YOLO and FOMO will hurt your Finances
Are you living life to the fullest? Or you are just living for the next adventure because of YOLO and FOMO?
You Only Live Once (YOLO) and the Fear of Missing Out (FOMO) seems to be the motto of many young people nowadays that they have become a phenomenon. We invest on so much on experiences, big or small, good or sometimes bad.
But even the good things can become bad for us, if done excessively. That is because everything that we do, all the activities that we want to experience, entail money. Even a seemingly innocuous road trip need G-A-S and spells M-O-N-E-Y. And of course, meals and sometimes new outfits to match.
Hear Me Out
Before you protest, I am not gonna tell you to stop doing that. I am 42, therefore not a millennial. But I love making memories and creating family traditions with my husband children so experiences are a must for us. Before the term YOLO was invented, I was already doing that.
What I want to underscore and the key thing here is — keeping the right BALANCE. As with my earlier blog post, our finances should be guided by this equation:
Earnings – Savings/Investments = Expenses
So it’s okay to spend some of your income for pleasures and experiences. But let’s do that after we have set aside money for our different kinds of savings like emergency funds, help funds, mutual funds, and other kinds of investments like houses, businesses, and the like.
Saving Up for Travel and Your wants
One of the experiences that we all long for is traveling. We feed our wanderlust, thanks to social media that show us colourful photos and exciting videos of places to go and things to do. And all those enticing seat sales offered by airlines for local and international flights–awesome!
Everything is screaming “SALE”, which translates to “Buy Me Now!” It also does not help that your FB friends seem to be living off their suitcases, hopping from one place to another. You also want what they have experienced, too, so that you will not miss out.
Our Family’s Story
Now, I will tell you a true story.
We have long wanted to bring our first daughter Shawna to Hong Kong so that she can also experience the magic of Hong Kong Disneyland. But our adorable second daughter came along so we had to suspend the trip, as we now wanted to go together as a family.
Plus, it will also save us from going back there again. We can use future travels funds in going to another place. We do this because we try to make things as fair as possible between the two kids.
We kept saving here and there in the interim and finally, our dream trip will soon come true next month. It has been five years since Dindin started saving up for her Hong Kong trip and she is just so happy that it is becoming reality. And our second daughter Shane is sharing in the joy, too, because also joined us in saving for this trip.
The Life Lessons Taught
We wanted to impart to our daughters that big expenses like travel should not be spent upon one time-big time. We are also sending a message that we should be saving up in order to achieve our goals, such as traveling or buying something expensive. We are showing them also that there are different ways of saving and earning to afford what they want. We don’t take out a travel loan or tell them that we are going to withdraw their future educational funds just for travel.
Additionally, saving for travel should not be deducted from the savings you decided to set aside for the future. Savings for the future should be mostly for your retirement, your children’s college fund (even if you are still single), or anything that you would want to save on.
Real savings make your money grow. Travel is an expense. So don’t make the mistake of taking out your travel expenses from your savings.
Avoiding the Trap
The best thing to do to avoid the YOLO travel trap is to write down your priorities and goals. Seeing them on paper makes your goals more tangible and achievable. It will also help you to check your list from time to time. It will remind you of where you plan to go and if you are on the right track.
I, too, get tempted. After I have plotted our HK trip, I am already thinking of going to Ho Chi Minh in Vietnam. The wanderlust is really strong in this one. I was told that it was easy to get there, visas are not needed, and food + accommodations are very cheap.
Naturally, I was enticed that I told my husband that I am already scouting for cheap fares. I reasoned that since we are homeschooling in Bacolod, part of our world learning curriculum is to bring our kids to international adventures.
But sadly, we do not have a bottomless budget for travel. After our HK trip, we will have to start saving again for our next trip. My husband had to remind me about it and I listened. Sometimes, it is best to be in good company to help you put your priorities in order. So maybe, you can have a buddy or partner who has the same financial goals as you do, so that you can help each other achieve your dreams.
A lot of people (myself included) set aside part of their income as savings that will mostly go to retirement. It has become a trend. Instead of letting your savings stagnate by keeping it under your bed or in a savings account in the bank, you put your future funds in investment vehicles like mutual funds. If your risk tolerance is higher, you may decide to invest in the stock market. This part needs some monitoring though to make sure your stocks are not losing money.
The best time to invest is now. Actually, it should have been yesterday. But since you haven’t started yet, then start investing now. Seek out investment vehicles. The easiest for our family is mutual funds as I don’t have to manage them, so that’s where most of our money is.
We are preparing for our children’s future and our retirement, which is why we are channelling a big part of our combined incomes there. We want to be able to save more, of course. But since money doesn’t come in regularly for me (refer to Freelancer Problems), we just try to top up on our investments as much as we can, whenever we can.
YOLO Can be Used for Good
If you embrace the YOLO principle, it should encourage you to seize the day or go for your passions or pursue your dreams. That should be the most important motivation there. If you have dreams of traveling as frequently as you want, you should make sure that you can afford it.
At one extreme, we shout YOLO, which means that we don’t care about managing our finances well. These are the kinds of people that, if faced with lack of funds, they just either give up on their dreams or take out a loan. That should not be the case.
If you have a lot of dreams, such as traveling the world, the YOLO principle should drive you to pursue them, which includes reaching the capacity to afford them without compromising your future funds.
I have a young friend who travels a lot, but thankfully she has also started saving for her future through mutual funds. My brother has already reached a capacity of being able to support our retired parents but he still gets to enjoy a life of pleasure while saving for his retirement. Sure, there are sacrifices but these are all done for the sake of a BALANCED LIFE.
Many young people nowadays think that they are living the high life because they don’t want to miss anything and eventually say, “I wish I did that.” But it could also apply to saving for your future. If you spend all your energies and money produced in your youth chasing after each and every experience that presents itself, you’ll regret it. You will eventually say, “I wish I have saved some when I was younger.”
Living our lives to the YOLO financial extreme is not living life at its fullest. Instead, we are losing it on the other side.
Living life at its fullest doesn’t equate to extravagance. No matter how much you have inherited or earned, you can still end up using every single centavo if you do not act with prudence. Keeping a balance is key. You may have some money at your disposal and you have used every bit in rewarding yourself with travels. You’re young and single, anyway.
But there are unforeseen things that may require you to spend on. You don’t really have to do what everyone else is telling you or go where they invite you to go. FOMO starts with “F” and F means Fear. This newfound fear may be shaken off–it’s not real. You just got to stick to your plan.
Real Friends Will Help You
You might be thinking that you will lose friends if you will not go with them in their jaunts and journeys. If that happens, then probably you should reconsider these friendships. Real friends would not bring you down to your detriment. Real friends protect each other.
And honestly, based on my observations with other people, these kinds of “friends” who only hang out with you because you can afford their “trips” are not worth it. They will not bother to look at you when you can no longer afford the YOLO lifestyle.
Yes, You Only Live Once. YOLO it is So try to make it as pleasant as possible for yourself on both sides of the fence.