to those dollars until you’ve made them whole. Before YOLO spending, take the time to establish for yourself a strong financial position of power that includes being debt-free. From there, you can YOLO spend, splurge a little, and spend as guilt-free as your heart desires.
Have An Emergency Fund: Another requirement of the YSSM is to always have a 3-6 month emergency fund. The last thing any of us want to do is put ourselves or our families in harm’s way because we decided to go out and blow all of our money. Instead, the idea is to strategically YOLO spend money a little bit of our surplus for maximum life enjoyment—while also being assured that we have a nice during those inevitable moments where life happens.
Actually Start Saving At Some Point: The final rule of the YSSM is to have a plan to actually start saving sometime in the future. This one may be easier said than done for some folks, but it’s imperative that we not lose sight of the fact that the future is still coming, and we must prepare for it. A general rule of thumb is to start investing sometime before age 45 with exact timing and agressiveness being dependent on when you want to retire.
To YOLO Spend Is To Live Today
Money is important, but what truly matters in life is the time we have to do the things we love, the people we do them with, the places we visit, our health, and the experiences that make life interesting.
I used to be in the camp that said we should save aggressively for retirement, but I don’t think that is the best way to live today. Life is happening right now, at this very moment. And by YOLO spending, we give ourselves the best chances of enjoying the precious moments we have in the world—while we truly have them.
The past is already gone. Tomorrow isn’t promised. So all we can really do is live and spend in the moment—albeit wisely.