Some people close to me are so caught up in the good-life that they’re actually stuffing up their future.

Living beyond their means, they’re spending every cent they earn, and more. They feel abundant now, but they’ve got no hope of reaching their medium or long-term goals.

There’s some obvious appeal to this YOLO (you only live once) approach, but the future comes faster than we think.

And there will have to be a day of reckoning.

What’s ‘living beyond our means’?

When we look at the basic wealth creation equation, it’s: Income - Expenses = Surplus or Deficit.

Those spending more than they earn, fueled by credit or eroding capital, are living ‘beyond their means’.

Some might not even see that they’re doing it. Rather than debt, they’re spending their income and cash savings. The trouble is, they don’t have anything going towards their future.

Why do we splash cash like YOLO?  

It’s so easy to justify this behaviour. YOLO is one excuse. Another is what I call the ‘L'Oreal because you're worth it effect’. ‘I work hard, I deserve this.’

One of my members believed this, and was recently quite pissed off with the restraints of his budget. ‘I work my arse off, I’m earning to care for my partner and our child. Why can’t I have these things?’

Having a YOLO approach to spending can of course be FUN. Like The Dorito effect, we can get swept up in the ‘now’ and consider tomorrow, the next day, the next year as ‘future me’s problem’.

Our culture of instant gratification is a massive element. Ready access to credit cards makes it easy, and initiatives like Afterpay don’t help.

In many jobs we know what our future earnings will be, and we’re pre-spending. ‘I’ll put this impromptu holiday to Byron Bay on my credit card now, and pay it off with my pay rise.’

It’s so easy to do when we’re not connected to our medium or long-term goals. If we’ve got no foreseeable purpose for that money, of course we’re going to use it now.

Are we afraid of dying?

For most of us, this YOLO approach is a bloody disaster waiting to happen. Unless we have a good reason to believe we’re actually going to die soon, and can say ‘Fuck it let's enjoy things now’, it’s a really shit excuse for our behaviour.

Yes, the future is uncertain and sometimes it can be scary. It can be easier to live, and spend, ‘in the now’, than worry about the unknown. But we need balance. The last thing we want to do is not enjoy life, and our money is there to help us do that. But we also could live beyond 100 — and without being prepared to sustain that, our lifestyle will come crashing down.

What does YOLO spending do to us?

Our approach to spending is the difference between getting ahead, breaking even, and going backwards. And YOLO of course means going backwards.

When the time comes that we have to wind down our capital — either through unexpected circumstances like a job loss, the need to change industries, sickness, or retirement — YOLO means we’ll be reliant on others to survive.

I believe that jolting shock of our lifestyle disappearing is really when the world starts to end. Seriously! Think of how sad and lonely it will be.

If we want to remove our dependence on work and others, then we need to make changes now.

How do we balance YOLO with the future?

If you could live at 70 to 80 percent of your best life today, and you could do it forever, would you take that option?

To sustain a comfortable life, you need to be saving 30 percent of your income. And if you want to kick some serious arse, it’s actually more like 50 percent.

Millennials need to be saving and investing almost constantly. There will be points where we might take time off (to study, raise a family, etc.) but generally speaking now’s the time to be building wealth.

Remember those goals?

We have to come back to our medium and long-term goals. If we want to start a business, travel the world, or do charity work for a year — we need to stop pissing money away on things that aren’t adding value to our lives.

If we don’t know what our goals are yet, it doesn’t mean that we can’t be ready for when we do know. In 20 years’ time I want the funds to have choice.

Starting small is fine

Right now you might be thinking ‘Holy crap Bec this sounds like a budget, this sucks, I’ll be on home-brand food forever, and frozen lasagnes and tuna’. For the record, I hate tuna and would never advise that. 

But if we can see the connections between the decisions we make daily, and how they flow to the top, we won’t feel like we’re being whipped.

Let’s look at $200 a week of your personal spending, which is $10,000 a year. If that $200 a week is spent on crap, that’s $10,000 of holidays that you’re missing out on.

If you compound that $200 a week over 10 years, it could be a $159,000 home deposit.

It’s about starting with whatever you’ve got, and making a conscious effort to be brave, to face the future, and create opportunities. If it’s a small change, or a massive system or lifestyle change, it’s better to know now.

The why’s are still relevant

Remember the ‘5 whys’ we talked about in Are you really making the right progress? These help us here too.

Ask, why am I spending like YOLO?

You might say, ‘I work really hard and I feel like spending on my wellbeing.’

Then ask, why is that? Etc. Etc.

When you keep digging, you might identify some elements that you really value, and others that are just garbage. Maybe spending more on personal training, and less on a bottle of wine every night, could let you live your best life now, but still have money for later.

Can we live a YOLO life with balance?

As millennials, we have earning capacity and time on our side to help us kick some major goals. The sooner we sort out the shit spending from what matters, the better chance we have of reaching them.

The crux is balancing our blatant optimism of today with our needs for the future.

As for me, I’m saving 50 percent of my income, but I’m not hard done by. I’m living a fabulous life, and I’m excited by my medium-term goals. The future will be here faster than we expect, and we can all be ready.