Chapter Nine
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Live for the now.... or later?.
One of the biggest arguments that most people have against traditionally sound financial decisions is that they want to live in the ‘now,’ as you never know what will happen in the future. I can certainly understand that logic as we all know someone who has passed away well before their time.
But, should we really use these types of examples to determine how we live the rest of our lives?
Let’s look at actual statistics behind this below. These stats are derived from the Actuarial Life Table published by the US Social Security Administration. These are US statistics but I would bet they are fairly similar to Canadian numbers.
For a male, aged 30, there is a 0.15% chance that you will die within a year. Yes, that is less than 1%. But even more satisfying there is an 88.27% chance that you will live for an additional 30 years. What about living from 60 to 70? Well there is an 82.3% chance. What about from 60 to 80? There is a 58.99% chance you will make it to 80 when you are 60. When you look at all of this, you can see the odds of an average 30-year-old male living to 60, then to 70, then to 80 are actually fairly high. The odds for a female are even higher.
When knowing this data it would be foolish to think about living in the ‘now’ vs. the future. I understand that you may not be around tomorrow, but let’s be honest, the odds of that occurring are extremely slim.
I find it amusing that people will buy lottery tickets, based on the average lottery odds. You are more likely to die than you are to win the lottery. Instead, take the $10 per week you spend on lottery tickets and invest it. Over 30 years you will have over $42,000 saved of which over half of that would be interest. Would you rather have, a higher chance to die than the win the lottery or $42,000 in the bank?
My hope is that you use this information to make better decisions about your goals and how you wish to live your life. I assist a lot of retirement aged consumers who are still working to service their debt. I would think that had they been properly taught fundamentals of finance (as taught in this book), they would have been much better prepared for some of their struggles.
Also, think about it, when do you think you are more likely to get hurt or experience an adverse life event like a heart attack, cancer, etc.? When you are young or older? I think we would all agree there is a higher chance when you get older, so it only makes sense to begin preparing for this potential before it happen.