Hi, I'm Kevin. I write a free newsletter about money for 904 other Millennial parents. We talk about how to turn your money into memories.
Comedian Jim Gaffigan once joked, “My wife wants me to live longer. We all want to live longer. But how much longer?”
“Do you ever see old people – like really, really old people – they always have that look on their face like, ‘Ahhhhhhh! I can’t believe I’m still here!’
‘I would have eaten so much more ice cream.…’”
Welcome back to Financially Well, the finance podcast for Millennials.
When did you last use your money to create an experience or memory that made you feel happy, personally content, or proud?
For you, perhaps that purchase was at an ice cream shop. But maybe it was a long-weekend in the mountains with your partner. Or a unique gift for a close friend.
In all of these examples – and countless others – you exchanged your money for an experience. “When you have an experience,” author Bill Perkins writes in his book Die With Zero, “You get that current, in-the-moment enjoyment. But you also form memories that you get to relive later.” And “memories are an investment in our future selves, paying dividends and helping us live richer lives.”
Of course, we’ve heard for years now about how much Millennials prefer experiences to material goods. Yet, that’s typically where the discussion ends. Perkins, though, throws in a time dynamic, best illustrated by a story about his daughters:
“When my daughters were little, we loved watching Pooh’s Heffalump Movie together…. We watched it many times. But then one day, when my younger daughter was 10, I suggested we watch the movie and, to my astonishment, she just wasn’t interested anymore.
If someone had told me that, by this date, my kid would stop wanting to watch the Heffalump movie, I probably would have watched it with her a lot more.”
This idea doesn’t only apply to parents with kids who are growing up way too fast, though. How much less feasible does a month-long stay at budget European hostels seem once you’re in a serious relationship? Or, if you’re honest, how much more tired are you likely to feel after only a few hours of skiing when you’re in your 50s?
Perkins emphasizes throughout his book that, “Our ability to enjoy different kinds of experiences changes throughout our lifetimes…. The number of actual experiences available to you diminishes as you age.”
“In other words, to get the most out of your time and money, timing matters….There is a sweet spot in everyone’s lifetime during which they can most enjoy the fruits of their wealth….So to increase your overall lifetime fulfillment, it’s important to have each experience at the right age. And that’s true no matter what you enjoy or how much money you have.
The problem is that people continue to save well past that optimal point.”
Few people would argue against saving some money for the future, including much later in life. Yet how often do you deprive yourself of various age-specific experiences out of worry for your much (much) older future self? We make this choice even though our future selves may not actually be interested in or healthy enough to truly enjoy those dollars.
When you max out your 401(k) contributions or keep a small inheritance invested in the stock market, you do so with good intentions and impressive discipline. But, as Perkins notes, people who say they’re “saving up for retirement are not actually spending those retirement savings once they reach retirement.” When they reach a certain older age – let’s say, the IRS’s “full retirement age” of 66 – they find that “their wants and needs changed.”
When you don’t effectively exchange your hard-earned money for experiences, you’re not only missing out on positive memories. You’re also essentially working for free and giving up time that you’ll never get back. Bill Perkins offers up the following simplified case study:
Elizabeth, a 45-year-old single woman, earns $60,000 a year at an office job in Austin, Texas. She’s a hard worker, averaging 50 hours a week, so her net income (after taxes) comes out to $19.56 per hour. That’s how much she takes home for every hour she spends at the office.
Based on the investments Elizabeth makes during her working years, her net worth amounts to $770,000 at age 65. She spends $32,000 each year during her retirement, so her savings have the potential to last her 24 years. But she ends up dying at 85, or 20 years after she left the workforce. As a result, she leaves behind $130,000.
If you divide that $130,000 by Elizabeth’s hourly rate ($19.65), you can see that she spent 6,646 hours working for money that she never spent. That’s more than two and a half years of 50-hour work weeks. Or two and a half years of working for free.
Almost all of us can agree that, in theory, money is just a means to an end. But in practice, we often act differently. We don’t act as if we ultimately seek to use our money to enjoy our lives. Instead, we focus on trying to maximize the money that we have. We succumb to fear and uncertainty, even when we have enough resources to both survive and thrive.
In Die With Zero, Perkins uses this analogy: we build a well and get a pump. As the pump puts water into our cup, our cup quickly fills. Soon the water starts overflowing. We take a sip, but we mostly keep pumping. We pump for almost our entire lives. Then, not until the end of our life, do we notice that we’re still thirsty.
The society in which we live has clearly delineated between financial right and wrong: spending is a vice and saving is a virtue. This reality makes the arguments in Die With Zero incredibly difficult to apply to our own lives.
So in the next Financially Well episode, I’ll address the objections that people most often raise about more aggressively exchanging money for experiences. And I’ll share a few tactics that might help you feel more empowered in the present and less fearful about the future.
For now, I’ll leave you with this thought from Die With Zero:
“Why wait until your health and life energy have begun to wane? Rather than just focusing on saving up for a big pot full of money that you will most likely not be able to spend in your lifetime, live your life to the fullest now.”
Including buying that extra ice cream.
Thanks for listening to the Financially Well podcast.
[Editor’s note: this article reflects the transcript (which I’ve edited for clarity) of a recent Financially Well podcast episode.]
Hi, I’m Kevin. I’m a financial advisor in Washington, DC. I’m also the founder of Illumint, an independent financial planning company in the District that specializes in financial planning for Millennials like you. I empower our generation with the confidence to invest an inheritance, financial gift, or extra savings. If you’re new to Financially Well, welcome – you now have access to the leading finance podcast for Millennials. I encourage you to read, watch, or listen to the ideas I’ve shared about making your money work for you. And then when you’re ready, please send me your thoughts & questions!
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