YOLO is a No No

I have written in the past about the opportunity cost fallacy.  In brief, there is an argument that luxury spending saps wealth by obliterating the compounding effect of the wasted dollar.  While clearly true that you can’t make money off of money already gone, wealth is not only about cash reserves but also experiences, and even ownership.  It is ok to spend.  Money is just an intermediary used to purchase goods and services that you either need or bring you pleasure.  The other side of the coin, however, is just as dangerous.  The You Only Live Once (YOLO) belief system can destroy wealth just as fast as the opportunity cost fallacy can destroy happiness.  Personal finance in the end is about balance.  Extremes tend to bring hardship more than joy.  YOLO is a no no.

You Don’t Only Live Once

Catchy sayings and slogans accompanied by glitzy acronyms are fun.  They have an airy feel that venture to solve life problems with a simple turn of a phrase.  Keep it simple stupid!  Stop wasting your time being so thoughtful and introspective!

YOLO is a no no because you don’t only live once.  I would argue that in the typical eighty some years of existence, people experience many new beginnings.  There are new days, and new decades.  New careers and new relationships.  Change is so constant that we are continuously beginning or ending a new stage in life.

When you make economic decisions based on the idea that once the moment is past it will never come back again, you spend based on fear and short-lived hedonism.  In actuality (especially when young), every new stage in life will feel like a fresh start.  Although wisdom accrues, new beginnings abound.

You know what happens when people spend like you only live once when they are young?  They end up facing the multitude of new life stages poor and unprepared to fully enjoy what life has to offer down the road.  Think of all the joys a new parent or a newly retired person can experience when they have enough economic fuel to propel them in their journey.

You don’t only live once.

Compounding

Admittedly, this is the exact opposite argument I used with the opportunity cost fallacy.  Money compounds.  If you fall into the habit of YOLO as a young person you will have nothing in your bank account.  Empty coffers don’t compound!

But the true benefit of compounding is that if you front load the sacrifice and start at the beginning of your career, wealth accumulates at a much faster rate.  YOLO is a no no at this juncture.  By the time you reach middle age, however, there should be enough saved up to now YOLO more intensively than you ever imagined at a younger age.

Not only your savings but your ability to spend like you only live once will compound with time.

The Fear Factor

Lastly, YOLO is a no no because it is a battle cry that focuses on fear.  It espouses the theory that since you only live once, you better grab those opportunities before they disappear forever.

My advise to you, is to try to do the majority of your spending on joy or necessity, and not on fear.

Of course we have to buy the various types of insurance and spend on safety.  But the rest of your dollars should be used to embrace the good things, not chase the ephemeral.

When you spend on fear, all you get is a little less fear.

Why not spend on joy?

Final Thoughts

YOLO is a no no because you don’t only live once.  You live countless lives and endure countless transitions.  Spending based on a YOLO philosophy, especially when young, erases the magic of compounding and values fear over joy.

So don’t do it.

At least not until your older and have a perpetual money machine that allows spending on whatever you want.