Both "YOLO" (you-only-live-once) and "FOMO" (fear-of-missing-out) place more attention on living in the moment instead of planning for the future. This trend plays out on social media, but spills over into all areas of life, making it harder to picture your future selves. When you are 25, it is very hard to see yourself as gray-haired, retired and living in a condo in Florida. This future feels even more distant to those in the YOLO and FOMO mindset.
What young generations do not realize is that their youth is their most valuable attribute for retirement planning. Alongside living for the moment and smelling the roses, I encourage millennials to be pragmatic in finances and start getting their financial house in order. While living in the moment, have a parallel track of moving forward financially.
It helps to picture your future self - not just how you may look physically, but what you do with your time, where you live, how you vacation and your income. This can help crystalize your retirement vision and give you motivation to start planning today.
So, what can a 20 or 30-something do now to plan for tomorrow? Here are three simple steps to take so that a FOMO and YOLO mentality does not jeopardize retirement.
First, pay your future first. Fund a retirement account, take advantage of any employer match and increase savings whenever possible. How much you put away now greatly impacts your lifestyle and flexibility in retirement. A telling study from Voya Financial found that more than half (55%) of millennials report that the best financial advice they got is the importance of starting to save for retirement early -- even if saving only a small amount.
Second, don't spend money you do not have. YOLO and FOMO mindsets can easily lead to debt. Think carefully before you book that excursion to Belize or buy that sporty new car. Track your cash flow (money in and money out every month) and discipline yourself to spend no more than 90 cents out of every dollar you make. Get used to living on less than you make.
Third, build up 3-6 months of cash reserves for emergencies. No one likes thinking about illness, disability or job loss, but having a cushion set aside can sustain you through difficult times. Also look at workplace benefits such as disability, accident, life insurance or critical illness insurance. This can be an easy and economical way to protect yourself in case of unexpected challenges.
In our culture, the pendulum has swung towards a live-for-today focus, which social media only further reinforces. When you see those YOLO and FOMO posts in your news feed, take them with a grain of salt. Step back to appreciate that life is a balancing act and retirement savings needs a seat at the team next to YOLO and FOMO.
Voya Retirement Coach Jacob Gold is a third generation financial advisor with ING Financial Partners, a broker-dealer of Voya FinancialTM. He is a published author of "Financial Intelligence; Getting Back to Basics after an Economic Meltdown", which was published in August 2009. Gold is a CERTIFIED FINANCIAL PLANNER™ practitioner and Series 7, 24 and 66 securities registered.
Securities and Investment advisory services offered through ING Financial Partners, Member SIPC.