Figuring Out Finances at 25

A 25-year-old male who works in digital media writes to Fusion and asks the following question: “How do you balance between savings and quality of life/personal development?” This person has started to develop some anxiety about money and stopped taking tennis lessons, buying coffee, and paying for a gym membership. He has “half a month’s salary” in savings.

Felix Salmon’s response is fair, if not surprising: having money anxiety is a sign of maturity (welcome to adulthood!), and half a month’s salary in savings is not enough. Also, you can do a lot to calm your anxieties by doing the simple thing of not spending more than you earn:

Living within your means is a good habit to get into, no matter what your income is. You might expect a substantial inheritance at some unknown point in the future, but it’s never a good idea to essentially borrow against a future bequest of unknowable size and timing.

To put it another way, it’s only by balancing the amount you spend against the amount you earn that you learn the value of money—and if you don’t learn the value of money, you’ll never have much of it. Your parents didn’t accumulate their current wealth by starting with the tennis lessons and then wondering how they might pay for them. The success came first; spending it came later.

Salmon ends with a note to stop equating what he spends on on stuff as indicators of personal development and to consider living with roommates.

The only thing I’d like to add is that when I was a 25, I was still learning a lot about who I was and what kind of career I wanted and what kind of life I wanted to live. I was worried about money all the time, and phone calls from my parents did not help to calm my anxieties. I had almost nothing in savings because most of my money was diverted to student loans or was sent across the country to my folks. I felt like I was just getting by. But! I was living within my means, with roommates who were also 25 and figuring out their careers and what kind of lives they wanted to live. And we all made mistakes and experienced personal hardships—unemployment, loss, relationship crises—and those experiences made us grow and figure things out.

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