Sometimes there are articles that seem tailor-made to get a reaction from people who write about personal finance.
Like this one, the other day, on the 24hours site: “The budget of Alexandre, a 36-year-old man who refuses to save for retirement”1.
Good. A millennial playing it yolo (you only live once). Nothing new, but it earned a click from me.
The article reveals how Alexandre, a self-employed videographer, lives according to his desires and his moods.
He currently earns a very good income ($8,000 per month after tax), spends more or less half of it, and leaves the other half sleeping in a bank account.
The money that accumulates is used for a short-term project, such as an experience or a trip.
I could go over the details of Alexandre’s expenses here, and say how he could optimize them without reducing his quality of life, but I won’t do that.
Our videographer has something much more urgent to resolve than the price of his groceries (nearly $600 per month for a single person – three of us live on a similar amount).
We change with age
The problem is his philosophy of saying that after the age of 65, he will simply continue to work.
“I like to work, and I have the chance to do a job that is also one of my passions. When I look at actors who are 75 years old… I want to be that person who still has fun and passions. Even though my desire to be a snowbird is real, I can’t see myself just doing nothing, even though I know that can change. »
The mistake here is actually very common: believing that we will be the same person at 75 as we were at 36, but with just a few more wrinkles.
To think that in the four decades between us, our knees won’t start producing flashes of pain. That our back will always be flexible and cooperative. That our energy level will always be just as high.
That things like experiencing depression, being injured in an accident, or being unable to work for a thousand and one reasons will affect others, but not us.
Also, that on a professional level, our interest will not have changed in 40 years. That we will not discover a passion for sailing, massage, yoga, travel, writing, photography, volunteering, the recorder… In short, for plenty of valid ways to occupy our limited time on this planet.
Give yourself the opportunity to refuse
I understand that for many people, “investing for the future” is not exciting. Especially when everything is going well at work and you pay every bill on time without stress.
Another way to look at investing is that it develops our power to say no.
It’s subjective. But I believe that a person who has been working for decades has earned the right to say no. No to an unpleasant schedule. No to boring or repetitive projects. No to working for an unpleasant client. No to the obligation to attend endless meetings, etc.
But the person who lives paycheck to paycheck often doesn’t have the power to say no.
An available contract is poorly paid? Are we offered to work on a flat project? We may feel obligated to say yes, simply so as not to miss out on income.
At 30, it’s normal. But at 75?
Suddenly, our “passion” for our work becomes very relative…
The person who has saved and invested during their career has diversified their sources of income. Over time, his work income will become secondary: his investments can take over if necessary.
Giving up on this diversification means banking on the idea that we will rent out our hours to pay our bills until the day we die.
Maybe it will. But it’s a gamble. We are literally putting our lives on the line by doing it.
Manage your time
One of the greatest generators of happiness is having the ability to manage our time as we see fit, writes financial author Morgan Housel.
“The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. This is the highest dividend money can offer. »
This reminds me of a message I received last year from a specialist doctor with a big lifestyle, very in debt, who had just spent $50,000 on a family trip to Europe. He wrote to me:
“Doctors generally have a vocation, and don’t dream that much about retirement. I have an 80-year-old colleague, very rich, who comes to the office smiling every day, and who is still passionate! […] If I lack funds at 85, I want my children to be able to help me out, and remind me of the great times they had as a family…”
Phew.
Maybe I lack imagination. But a person who earns a good living has a duty to secure their own financial future before they start living like Jeff Bezos.
Putting your financial security in the hands of your children (who themselves will have their own family to support) means ensuring difficult times after a career that could easily have eliminated all money worries for the last decades of his life.
This doctor wrote to me again a few months later. He was working to pay his debts. “I am also looking to better educate my children about finance,” he wrote.
It’s all a long process, and I wished him luck.
To summarize: working by choice at 75: success.
Working out of obligation at 75: failure.
Let’s invest accordingly.
1. Read the 24 Heures article “The budget of Alexandre, a 36-year-old man who refuses to save for retirement”