Young, Smart, and Broke

Young, Smart, and Broke

Young, Smart, and BrokeMillennials are smarter than us.  They are.  There is no question.  So it is unsurprising that a host of millennial financial independence voices have sprung up and gained prominence in our burgeoning community.  The future lies in the hands of the young, and many are learning from the missteps of their progenitors, and forging their own radically modified and shortened path to financial freedom.  Although young, smart, and broke now, the situation will soon remedy itself.  Whether they came upon this pathway independently, or are second generation FI, I think there are a few unmodifiable truths that those of us who took the more traditional route can pass on to them.

Retirement in your twenties or thirties sounds quite luxurious at first pass.  Traveling the world, getting out from under the thumb of the man, and living life by your own internal rhythm sounds glorious.  I tip my hat to you.

I, however, would have been both unsuccessful and miserable if I walked this path.

Here’s why.

Retirement?  What?

Retirement is not a goal.  It’s a goal post.  It’s a street sign on the superhighway of life.  When your end game is to escape something unenjoyable, the journey leads neither to happiness nor fulfillment.  It leads away from sadness.

Coming out of college, retirement was never even on my radar.  I figured I would happily work to an old age.  Those younger years were full of passion and hope because my goal was concrete and palpable.  I wanted to be a doctor.  I wanted to help my fellow man.

This inner drive was going to propel me to success no matter what profession I chose.  The passion and joy are what made life fulfilling.  Although mid-career, my goals have changed, I wouldn’t erase all that hard work for anything.

If your goal is solely financial independence or early retirement, I think you may find your destination quite empty upon arrival.

I would suggest pursuing fulfillment in whatever form that comes to you, and then building both an income and a path to FI around that fulfillment.  If it takes a decade longer, who cares?  You’ll be enjoying yourself.

When your young, smart, and broke, you have all the time in the world.

Front-Load The Sacrifice

In this blog, I have mostly stated the obvious.  I write things that I believe are somewhat self-evident.  Yet, if you are going to take one piece of advice, it should be this: front-load the sacrifice.

Young, Smart, and BrokeThe formula is simple.  Work really hard and save a lot of money between the ages of twenty and thirty.  Then you should invest wisely, and be somewhat frugal.  If you do these things, you will never have to worry about money again  The power of compounding will solve most economic problems.  The earlier you start, the better.

If you waste this first decade dreaming of financial independence but accomplishing little, your road becomes much steeper.

It’s such a big mistake not to bust your butt when you are young, have the energy, and don’t have the responsibilities of children.  I know this is not what many want to hear, but the world sometimes looks different as you get older.  You can’t turn back the clock.

You may be young, smart and broke now.  Don’t end up old, smart, and broke.  Do your due diligence.

Life is Long

If you are lucky, life is long.  You need a large amount of jet fuel to propel you through the decades.  While passive income is great, sixty years of retirement is a touch expensive.  There is no way to know what economic, health, and emotional barriers you will face.  There are so many financial questions that are impossible to answer when you are young:

  • Will you decide you want ten kids?
  • May a health issue get in the way?
  • Will the economy tank to unfathomable lows?
  • May you one day be sad that you didn’t pursue a career or business?

The problem with unknowns is that they are unknowable. Certainly, the reverse argument is also true.  Since you may die tomorrow, why work today?

My answer is simple.  Find life-affirming work if you can.  Then make it profitable.  Cover all bases.

Final Thoughts

Young, smart, and broke is a good place to be.  But it is momentary.  While you will always be smart, youth is fleeting.  Don’t stay broke forever.

In my humble opinion, ditch the idea of retiring early.  Find something you are passionate about and build an income stream and life around it.  Live frugally, invest, and let compounding do all the work.

Front-load the sacrifice.  Really, I mean it!

Don’t let this opportunity pass.

Doc G

A doctor who discovered the FI community but still struggling with RE.

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17 Responses

  1. Cody says:

    Nice post Doc. As a 22 year old on this FI journey I wholeheartedly agree that your life should be built around your passions. My point of contention with this post is the “Front Load the Sacrifice” part.

    I honestly think it is possible to eliminate “grinding” through 10 to 15 years to achieve financial independence and live a life filled with purpose. I think anyone with a frugal mindset, indefatigable motivation, and undying passion can build a life in their 20s filled with purpose.

    After starting my journey over 3 years ago, I could not imagine working in an unfulfilling job until I was 32 or 37 (the 10 to 15 year range). The stories I hear in this community are so inspiring so I know that my mission is possible.

    Maybe it’s our generational differences that cause this polarizing ideology, but I urge any young 20-something’s reading this to optimize their lives NOW. Nobody deserves to waste their life hours in an unfulfilling nine-to-five!

    • Doc G says:

      Hey Cody, I agree with you totally. “Font Loading the Sacrifice” doesn’t mean spending your twenties miserable in a job you don’t like. I went to medical school and residency. These years were full of enjoyment, but they also were tough. I sacrificed much to take this path. That sacrifice was only possible at that age. I couldn’t work 36 hour shifts now or every weekend. But that was the point. In your twenties is when you have the energy and motivation to be that engaged. I think you miss an huge opportunity if you don’t grind it out at that age. The growth you make durning those years is jet fuel for the rest of your journey. But “sacrifice” and “grind” aren’t necessarily always negative. It’s just making the decision to work harder instead of doing something else for a time.

      • Cody says:

        Ah, okay. When you put it that way I can definitely stand behind your article. I just see that often times people pursuing FI are told to “sacrifice” and “grind” meaning “suck it up” in a job that they don’t really love.

        I’m in total agreeance that this age is the best for future growth. For entrepreneurship and investing, I have time on my side. I have no wife, children, or serious financial obligations. I have so much flexibility to pursue my passions with little to lose.

        Always enjoy reading your posts. Keep sparking the discussion!

  2. Young, smart, & broke. Of those, I was once young…..

  3. Sounds about right. Young is a great time to build a foundation and fairly easy to do without being miserable.

  4. If the fulfillment you choose surrounds a career, then by all means, don’t retire. But for many, including me, being retired for several years now, I love the variety of pursuits that I now engage in. You say, “The problem with unknowns is that they are unknowable”. One unknown for you is retirement.

  5. Xrayvsn says:

    You always need something to retire to, not from. I too feel that if all you are doing is escaping your job then you will find new unhappiness in retirement when you have all the time in the world but no purpose. I’m happy I found blogging as a new passion that I can see keeps me motivated and engaged once I finally pull the trigger from my w2 income.

  6. Gasem says:

    Pretty much I don’t believe in the “retire at 30, 60 year retirement” unless you have a gazillion dollars. I think it’s a load. I recently published an analysis of portfolio failure at 30 years and 50 year horizons using monte carlo for a couple standard lazy portfolios, and a more risky portfolio and a few other comparison portfolios. Sphincter tightening is an understatement.

    https://xrayvsn.com/2018/06/14/guest-post-gasem-a-quantitative-method-to-look-at-retirement-portfolio-risk/

    • Doc G says:

      I read your guest post. I was amazed at the difference between the 60/40 and 90/10 Allocations I’ve time. Not what I thought!

  7. I love this quote. I wish I had said that.

    “When your end game is to escape something unenjoyable, the journey leads neither to happiness nor fulfillment. It leads away from sadness.”

    We now have a lot of doctors who just want out. That is a sad state. I wrote The Doctors Guide to Smart Career Alternatives and Retirement for just that group. I wish that book was not needed.

    Dr. Cory S. Fawcett
    Prescription for Financial Success

  8. Doc G, thanks for the kind comment about my book.

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