YOLO Isn’t a Financial Plan: How Present Hedonists Should Handle Their Money

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Updated on Thursday, July 31, 2014

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The bass is thumping as you slam your credit card down on the bar and ask for another round of shots for you and your 15 closest friends you just made in the club. The bartender gives you a big smile as you throw down a $20 tip. Your new friends scream “cheers” and you shuffle back off to the dance floor.

Life is good as a present hedonist.

Living in the present to such an extreme often means you’re the life of the party, first on an exclusive invite list, and always willing to help spot a friend some money if it means enabling your fun-loving experiences. It’s healthy that you enjoy life fully, unfortunately, the pursuit of short-term happiness can have devastating consequences on your finances.

Financial issues with being a present hedonist

The “YOLO” attitude of a present hedonist makes him or her more susceptible to issues with credit cards, saving for the future and falling victim to investment schemes.

Credit cards

Banks love present hedonists so much they have a special term for them: “impulsive indulgers.”

Why?

Because if you give a present hedonist something now they’ll take it and the bank can then charge whatever they wanted.

Credit cards can be dangerous for present hedonists because it gives them access to using money they don’t have. It enables them to live fully in the moment without evaluating future financial consequences.

Remember to always pay your credit card bills on time and in full. If you can’t pay in full, at least pay the minimum due on time. A missed credit card payment can destroy your credit score.

Saving for the Future

Simply put, they usually don’t.

Present hedonists tend to live fully in the now without giving much regard to the future, especially something distant like retirement. The problem is, without saving in the present, they’ll end up having to work their entire lives to pay for their lifestyles. They are also less likely to have an emergency fund, which is an important part of financial health.

An emergency fund can help ward off incurring debt when an unexpected cost occurs like an unforeseen medical bill, loss of a job or car maintenance.

By adding a dash of future thinking, a present hedonist can enjoy the present while planning for the future to escape the 9-to-5 grind.

Perfect victim for bad investments

Present hedonists tend to get swept away in the moment, which makes them susceptible to sales pitches from crooks trying to hawk a bad investment.

If you know you’re a present hedonist, then be wary of anything that offers big, fast return on investments.

Instead, put a little research into your investments and make sure you have a well-diversified portfolio. Don’t forget, if your employer offers a 401(k) with a match, you should really be contributing.

Practical Tips to Harness your Hedonism

1. Switch from credit cards to prepaid or debit cards if you find controlling your impulses is tough.

2. Put a freeze on your credit report so you won’t be tempted to open a new card at the cash register.

3. Switch to a no fee bank account. In the U.S. several online banks let you get accounts with no overdraft or ATM fees, so temptation doesn’t bite you with fees.

4. Take time to shop around for better rates or accounts with lower fees at least once per year.

5. Have a basic savings plan with an emergency fund included.

6. If you have a savings fund that’s more than your emergency cash, be sure it’s in a well-diversified investment portfolio and not just stuck sitting in a checking or savings account.

7. Get insured.  Definitely have health insurance and if you have kids, basic term life insurance should be a goal on top of health coverage. It might seem overwhelming, but if you have a choice between a splurge today and handling a premium, go for the coverage.

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