On the first day of class in high school, my 9th grade English teacher placed an interesting combination of items on a table at the front of the classroom:
- A bowl filled with aquarium pebbles,
- A few ping pong balls, and
- An empty glass vase.
She went on to explain that the pebbles and ping pong balls each represented something different. The pebbles represented the things that we wanted to do with our time, like hanging out with friends. On the other hand, the ping pong balls were obligations that we needed to learn to prioritize, such as homework and spending time with family.
Our time is finite, so the glass vase was all the time we had during the school week. We could spend all of our time doing fun aquarium pebble things, or boring (but necessary) ping-pong ball things, or some combination of both.
She took the pebbles and poured them all into the vase. When she tried to pour the ping-pong balls in, they did not fit. There was not enough time to complete our primary obligations when we focused on the fun things first.
Then, she removed all the vase’s contents and separated them. She repeated the demonstration, but this time she poured the ping-pong balls in first. The pebbles then easily flowed around and past the ping-pong balls, and everything fit in the vase perfectly.
She went on to explain that we only have time to do everything we want and everything that need to do when we focus on our obligations first. When our homework was completed, we could fill in the rest of our time with typical teenager things. The significance was not lost on me, and it has stuck with me ever since.
Now all my high school classmates and I are young adults in our mid-twenties. I think by now most of us have figured out how to prioritize our time.
But time is not the only thing that requires conscious prioritization – we also need to prioritize how we spend our money.
“Life is short, so eat your dessert first”
While scrolling through my social media feeds, I usually don’t have to go far before I come across pictures of friends posed in front of famous landmarks. Or an excited post about their recent new car purchase following their new job. Or a beautiful wedding at a venue that everyone raves about being THE place to get married.
It is all very impressive, and that’s point. They want to show how exciting their lives are. They are experiencing their youth “while they can,” and putting off the nose-to-the-grindstone work until later.
Why? Well, that’s just what everyone does. When you’re young and healthy, you enjoy life by experiencing new places, meeting new people, and spending without regard to your future. The boring stuff like saving for retirement can wait until you’re a “real” adult.
I think of this as the “Life is short, so eat your dessert first” mindset. When you think short term like this, you want to maximize your enjoyment NOW. I get that. Who doesn’t want to have kickass stories about exploring the Sahara?
Due to compound interest, money now is worth WAYYY more in the future, so the more you can save now, the richer future-you will be. At any time, spending most of your money comes with a high opportunity cost. You want to minimize your opportunity costs.
The Trail to FI Way: Eat your vegetables first
It’s common to view adulthood as the time for work, and nothing more. When you’re a “real” adult, you won’t have time to travel the world, so you might as well do it before you career gets going, while you can. Soon you will have kids and it doesn’t make sense to cart them to soccer practice in a sports car, so you might as well buy that Ford Mustang now, while you can.
The irony is that by spending all their money now, my fellow classmates are actually causing the things about normal adulthood that we all dread. They won’t be able to travel the world for a year because they will be working. They will be working because they don’t have enough money saved up to retire until they are 65, or older. They don’t have enough money saved up because they spent all of it while they were young. They chose to eat their dessert first. But it doesn’t have to be that way.
Adulthood does NOT have to be spent working. You are NOT obligated to stay chained to your cubicle desk for the next 40 years. The exciting part of your life is NOT limited to your twenties.
But they do have one thing right: life is short. Save and invest now so that you can maximize your enjoyment over your entire life, not just the early part. Eat your vegetables first.
By taking care of the necessities first, like funding your retirement, you will have so much more time to enjoy life. You can shave 30 years off of your career. Think of all the traveling you could do then!
Time is on your side! The earlier you can start investing, the better off you will be in the future. If at age 25 you start investing $10,000 per year, you will have nearly $2.3 million at age 65. If you wait to start investing until age 35 AND double your annual contribution to $20,000 per year, you are still short by over $100,000 at age 65.
It’s easy to see that the earlier you start saving, the earlier you will hit your retirement goal. When you start investing early, your money has more time to work for you through compound interest. In the scenario above, you actually save $200,000. And let’s face it – wouldn’t you have invested that extra money anyway? You would end up even further ahead, and with barely any work required. All you have to do is make saving a priority.
Finding a balance
It’s not that you should avoid enjoying life while you are young – you should still save room for dessert. By all means, go to Tanzania! Explore the Outback, peruse through the Louvre, and watch the sunrise at Machu Pichu. Move to the mountains or the beach, buy your dream house, and build the life you desire.
Just don’t do all that at the cost of sidelining your savings. Yes, life is short, so why waste it? Prioritize your vegetables now (with the occasional dessert) so that you can enjoy dessert even more frequently in the future. Trust me. Future-you will thank you.