My Opinions On Saving Money in Your 20’s

I was hesitant to write this piece.

In part, because for 98%+ of Americans out there, saving money is a GREAT idea.

Dollar cost averaging into low-cost index funds has historically helped so many families save and plan for reitirement.

This article is not for them.

This article is if you want to be rich.

Rich meaning… $10M+?

It’s a subjective word. But objectively if you have $11.1M in assets today, you’re in the top 1%.

So… ya. You’re rich.

Ok so here are 2 reasons you shouldn’t save money in your 20’s (if you want to be rich)

First – Nobody gets rich from saving

OK entertain this napkin math with me for a second.

Let’s say you’re in the top 10% by earning – $173,000 per year

Call it $114,180 after taxes

And let’s say you have an AGGRESIVELY high savings rate: 50%

So you can invest $57,000/year

Average 8% returns.

30 years of your life passes:

You end up with $6,457,143.03

And that’s not even factoring in inflation in 2052.

So in summary, you basically scratched and clawed for the majority of your earning life, sacrificing amazing meals, vacations and memories, just to end up with a nice retirement. Not an ultra-rich retirement. A modest one.

Before you call me an asshole for calling 6.4M modest, just remember that’s roughly $3M in todays value (if you assume historical inflation numbers).

So… underwhelming.

You will not be rich saving.

Second – You miss out on epic experiences

I alluded to this in the last paragraph, but there are certain things you can do in your 20’s that honestly, you just can’t do when you’re in your 30s/40s.

• Solo backpacking and staying in hostels in Thailand becomes WAY WEIRDER in your 40’s when you have a family

• Skydiving in your late 30’s raises the stakes of injuries

• Ski trips, Dirtbiking trips, White water rafting adventures.

The marginal utiltiy of a dollar declines with age.

Minimize regret and maximize your dollar amount today.