The pickle that young people find themselves in is that when you’re young is arguably both:
1. The best time to invest (because that way the money has the longest to grow and build on itself)
2. And the best time to spend (you’re healthy and curious, it makes sense that you’d want to travel and see the world, try new things, party until 4AM…all that stuff)
And the real kicker is that it’s also likely the period in your career when you’ll make the least amount of money.
So it’s a great time to save, but you’d also really like to live life to the fullest and you also aren’t really making that much money yet. That’s the pickle.
There are, however, a few ways to navigate this time in your life:
1. Try not to overspend and rack up credit card debt. This will build bad habits and put you behind later in life when you start to think more seriously about retirement.
2. Try to at least take advantage of any RRSP matching programs that your employer offers.
3. Start paying yourself first, even if it’s just a small amount. So take $50 from every paycheck and automatically deposit it into your TFSA. Increase this amount with every raise and promotion. This builds a good habit and you won’t feel any pain.
4. Look into using a Whole Life insurance policy to start funding your major purchases like cars, vacations, annual bills, and even a down payment on your first home. Using this strategy will give you flexibility to spend money now, while also setting you up for long-term success.
Once you have the basics in place, go have some fun. If you saved every dollar you made and never went anywhere or did anything and ate a bunch of Kraft Dinner, you could get really far ahead and retire early, but you’d never be able to get back your youth.
Life is uncertain. It’s good to think about, plan, and save for the future, but it’s also important to enjoy your life today.