Financial Benefits and Drawbacks of a YOLO/Carpe Diem Mentality
Spending style — like most personality traits — exists on a spectrum. On one end you have YOLO/Carpe Diem/Overspending and on the other end you have Frugal MacDoogals/Misers/Financially Anxious.
Where people lie on the spectrum can change over time. Perhaps in your teens you were more on the YOLO side, but as you grew older, you tended more towards the frugal side. Likewise, perhaps you were miserly at the beginning of your career when income was tight and unpredictable, but as you start to earn more you learned to relax and enjoy your money a bit more once there was more room in the budget.
Wherever you are on the spectrum, when you are in a relationship, it is important to understand where your partner is as well.
In Couples Financial Therapy, it is often the case that the people in relationships are on opposite sides of the mid-point of this spectrum. The Spenders tend to end up in long-term relationships with the Savers.
And perhaps there is some cosmic wisdom in this pairing — because the Spenders need the Savers (to keep them from losing all their money) AND the Savers need the Spenders (to keep them from over-prioritizing money).
This blog is one of a two-part series looking at the benefits and drawbacks of both of these mentalities.
Financial Benefits of the Carpe Diem/YOLO Mentality
Enjoying Life: Embracing a Carpe Diem mentality can lead to more experiences and enjoyment in life. This could mean spending money on things like travel, dining out, or other activities that create memories and enrich your life.
Avoiding Regrets: By seizing the day and taking risks, you may prevent future regrets about missed opportunities. This can translate to investing in experiences or opportunities that may pay off financially or simply provide personal fulfillment. Indeed, when we look at the regrets of the dying, none of the most common ones discuss wishing they had saved more money, and that might point to some of the wisdom of the genuine YOLO mentality:
“I wish I'd had the courage to live a life true to myself, not the life others expected of me.”
“I wish I hadn't worked so hard.”
“I wish I'd had the courage to express my feelings.”
“I wish I had stayed in touch with my friends.”
“I wish I had let myself be happier” (Warren, 2012)
Motivation for Financial Goals: A Carpe Diem mentality can inspire proactive financial planning. The desire to live life to the fullest today may push individuals to save, invest, or pursue financial goals that provide the freedom to seize opportunities without the worry of financial constraints. Most YOLO folks don’t want financial instability…. quite the contrary! They want curate that financial stability in order to live more fully.
Financial Drawbacks of the Carpe Diem/YOLO Mentality
Impulsive Spending: One downside of a Carpe Diem mindset is the potential for impulsive spending. Making spur-of-the-moment decisions without considering long-term financial consequences can lead to debt or financial instability. And be VERY aware — there are entire companies studying exactly how they can make you buy more. They do NOT have your interests for a virtuous life in mind whatsoever. Take these quotations from a recent study on Impulse Buying & Confidence
~“Moreover, businesses should make genuine attempts to improve their social comparisons by encouraging influencers to promote their goods, which implies that when fans see them using something, they will buy it without hesitation.”
~“Negative affect also influences impulse buying positively. This finding provides managers with deeper insights into customers. Specifically, when customers feel depressed, anxious, or nervous, they are more likely to buy impulsively.”
~The article then goes on to state that this will allow managers “to plan effective marketing strategies to increase future impulse buying and profits.” (Tran, 2022)
~You are working against a machine designed to trick you into spending more than you would otherwise want to.
Lack of Financial Security: Prioritizing living in the moment may result in neglecting savings or retirement planning. Focusing too much on immediate gratification without considering future financial needs could leave individuals financially vulnerable in the long run.
Risk-taking Behavior: Seeking constant excitement and new experiences may lead to risky financial behavior, such as speculative investments or gambling. While taking calculated risks can be beneficial, unchecked risk-taking can jeopardize financial stability.
As with any virtue, “Living In the Moment” can quickly turn to vice if taken to an extreme. Overall, while a Carpe Diem mentality can bring joy and spontaneity to life, it's essential to strike a balance between embracing the present and securing one's financial future.
While getting finances in order for the YOLO spectrum person might feel constraining, with proper implementation, it can be very liberating.
You get to learn how to have fun, while doing so safely.
If you (or someone you know) needs help with this, give me a call. Financial Therapy can be wonderful for helping discuss these issues. If I am not a good fit, I will help them find someone who is.
Email: DrZepeda@FinancialTherapyTexas.com
Phone: 713-291-9553
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(with an in-person option in Houston, TX)
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Florida - 7901 4th St N, Suite 300, St. Petersburg, FL 33702