“YOLO” … “We might not get tomorrow” … “Forget about tomorrow because tonight we’re drinking from the bottle.”

These beautiful lyrics from the modern day Shakespeares called Drake, Pitbull and Calvin Harris reflect how a lot of people treat their finances when they are young.

“Hmmm, I could save this $100, or I could shout my friends JAGER BOMBS! BOOM!”

“This $1,700 could help me make a deposit on a house someday… Nah. IPHONE 6s+! It’s slightly bigger than the previous one and you can use your thumb to unlock it!”

Now I’m not here to rag on Jager bombs and iphones, which are two of the greatest inventions known to man. I’m merely illustrating how we rationalise bad financial decisions when we are young.

The reason most young people don’t save is not because they don’t make enough money or because they’re stupid. It’s because they don’t see the big picture benefit that comes with saving money when they are young.

Trust me – I’ve been there. Time and time again. Using my pay cheque as a pawn to compete with the latest and greatest. It’s the “want now, worry later” mentality. And only now at the ripe old age of 25 have I shifted my focus. With a different set of priorities comes a big nasty wake up call for my bank account. Spending money on that dress is great and all and that instant hit is like you’re floating on cloud 9. But trust me, it never lasts. Much like that big bag of ‘stuff’ I took to the charity shops last week.

So I’ve kicked 2019 off with a bang and a right royal boot up the bum when it comes to my finances. And along the way as I set myself a budget for the year and distinguish between my ‘wants’ and ‘needs’ – I have ignited a few lightbulb moments.

Saving when you’re young greatly increases your financial freedom when you’re older.

One day you’ll be 30. I KNOW. It sounds crazy but bear with me. You may want to own a house, you may want to get married. You may even want to have kids! You might not want those things right now, but it’s important to think about the future version of you and what he/she may want.

These things all cost a lot. They’re big ticket items in the game of life. It’s likely you won’t magically be able to whip the $20,000 needed for a wedding, or the $40,000 needed for a downpayment on a house, out of thin air.

So why not start saving for these things now? Saving big numbers seems impossible, but over a period of many years it is much more doable. Many of us millennials underestimate what they can do over long periods of time.

Unlock the power of the interest!

When you’re ready to make some serious savings, open an account that generates compound interest if you don’t withdraw money from it. Once you’ve invested that money for a period of time you gain interest. And once you have invested money for another period of time you gain interest on your interest. Over long periods of time this really adds up.

If you save $5,000 a year and get 3 percent interest, after 10 years you would have gained over $9,000 in interest. After 20 years, you would have made $38,000 in interest, and after 30 years a whopping $95,000! This is why it is so key to start saving early. It gives your money plenty of time to compound and for doing no work!! Free money – HELL YES.

Protect yourself in case of job loss, health scare, or blown up car.

In your twenties it’s hard to see yourself getting sick or disabled or without a job. In the perfect world we’d all be rich. But it’s the ‘what ifs’ that need to keep you grounded for if that day comes.

What if the future involves the human race struggling to find good employment or worse – fighting for survival! Granted this is worst case scenario, but it should illustrate that we don’t know what the future will bring, so therefore we should protect our downside.

Saving early increases your ability to afford the bigger things in life that you may want when you are older. When you’ve really earned it and can afford it with YOUR money.

Don’t get me wrong, it is all about balance. You can go to that concert or treat yourself to a new dress, but as long as it is within your budget and done by abiding by those financial promises you made to yourself.

Imagine if all the retail EFTPOS machines around New Zealand had a large computer screen, and that whenever you presented your card, it showed messages like “THIS PURCHASE WILL TAKE YOU WAY OVER BUDGET FOR THE WEEK AND RUN YOU LATE FOR YOUR POWER BILL. ARE YOU SURE YOU WISH TO PROCEED?”.

The very thought of making a purchase, with such a message waiting, would be a strong deterrent for most of us, and have the opposite effect of those ‘PayWave’ cards that make unconscious spending all too easy.

From my own years of financial stress, I learned a valuable lesson that money mastery is almost entirely about awareness and the ‘big picture’. When we get that monthly credit card bill from hell, it certainly doesn’t make for pleasant reading. We see all those little dollars and cents purchases and get confronted with our flawed thinking: “one little spend won’t matter”, “those little treats won’t add up to much”, and so on. But together, they DO matter.

We are the most vulnerable to overspending when we’re not aware of the consequences and EFTPOS and credit cards make this all too easy.

What seems to help me (and it’s still early stages) is maintaining a diary of spending. The date, time, amount, the shop, the description AND the reason. Even with that tiny $2 chocolate bar, I make an entry. At the end of each day, and each week I add up my spending in each category and compare it to the past week.

What I have come to find is the mere act of being extremely aware of purchases is having the great effect of cutting my spending. Don’t underestimate the power of attention. It may be uncomfortable, but it changes everything.

With money, attention teaches us how often we spend on something purely for anxiety relief, for a mood lift, for a moment’s distraction, only to find later on that the spending has created more distress than it soothed.

This idea is nothing new. It derives from the ancient concept of ‘mindfulness’, as practised by Buddhist monks thousands of years ago.

In today’s hectic life with ever-increasing distractions and ever-shortening attention spans, mindfulness has never been so important to our health, wellbeing, success and overall quality of life.

So forget the “YOLO!” mindset, and start making smarter decisions with your money today. Future you will thank you for it.

Trust me, it’s all stuff I’m still learning and coming to grips with at an age where everything is new and shiny and ‘must have’. But acknowledging this now at 25 is a good place to start for when I’m 55.