If you haven't read this story at Elite Daily about not saving money when you're in your 20s, I highly recommend you do so. You may hate it, you may love it, you may fist-bump the air in agreement as though the author, Lauren Martin, was sitting right next to you, or you may laugh so hard that you wet yourself.
Whatever you do, don't dismiss her point of view as immature fiddle-faddle without giving it some thought.
First, a recap of what the story is about: Martin argues that saving money in your 20s is a fool’s errand. The experiential tradeoffs are too big and the financial benefits are too small, she argues, estimating one would accrue just a “few thousand” dollars from a decade of penny-pinching.
She also argues that the idea people must start saving early to build a safety net or to reap the benefits of compounding interest and investment gains is an outdated social more from past generations whose people became full-fledged adults earlier in life. Today’s wild-and-crazy 20-somethings aren't into all that:
“We’re taking our time growing up, refusing to be shackled by mortgages and diapers. We’re not trying to live with safety nets; we’re trying to live on the edge.”
Some reactions to Martin’s piece were directed at her at-times cringeworthy writing. (“When you live your life by numbers, you strip yourself of poetry,” she also writes.) But that’s a little like calling someone fat because you don’t like his politics.
More substantive criticisms were aimed at the core: Gawker's Hamilton Nolan said it was a "Dumbass Article With Bad Money Advice," in a headline, Huffington Post writer Shane Ferro called Martin “Ridiculous” in the same way and Rusty Foster’s “Today In Tabs” newsletter dubbed her piece “the worst advice ever.”
I, too, think it’s unwise to live paycheck-to-paycheck in the interest of shopping sprees and excursions with your pals. That’s partly because of my background: I’ve been on my own financially since I was a teenager, and before that didn’t have much money anyway. I don’t have fond memories of being young and broke.
I also understand the “right” things you’re supposed to do with money, and I’m not a big risk-taker. So, it makes sense that I would not spend my last dime on a "fun" experience when I was in my 20s, because throughout the experience I’d be so frightened by my $0 balance I wouldn’t be able to enjoy it.
I don't know how other writers' personal circumstances filter into their points of view. However, I wasn’t sure Martin’s argument was without merit, based on a bunch of journalists saying it was dumb.
More than anything, her viral war-cry seemed to stem from frustration. It read like a GFY to all the scoldy gurus she had listened to for awhile, whose emphasis of frugality over fun had driven her to the brink. She was urging young people who have money-anxiety to let go of it and live a little.
I wondered whether her idea of saving nothing til 30 was truly crazy, or whether all the negative reactions, including mine, were just a bunch of jerking knees. After all, as my colleague Felix Salmon and others have written thoughtfully, conventional wisdom about personal finance—especially for young people—is often misguided and wrong.
So, I asked some people who are wiser than me for their points of view. To my surprise, none of them said Martin was off her rocker.
In fact, Barry Nalebuff, an economist (professor at the Yale School of Management) and successful businessman (co-founder of Honest Tea) who has studied and written about lifecycle investing, said her argument is spot-on.
“The lifecycle theory of consumption says that you should try to smooth out your consumption over your lifetime,” he wrote by email. “Since you are relatively poor when young, you should be spending more than you earn. This is the advice I give to my 20-something daughters, too.”
Marc Andreessen, the tech entrepreneur and venture capitalist, says he doesn't endorse Martin's advice but understands where she's coming from.
"I think it would depend, in part, on choice of college degree and career field," he told me. "For high earning fields, [her strategy] probably makes sense."
Maybe Martin’s story would have had more resonance if Toni Morrison had written it, and maybe it isn’t brilliant to burn all your cash on Jimmy Choos and nightclub entry fees. But for some people, like Martin, those belongings and experiences are worth more than the comfort of a savings account, and they’re OK with bearing bigger financial burdens later in life.
And of course what has been left largely unmentioned are the grays between the black and white. You don’t have to shop at Goodwill and eat ramen through your 20s, nor do you have to set all of your paychecks on fire. Maybe you can splurge once in awhile on things that matter, set aside the things that don’t, and store what’s left for a rainy day.
I oversee Fusion's money section and have spent most of my time as a journalist writing about banks and finance. I live in Brooklyn with my partner Geoffrey & our two dogs, Captain & Tallulah. Favs: leopard print, Diet Coke, gummy candy, Ireland.