FIRE advice for young people

[Ron Scott]

Thought on this?

1.   It’s FIRE—not REfi: Focus first on achieving financial independence as YOU define it, not according to someone else’s philosophy. You do not “need” to rely on the trappings of the consumer economy any more than to need to live on the cheap. Figure out how YOU want to live and plan accordingly.
2.   The first investment you should make is in yourself. We live at a time in which unskilled labor is outsourced to places where it is cheapest. Get an education that qualifies you for a high-paying job in a field that is likely to see growth during your lifetime.
3.   Find work you really like…something intellectually stimulating and personally rewarding. Don’t settle for boredom and angst. Retirement should be a leap into a new stage in life with new adventures, not an escape from drudgery.
4.   Live a lifestyle that improves your chances for healthy living for a very long time. Plan to live independently at 100. (Exercise, eating, smoking, weight, etc.)
5.   Equity is king. Having an ownership stake in a business with growth potential (as a proprietor or through stock options, etc) or, at a bare minimum, owning shares in stock index funds, is where it’s at.
6.   Making predictions is hard, especially about the future! Don’t believe that SWR research based on historical databases of financial returns will work in the future. Model for yourself, using conservative estimates of returns.

[maizefolk]

Making predictions about the future is hard (as you mention in #6). But that applies to some of your other proposed advice as well.

#2: It's hard to predict which jobs will be around in twenty years, let alone growing. Consider not only outsourcing, but also automation. If I was going to make a prediction, I'd say a plumber less at risk of either outsourcing or automation than a comparably paid white collar middle manager with a college degree.

#3: It's also hard to predict what jobs you will find intellectually stimulating and personally rewarding ten years down the road. That's true both because the experience of studying a topic and the experience of working in the field can be radically different, and because ten years is a long time to do ANYTHING without getting a bit bored or burned out with it.

The way #6 is worded makes it sound like you're trying to encourage people to work longer than necessary to accumulate excessive margins for safety. If they were successfully able to find a job they continue to enjoy for decade after decade, there is less harm in that. But given how hard it is to predict the future, my advice to a young person would be to aim for FI as soon as practical. If they do end up loving their job and working in an in demand field, great (and knowing you CAN leave a job can make the job better just by reminding yourself that you're not feeling trapped). If they don't, the total number of years of drudgery are minimized.

#5: I'm an equity sort of person myself, but real estate seems to work quite well for some folks who prefer that lifestyle. So long as people aren't piling their money under a mattress or in bonds, I think they should be okay.

[Weisass]

are you compiling this list for yourself, or so that you can lecture/educate young people in your life?

[Metalcat]

Honestly?

It leaves me wondering how many young people you talk to on a regular basis.

I was the oldest person in my doctoral program, most of my classmates were early to mid 20s, and about to graduate as high earning medical professionals. These were intelligent, driven people who knew how to research and understand anything and everything important to them, and I had to explain the very basics of income tax to them.

I've worked professionally as someone who gives people career, business, and financial advice. My target audience has been people ranging from mid 20s to late 50s. I've learned through extensive experience that a list like yours would be confusing, intimidating, make very little sense, and would trigger them to feel stupid, and therefore to tune out your advice.

That's why MMM is so successful, he breaks down the most basic of basic concepts into digestible, easy to read and understand content, and even then, I usually have to prime someone with a bit of knowledge before referring them to the MMM website.

You talk about speaking to young people and then throw in concepts like "equity" and "growth potential" and "index funds". Any young person who understands those concepts is so ahead of the game that they already know where to look for high quality advice well beyond a bullet point list.

Personally, when I'm advising young people, I emphasize the following points
1: Most advice is terrible, even professional advice, it takes a lot of time and experience to learn to evaluate good information from bad, and many people don't bother. Start learning now, this isn't something that can reasonable wait, because it takes time. Getting a head start on truly understanding your own career and finances is what will make you rich and happy, not listening to advice, which is probably shitty.

2: Most people are unhealthy and unhappy, so general wisdom won't likely produce a very good life, if it's what everyone is doing, question HARD whether it's right for you, because the outcomes of what most people do are not great

3: Don't be the employee who benefits your employer best, be the employee who benefits your own life the best, you define what success looks like for yourself, if you and your employer can't come to an agreement on that success, then you aren't working for the right employer

4: Watch your indicators of wellness like a hawk: eating, sleeping, exercise, and relationships. If any of these things start lagging, something is very wrong with your life, and you need to act fast to resolve it. It will feel like the most normal thing in the world to let these factors start failing, because that's what everyone does, but remember #2, just because most people let themselves fall apart doesn't mean it's okay.

Note, I give very little specific, actionable advice, unless I have gotten to know the person as an individual, because you can't know what specific advice is needed for any given individual, and that's why most advice is SO TERRIBLE. That's why professional advice tends to be so terrible, it's not that all professionals are shitty advice givers, it's that their advice is by default shitty unless the person seeking it is able to be clear as to what they really need, and they can't be clear if they don't even know themselves, which is the case with most people.

So my advice for young, typically clueless people is to emphasize the importance of truly understanding these things for themselves, to not just follow paths that are set for them, and to question at all times anything and EVERYTHING that appears to be "common knowledge" or "normal".

It's very destabilizing and very upsetting for them because they so desperately want to perceive the world as full of proper adults who know what they are doing, who can tell them predictably how to follow the predictable path to success. But that path is a joke, most adults are a joke, and the sooner they grapple with the angst that comes with that realization, the quicker they can actually prepare themselves to be successful on their own terms.

[ender]

I guess I have a lot of thoughts on this...

1.   It’s FIRE—not REfi: Focus first on achieving financial independence as YOU define it, not according to someone else’s philosophy. You do not “need” to rely on the trappings of the consumer economy any more than to need to live on the cheap. Figure out how YOU want to live and plan accordingly.

I'd also add that becoming a slave to FIRE/FI isn't much different than being a slave to a 9/5 for the years you are doing so.

Many young people see FIRE as salvation to their general life malaise or otherwise forget that even if FIRE does result in a great end state, you shouldn't throw years of life away in pursuit of it.

I literally had a conversation with a new grad about this yesterday.

2.   The first investment you should make is in yourself. We live at a time in which unskilled labor is outsourced to places where it is cheapest. Get an education that qualifies you for a high-paying job in a field that is likely to see growth during your lifetime.

This reads like a quippy point that lacks substance.

Plenty of skilled labor is also outsourced (arguably more).

This point also can in many cases directly contradict your next point.

3.   Find work you really like…something intellectually stimulating and personally rewarding. Don’t settle for boredom and angst. Retirement should be a leap into a new stage in life with new adventures, not an escape from drudgery.

This is also pretty quippy without substance.

What you should do is think about the things you love doing and then find a job/career that matches those. Or find something that is worth the sacrifice. My father in law basically picked a career that he knew was "boring" but it was one that let him live his life that he wanted to live.

4.   Live a lifestyle that improves your chances for healthy living for a very long time. Plan to live independently at 100. (Exercise, eating, smoking, weight, etc.)

This is the one bullet point here I agree with.

5.   Equity is king. Having an ownership stake in a business with growth potential (as a proprietor or through stock options, etc) or, at a bare minimum, owning shares in stock index funds, is where it’s at.

... king?

I suspect by far the fastest/easiest/most consistent path to FI/FIRE is working as an employee somewhere rather than being an owner or hoping stock options work out.

And this entirely ignores real estate, which if your risk tolerance and willingness to work tolerates is actually king for FIRE purposes.

6.   Making predictions is hard, especially about the future! Don’t believe that SWR research based on historical databases of financial returns will work in the future. Model for yourself, using conservative estimates of returns.

"Don't believe an entire established community worth of research and discussion for decades! think for yourself!"

Hmmm. I guess I just fundamentally disagree with the gloominess of this point.

I personally think that if anything, the average person in FIRE communities needs way more encouragement to retire than reasons to do OMY or brainstorm how they might increase their FIRE success from 98.9% to 99%.

[MDM]

6.   Making predictions is hard, especially about the future! Don’t believe that SWR research based on historical databases of financial returns will work in the future. Model for yourself, using conservative estimates of returns.

"Don't believe an entire established community worth of research and discussion for decades! think for yourself!"

Hmmm. I guess I just fundamentally disagree....

Although I'm not sure whether the OP is being gloomy or rosy-glassed, it's the very rare young person who would realize
a) the point of the SWR research is that assuming constant annual returns is not a good assumption, and/or
b) a pure Monte Carlo approach that ignores mean reversion is also not a good assumption.

No idea what assumptions will prove correct going forward, but assuming the next X years will be no worse than the worst Y% of historical X year periods is not unreasonable.

[JJ-]

I'll just chime in and say I would have no idea what to do with this list, especially #5. As a young person where would I go to buy equity somewhere? I would just say thanks and move on with my day.

It almost reads to me like I would see it on a random finance website like Motley Fool or something for tips to a better life. It's too complicated for a young/general/uneducated audience.

[wageslave23]

I'll just chime in and say I would have no idea what to do with this list, especially #5. As a young person where would I go to buy equity somewhere? I would just say thanks and move on with my day.

It almost reads to me like I would see it on a random finance website like Motley Fool or something for tips to a better life. It's too complicated for a young/general/uneducated audience.

Maybe the OP should qualify it as advice for young people already interested in FIRE?

I think there is really only one principle that needs to be taught/learned and that's to avoid instant gratification at the expense of future quality of life.  The lesson of the experiment where children are given a marshmellow and can eat it immediately or wait 15 minutes and then have 2 marshmellows sums things up pretty succinctly. 

[Metalcat]

I'll just chime in and say I would have no idea what to do with this list, especially #5. As a young person where would I go to buy equity somewhere? I would just say thanks and move on with my day.

It almost reads to me like I would see it on a random finance website like Motley Fool or something for tips to a better life. It's too complicated for a young/general/uneducated audience.

Maybe the OP should qualify it as advice for young people already interested in FIRE?

I think there is really only one principle that needs to be taught/learned and that's to avoid instant gratification at the expense of future quality of life.  The lesson of the experiment where children are given a marshmellow and can eat it immediately or wait 15 minutes and then have 2 marshmellows sums things up pretty succinctly.

The marshmallow test just shows that children who are better at delaying gratification tend to grow up to be adults who are better at delayed gratification. It doesn't really sum up anything other than that this is a strong feature that persists through to adulthood, regardless of life experience along the way.

It actually points to it being a *harder* thing to learn than one would expect. If it was an easily changed pattern of behaviour, you wouldn't expect it to persist, you would expect it to be shaped by experience, and therefore be less predictable based on early childhood behaviours.

So just telling people to avoid instant gratification isn't likely to work. And people who *are* good with delayed gratification likely fundamentally cannot understand why others aren't, because the study suggests it's somewhat of an ingrained predisposition.

So that would be like a person who is naturally good at school telling someone who naturally struggles to just get better at school.

It would be lovely if life was as simple as just telling people to not be the way they are prone to be, but it's not so tidy as all that.

[JJ-]

I'll just chime in and say I would have no idea what to do with this list, especially #5. As a young person where would I go to buy equity somewhere? I would just say thanks and move on with my day.

It almost reads to me like I would see it on a random finance website like Motley Fool or something for tips to a better life. It's too complicated for a young/general/uneducated audience.

Maybe the OP should qualify it as advice for young people already interested in FIRE?

I think there is really only one principle that needs to be taught/learned and that's to avoid instant gratification at the expense of future quality of life.  The lesson of the experiment where children are given a marshmellow and can eat it immediately or wait 15 minutes and then have 2 marshmellows sums things up pretty succinctly.

I'm not sure if it's any better knowing that the target audience is those that are interested in FIRE. I've read each item in the list a handful of times and have to go back to it to remember what each said. Maybe it's just not digesting well with me today or I'm a little slow today.

[joe189man]

ptf

[soulpatchmike]

Thought on this?

1.   It’s FIRE—not REfi: Focus first on achieving financial independence as YOU define it, not according to someone else’s philosophy. You do not “need” to rely on the trappings of the consumer economy any more than to need to live on the cheap. Figure out how YOU want to live and plan accordingly.
2.   The first investment you should make is in yourself. We live at a time in which unskilled labor is outsourced to places where it is cheapest. Get an education that qualifies you for a high-paying job in a field that is likely to see growth during your lifetime.
3.   Find work you really like…something intellectually stimulating and personally rewarding. Don’t settle for boredom and angst. Retirement should be a leap into a new stage in life with new adventures, not an escape from drudgery.
4.   Live a lifestyle that improves your chances for healthy living for a very long time. Plan to live independently at 100. (Exercise, eating, smoking, weight, etc.)
5.   Equity is king. Having an ownership stake in a business with growth potential (as a proprietor or through stock options, etc) or, at a bare minimum, owning shares in stock index funds, is where it’s at.
6.   Making predictions is hard, especially about the future! Don’t believe that SWR research based on historical databases of financial returns will work in the future. Model for yourself, using conservative estimates of returns.

I often have difficulty with line item advice.  More often than not, the "advice" is really just an outline for the bigger and more detailed discussion.  This is how I would rewrite the outline to generate discussion with someone of any age, not necessarily just young people.

1.  Don't Skip Steps.  Focus on FI before focusing on RE because you won't have RE very long without FI.
2.  Be a continuous learner.  For some this means a formal education, for others it means to learn along the way.  Options are a great thing to have in your career and hobbies.
3.  Work in a field you enjoy for the highest long-term monetary, emotional and physical success.  Work in a field that you don't like or hate only for obscenely high pay and only for a targeted amount of time to protect your mind and body.
4.  Treat your body and mind well today for the best chances of a fruitful and enjoyable ride toward the last decade of life.  You might live to 100!
5.  Invest your money.  Don't let your savings sit idle, it will inflate away.  Whether it is company stock options, index funds, business equity and/or rental real estate any or all of them might support your investment return goals.  Study first, execute a plan second.
6.  Past performance is no guarantee of future results. It is not just fine print! Past market performance is a nice reference, but -flexibility- in any FIRE plan for negative economic and market events will always beat the best linear planning based on the past.
And I would add:
7.  Practice delayed gratification.  Every material object should be looked upon as a lifelong burden. Will its benefits outweigh the lifelong burden? Consider carefully.

[Ron Scott]

6.  Past performance is no guarantee of future results. It is not just fine print! Past market performance is a nice reference, but -flexibility- in any FIRE plan for negative economic and market events will always beat the best linear planning based on the past.

I am with you 100% on this.

The "past" in these assessments typically means looking at US returns for a hundred years during a century in which the US was the most unique and successful country in history. I simply have no idea whatsoever if the future will be like the past in this regard, and if it's not, whether returns will be better or worse.

So what to do?

My approach is to assume no real returns and no inflation. My investments will simply keep pace with inflation, no better or worse.

So, to get to an annual spend you simple divide the money you set aside for spending in life by the number of years you need your money to last. Translated in my logic, for a 30 year retirement that's a 3.33% SWR against the last Y-E balance.

If there's a better answer to this one I haven't heard it. The variable spend approach is also OK, I guess.

[boarder42]

6.  Past performance is no guarantee of future results. It is not just fine print! Past market performance is a nice reference, but -flexibility- in any FIRE plan for negative economic and market events will always beat the best linear planning based on the past.

I am with you 100% on this.

The "past" in these assessments typically means looking at US returns for a hundred years during a century in which the US was the most unique and successful country in history. I simply have no idea whatsoever if the future will be like the past in this regard, and if it's not, whether returns will be better or worse.

So what to do?

My approach is to assume no real returns and no inflation. My investments will simply keep pace with inflation, no better or worse.

So, to get to an annual spend you simple divide the money you set aside for spending in life by the number of years you need your money to last. Translated in my logic, for a 30 year retirement that's a 3.33% SWR against the last Y-E balance.

If there's a better answer to this one I haven't heard it. The variable spend approach is also OK, I guess.

Based on these statements alone I don't really think you're in a good place to be influencing young people's decisions as it relates to Fi.

Your best case is to give them resources to learn and encourage them to do so.

By your logic here I'd need 5MM to retire at 35 assuming a 50 year life expectancy. I mean. Maybe this just isn't the best forum for your line of thinking. This would be better received at bogleheads where they fear everything.

[vand]

Why frame it as FIRE advice?

The concept of RE is alien to most young people who don't have the experience of a length of time in work.

I rather hate how people tend to conflate FIRE with normal personal finance. Just frame money advice for younsters as Personal Financial.

[Ron Scott]

I rather hate how people tend to conflate FIRE with normal personal finance.

I guess I was looking at it as a sequence in time, i.e, once one is financially independent as defined by the number of years' expenses accumulated, retirement becomes an option.

[JJ-]

I rather hate how people tend to conflate FIRE with normal personal finance.

I guess I was looking at it as a sequence in time, i.e, once one is financially independent as defined by the number of years' expenses accumulated, retirement becomes an option.

I'm still having a hard time understanding the original six and even this phrasing. Your communication style I think is throwing me for a loop by trying to present a new twist on an old concept.

I think the posters here have given you some good feedback and maybe try taking a new stab at your advice. If you are trying to talk to people who are already down the path of working, I don't think you need to tell them to invest in themselves. Maybe think about who you are actually trying to talk to. If it is youngsters wanting to minimize their time in the actual workforce before or right when they get started, phrase it that way. If it's people 5-10 years into working you change the language and advice for an early exit.

Right now as it stands I agree it is more in line with generic personal finance advice.

[boarder42]

I rather hate how people tend to conflate FIRE with normal personal finance.

I guess I was looking at it as a sequence in time, i.e, once one is financially independent as defined by the number of years' expenses accumulated, retirement becomes an option.

I'm still having a hard time understanding the original six and even this phrasing. Your communication style I think is throwing me for a loop by trying to present a new twist on an old concept.

I think the posters here have given you some good feedback and maybe try taking a new stab at your advice. If you are trying to talk to people who are already down the path of working, I don't think you need to tell them to invest in themselves. Maybe think about who you are actually trying to talk to. If it is youngsters wanting to minimize their time in the actual workforce before or right when they get started, phrase it that way. If it's people 5-10 years into working you change the language and advice for an early exit.

Right now as it stands I agree it is more in line with generic personal finance advice.

That's how I labeled all my class to new hires. General personal finance knowledge backed by all this data. Then the resources you point them to have more of the FI propaganda.

Inthink choosefi is the best mainstream thing to happen to this movement bc it takes the stigma or retirement off and you focus on freedom to choose what when and how you work or if you work. This was always my message to new hires. My course was titled own your money. And was meant to convince people to learn about personal finance and not hire someone.

[JJ-]

I rather hate how people tend to conflate FIRE with normal personal finance.

I guess I was looking at it as a sequence in time, i.e, once one is financially independent as defined by the number of years' expenses accumulated, retirement becomes an option.

I'm still having a hard time understanding the original six and even this phrasing. Your communication style I think is throwing me for a loop by trying to present a new twist on an old concept.

I think the posters here have given you some good feedback and maybe try taking a new stab at your advice. If you are trying to talk to people who are already down the path of working, I don't think you need to tell them to invest in themselves. Maybe think about who you are actually trying to talk to. If it is youngsters wanting to minimize their time in the actual workforce before or right when they get started, phrase it that way. If it's people 5-10 years into working you change the language and advice for an early exit.

Right now as it stands I agree it is more in line with generic personal finance advice.

That's how I labeled all my class to new hires. General personal finance knowledge backed by all this data. Then the resources you point them to have more of the FI propaganda.

Inthink choosefi is the best mainstream thing to happen to this movement bc it takes the stigma or retirement off and you focus on freedom to choose what when and how you work or if you work. This was always my message to new hires. My course was titled own your money. And was meant to convince people to learn about personal finance and not hire someone.

I hadn't heard of choosefi. Is it based around the book/podcast/website? I'll look for it.

Taking the term retirement out of the picture seems to simplify it a bit. I think back to my first days to people telling me to put 10% of my paycheck into the company 401k for retirement, and I was like why would I do that not knowing what retirement is. Breaking it down into tangible concepts of day to day spending etc and how to use that money in those vehicles is much more tangible for me anyway.

[Steeze]

My advice to young people in college is along the lines:

1. Choose a career / degree with high income potential by the 5 yr mark
1a. Go to school for computer science / software engineering if you are at all interested / capable
2. Choose an employer that is well known in the industry, relocate if needed
3. Don’t let student loan stress ruin your life, they will get paid
4. Basic investment order information
5. Keep your overhead as low as possible for the first 10 years
6. You can be FI in 15 years or less, retired by 40 easy
7. Use low cost ETFs or Mutual funds with 90%+ of your savings
8. Live close to work, walk or biking distance
9. Stay healthy, eat well, exercise
10. Stay sober as much as possible, remain alert and aware at all times
11. Take career risks (ie. startups, entrepreneurship) while you are young, before kids, marriage
12. Be careful what you put on social media, assume everything is permanent

ETA:

13. If you want to get married, make sure you share the same goals, especially financial goals

[Weisass]

Said it above, will say it again: what's your motivation? Why do you feel like you need to be in a position to offer advice to young people? Are you trying to help your kids? Your grandkids? Teach a class in the local community college? Shake your finger at the youngsters in the park? Write a blog post and get internet FI famous? The advice you get is going to depend on why you want it.

[Ron Scott]

My course was titled own your money. And was meant to convince people to learn about personal finance and not hire someone.

Excellent—if I’d thought of it before I hit enter this would have been #7.

Without actually understanding too much about “investing” I went through several brokerages and one advisor, lastly Goldman. I never followed anyone’s advice and simply bought an S&P500 fund and a general bond fund. The Goldman guy finally said to me “if this is all you want to do why are you with Goldman?” Good question. I left.

I still listen to Bloomberg radio and read a lot of what’s on the net for fun and it’s hard to imagine individual investors do all the buying and selling the folks they interview espouse. Different strokes.

[ender]

I am with you 100% on this.

The "past" in these assessments typically means looking at US returns for a hundred years during a century in which the US was the most unique and successful country in history. I simply have no idea whatsoever if the future will be like the past in this regard, and if it's not, whether returns will be better or worse.

So what to do?

My approach is to assume no real returns and no inflation. My investments will simply keep pace with inflation, no better or worse.

So, to get to an annual spend you simple divide the money you set aside for spending in life by the number of years you need your money to last. Translated in my logic, for a 30 year retirement that's a 3.33% SWR against the last Y-E balance.

If there's a better answer to this one I haven't heard it. The variable spend approach is also OK, I guess.

But this is just bad advice.

I mean I guess it's good to know you expect the economy to basically consistently get worse over time but recognize you're going to be giving advice that is pretty much straight bad for 99% of people.

You might as well add another point to your list:

7. Keep working forever because you never know when societal collapse will happen and your savings disappear!

If you honestly believe what you said, I think you really shouldn't be giving FIRE advice. Because your advice flies in the face of nearly all FIRE advice so far.

[maizefolk]

Planning based on the worst case scenarios observed across multiple countries (predominantly in europe because that's where there is at least 100 years of historical data) means you are planning for a retirement where you would never have to cut your spending or alter your lifestyle even when a world war is being fought in the streets outside your door. If you remove the effect of world wars I and II and the spanish civil war on the countries where the vast majority of on the ground fighting was taking place (governments were overthrown, bad for bonds, cities were levels, bad for the stock of the companies that had factories in those cities, millions of people died, bad for near term economic growth) the rest of the world looks much more like the USA.

If soldiers are fighting and dying outside my door, I figure I'll have more urgent concerns to worry about, regardless of whether I've FIREd with a 4% withdrawal rate or am still working.

[Chris Pascale]

You have crowd-sourced the wisdom of everyone on this topic.

@Malcat, I think I relate to your stuff the most.

[Morning Glory]

I'll just chime in and say I would have no idea what to do with this list, especially #5. As a young person where would I go to buy equity somewhere? I would just say thanks and move on with my day.

It almost reads to me like I would see it on a random finance website like Motley Fool or something for tips to a better life. It's too complicated for a young/general/uneducated audience.

Maybe the OP should qualify it as advice for young people already interested in FIRE?

I think there is really only one principle that needs to be taught/learned and that's to avoid instant gratification at the expense of future quality of life.  The lesson of the experiment where children are given a marshmellow and can eat it immediately or wait 15 minutes and then have 2 marshmellows sums things up pretty succinctly.

The marshmallow test just shows that children who are better at delaying gratification tend to grow up to be adults who are better at delayed gratification. It doesn't really sum up anything other than that this is a strong feature that persists through to adulthood, regardless of life experience along the way.

It actually points to it being a *harder* thing to learn than one would expect. If it was an easily changed pattern of behaviour, you wouldn't expect it to persist, you would expect it to be shaped by experience, and therefore be less predictable based on early childhood behaviours.

So just telling people to avoid instant gratification isn't likely to work. And people who *are* good with delayed gratification likely fundamentally cannot understand why others aren't, because the study suggests it's somewhat of an ingrained predisposition.

So that would be like a person who is naturally good at school telling someone who naturally struggles to just get better at school.

It would be lovely if life was as simple as just telling people to not be the way they are prone to be, but it's not so tidy as all that.

This is all true, but there's a third option. For some of us it's not about delayed gratification at all, but rather just not being gratified by things that cost a lot of money. Kind of like being the weird kid who doesn't like marshmallows.

[Metalcat]

I'll just chime in and say I would have no idea what to do with this list, especially #5. As a young person where would I go to buy equity somewhere? I would just say thanks and move on with my day.

It almost reads to me like I would see it on a random finance website like Motley Fool or something for tips to a better life. It's too complicated for a young/general/uneducated audience.

Maybe the OP should qualify it as advice for young people already interested in FIRE?

I think there is really only one principle that needs to be taught/learned and that's to avoid instant gratification at the expense of future quality of life.  The lesson of the experiment where children are given a marshmellow and can eat it immediately or wait 15 minutes and then have 2 marshmellows sums things up pretty succinctly.

The marshmallow test just shows that children who are better at delaying gratification tend to grow up to be adults who are better at delayed gratification. It doesn't really sum up anything other than that this is a strong feature that persists through to adulthood, regardless of life experience along the way.

It actually points to it being a *harder* thing to learn than one would expect. If it was an easily changed pattern of behaviour, you wouldn't expect it to persist, you would expect it to be shaped by experience, and therefore be less predictable based on early childhood behaviours.

So just telling people to avoid instant gratification isn't likely to work. And people who *are* good with delayed gratification likely fundamentally cannot understand why others aren't, because the study suggests it's somewhat of an ingrained predisposition.

So that would be like a person who is naturally good at school telling someone who naturally struggles to just get better at school.

It would be lovely if life was as simple as just telling people to not be the way they are prone to be, but it's not so tidy as all that.

This is all true, but there's a third option. For some of us it's not about delayed gratification at all, but rather just not being gratified by things that cost a lot of money. Kind of like being the weird kid who doesn't like marshmallows.

I wasn't talking about money though, I was just responding with how the study shows that the characteristic of being susceptible to instant gratification seems to be a persistent one. Regardless of whatever that person's flavour of temptation is.

[vand]

Good advice has to be both evidence based and relatable.

Explaining early retirement to youngsters isn't relatable if they haven't a concept of the daily grind of the world of work (in most cases).

Talking about saving a $1m retirement stash isn't relatable to someone who hasn't saved their first $1,000, or even $10,000.

Telling someone to invest in a balanced portfolio, or in real estate is evidence based. You may not get exactly the same results, but the idea that you buy wealth generating assets and/or loan capital and a fixed rate of return can be understood and should be repeatable no matter what future shape the world takes. The idea that you buy internet indescript digital tokens that people will increasingly want does not seem repeatable in many future possible versions of the world.

The idea that the world gets gradually richer due to human ingenuity, technological advances and capital accumulation, and that wealth must be stored somewhere, is understandable and evidence based.

The idea that the world gets gradually richer due to redistribution of existing wealth is not evidence based or understandable. I raise this point because many economically illiterate people believe that taxes are a duty and no amount of taxation should be considered too much. Economically literate people understand that capital in private employment is what generates wealth, and therefore usually have no qualms about paying as little tax as they can get away with.

anyway, don't really know where I am going with this. Personal finance needs to be addressed along with economic literacy for our youngsters. Both are important for financial education imo.

[maizefolk]

Explaining early retirement to youngsters isn't relatable if they haven't a concept of the daily grind of the world of work (in most cases).

Talking about saving a $1m retirement stash isn't relatable to someone who hasn't saved their first $1,000, or even $10,000.

...

anyway, don't really know where I am going with this. Personal finance needs to be addressed along with economic literacy for our youngsters. Both are important for financial education imo.

I agree with this. The strategy I use is to focus on how much better it feels to make life decisions about the big spending things (rent, food, transportation) so you're automatically saving a fair bit of money in every normal month. That way when your car beaks down, or your paycheck is a week late, or you have to go the the hospital and get an unexpected bill it isn't something you need to stress out or worry about.

And that the best time to make this decision is right after college (or grad school) because you're used to living on much less, all you have to do is increase your lifestyle by less than the new higher pay you're earning.

[bmjohnson35]

The OP hasn't provided enough detail of the circumstances.  Has a young person come to them to ask for advice? Are they offering unsolicited advice?  How mature, intelligent and/or disciplined is the young person in question?  There is no one size fits all answer.  Three kids and 6 grandkids into life and I can't claim much success in this area.  Despite our best efforts, two of our three kids are the embodiment of consumerist. 

[zolotiyeruki]

1.  Don't Skip Steps.  Focus on FI before focusing on RE because you won't have RE very long without FI.
2.  Be a continuous learner.  For some this means a formal education, for others it means to learn along the way.  Options are a great thing to have in your career and hobbies.
...

Ron Scott's points are all great, and I think soulpatchmike's rewording is a whole lot more digestible.  I might reorder the various points and put FIRE further down the list, since it's more of an outgrowth of earlier wise choices.

5. Keep your overhead as low as possible for the first 10 years
...
10. Stay sober as much as possible, remain alert and aware at all times
...
12. Be careful what you put on social media, assume everything is permanent

These three especially are worth reiterating.  Our first home was definitely a starter home, and its low cost definitely helped us in our financial goals.

Here are a few I'd add:
13) Time is your biggest asset when you're young.  So invest early and often.
14) Learn to DIY.  Do your own taxes, change your own oil, replace your own light switches, mow your own lawn, and replace your own toilet valves.  Even if you have to hire someone for more involved tasks, you'll at least have a smidgen of understanding.
15) Question everything, but also respect experience.  Understand the underlying "why"s, so you can correctly decide whether to follow that path.
16) Take quiet time.  Our culture is full of noise, often designed to induce you to do things that are not in your best interest.
17) Recognize your own flaws that keep you from making the best choices. Find ways to mitigate, compensate for, and/or overcome them.

[Anon-E-Mouze]

I've been thinking about this thread for a few days and tried to take a different approach to the advice I'd give. I want to frame the advice to take into account some of the major trends (hello climate change) that likely are generating a heck of a lot of anxiety for younger people.

So here's my take on advice for younger people thinking about FI, with a bit of elaboration below each (but not everything I might raise in a discussion):

1. Invest consistently and early; spend thoughtfully.

This applies to $ but to more than that as well. Get in the habit of investing (in index funds of course) at least a little of every paycheck or other payment you receive. Invest consistently in your physical and mental health, too. Keep learning (build your intellectual capital) and invest in healthy relationships with family, friends, peers, mentors and "mentees".

Spend carefully and thoughtfully on things, experiences and relationships, focusing on the value you get from the expenditure and its impact on your life and the lives of those you care about.

2. Minimize your physical footprint in the world; expand your horizons.

Buy less stuff and keep it in as small a space as is practicable for you to live in - it's good for the planet and your finances and keeps you nimble. Acquire things second-hand wherever possible. If you have to buy something new, remember that "cheap" in the short run can sometimes be bad for the planet (and humans and non-humans). Pay attention to where your food and stuff are made and transported, and who (human and non-human) is harmed in the process. Use your $ to make compassionate choices. Choose modes of transportation that have less impact on the planet.

Make meaningful connections - in real life and virtually - to expand your horizons. You can experience other cultures without having to fly there. Invest in healthy relationships with people outside your echo chamber. Learn how to listen and have a true conversation.

3. Practice resilience, but prepare to pivot.

Some of your life ahead of you is probably going to be awful. You need coping skills to survive (and possibly even thrive) in an uncertain and potentially very difficult future.

Develop the skills and attitudes that enable you to stick with experiences and environments that are challenging (or even difficult or sometimes unpleasant) because sometimes it's worth it in the end, and sometimes, frankly, you just have no choice but to stick it out. On the job front, this can mean staying with an employer for a period of time in order to build up your financial resources, develop skills or have access to affordable health care, or because your partner needs you stay where you are for a while so that something else can be achieved in your life together. Empathy, the ability to reframe your experiences to identify the positives, the ability to forge strong relationships with good people, and to take care of yourself will all help you stay in a difficult situation temporarily where you've decided it's worth it or necessary to stay.

But you should also develop the skills and attitudes that enable you to pivot to something else if it's the right time to do so. The world is changing so fast that what you think you need to know (or want to have) today isn't likely going to work for you in the future. Being able to pivot away from disaster and/or toward a great opportunity requires knowledge, skills, a strong network and a great attitude. And following the steps above will also make it easier for you to pivot when the time is right.

[Ron Scott]

3. Practice resilience, but prepare to pivot.

Very good point…

The only constant is change—so a young person needs the psychological stamina to accept and even embrace change, the skill sets to thrive in the changed environment, and the financial investments to tide her over during the transition.

Being prepared for change requires a good mix of conservative and adventurous approaches to living.

All I would add is that since we cannot choose a world without change and can only choose wether to drive change or be dragged along by those who do, choose to be a leader and drive change as much as you can. Don’t just drop out; be a force in the world.

[Metalcat]

3. Practice resilience, but prepare to pivot.

Very good point…

The only constant is change—so a young person needs the psychological stamina to accept and even embrace change, the skill sets to thrive in the changed environment, and the financial investments to tide her over during the transition.

Being prepared for change requires a good mix of conservative and adventurous approaches to living.

All I would add is that since we cannot choose a world without change and can only choose wether to drive change or be dragged along by those who do, choose to be a leader and drive change as much as you can. Don’t just drop out; be a force in the world.

Being prepared for change actually requires the skills to process fear in a responsible way.

It's one thing to be prepared for some changes, but what that really means is that changes can happen without actually changing your life in any meaningful way. So if you have a ton of money and face losing your job, your actual day to day quality of life won't change, because you don't need your job to sustain your day to day quality of life.

The ability to handle change is actually the psychological ability to adapt to truly different circumstances. And that is a very different psychological process.

NOTE: I'm not disagreeing with you, I'm expanding on your point

[K_in_the_kitchen]

My advice to young people in college is along the lines:

1. Choose a career / degree with high income potential by the 5 yr mark
1a. Go to school for computer science / software engineering if you are at all interested / capable
2. Choose an employer that is well known in the industry, relocate if needed
3. Don’t let student loan stress ruin your life, they will get paid
4. Basic investment order information
5. Keep your overhead as low as possible for the first 10 years
6. You can be FI in 15 years or less, retired by 40 easy
7. Use low cost ETFs or Mutual funds with 90%+ of your savings
8. Live close to work, walk or biking distance
9. Stay healthy, eat well, exercise
10. Stay sober as much as possible, remain alert and aware at all times
11. Take career risks (ie. startups, entrepreneurship) while you are young, before kids, marriage
12. Be careful what you put on social media, assume everything is permanent

ETA:

13. If you want to get married, make sure you share the same goals, especially financial goals

This is pretty much the advice we’ve given our own college students, with a little tweaking.  One switched from music to computer science and has FIRE on his radar.  The other has decided on teaching as he’s looking for flexibility in order to pursue his goal of being a professional cyclist (and most of them don’t get paid much).  If he stays in our area, median for his field is currently $93K (of course he won’t start there and will need more education to advance on the pay scale).  Luckily they’ve seen us live below our means, live within walking distance of work, stay sober, stay away from addictive activities like gambling, prioritize our marriage, exercise, eat well, etc.

But I actually start at the very beginning with young adults.  I suggest they,

1) Choose a major and career that balances what they enjoy doing and have aptitude for with what the market needs, understanding none of us knows what the future will bring.  Be aware of how technology is changing the kinds of work people do.
2) Use a program that accounts for every penny earned and spent (we like YNAB) and use it daily.
3) Allocate each month the money earned the previous month.  This allows them to know exactly how much money they have to allocate so they don’t overspend, and also ensure the rent money is always there.
4) Don’t use credit for anything other than a house — no student loans, no auto loans, no putting anything on credit that won’t be paid off when the statement comes due.  I say no student loans because you shouldn’t attend a university you can afford — in that case choose community college and state schools, live at home if you can, and do everything possible to avoid loans.  It might not work for everyone, but I think most students who take loans could have avoided them if they hadn’t seen university as an experience to be had.
5) Don’t ignore expenses that don’t occur monthly.  Figure out what they are (auto registration and insurance, Christmas, medical copays, etc.), divide them by 12, and set it aside each month so they are never surprised by a bill or other expense.
6) Begin saving for retirement as soon as you start working and never consider it optional to do so.  If you have a 401k with a company match make sure you contribute enough to get the full match.
7) Always always always live below your means, even if it isn’t the lifestyle you grew up with.
8) Save and then save some more.  Start with an emergency fund, then build up at least 6 months worth of “income replacement” savings.  Then keep saving, building a bigger emergency fund, a general savings account, down payment savings, etc.  Living below your means and saving the rest is how you avoid debt.
9) Know what your financial goals are and choose a partner who understands money and shares your values.  Also stay away from partners who drink excessively, shop excessively, use drugs, gamble etc. — all things that show a lack of control.

We’re of the opinion that taking care of personal finance and health (all areas — physical, emotional, relational, spiritual) can lead you to FIRE even if you weren’t even planning for it.

[Metalcat]

In talking to a young person today, I was reminded of a piece of advice I often give very young people:

"Prestige" is meaningless shit.

People are heavily motivated to acquire various types of prestige: the kind of career that people are impressed by, income, wealth, cars, houses, skills, talents, looks, whatever.

None of this shit matters unless it actually matters to *you*.

Impressing people seems really important when you are young, because when you are young, you aren't very impressive and worse, you're easily impressed.

But the thing with being or having what other people want is that it's utterly meaningless, and actually makes people judge you pretty harshly.

The novelty of being impressive wears off as you learn that it comes with more social awkwardness than social benefit. Unless you are surrounding yourself with people who are impressive in the same way, in which case, it really doesn't matter.

The worst part though, is that even though it's shit, and even though it doesn't matter, it's still addictive.

So don't fall for the fool's gold of prestige. Don't ever do or pursue or buy anything to satisfy a desire to impress people. Avoiding that pitfall is more efficient than trying to escape it.

Instead, really focus on trying to do, pursue, and buy things that truly add value to your life, even if no one ever knew you did or owned them.

[ender]

But how else will I impress people who don't care about me and whose opinions I also don't care about if I don't get prestigious achievement???

[boarder42]

But how else will I impress people who don't care about me and whose opinions I also don't care about if I don't get prestigious achievement???

The future of prestige will lie in time available to do whatever you want. Glad my bank is full

[mistymoney]

no fire for people who are vain about their prestigious acheivments?

[meandmyfamily]

I teach classes to young people often and I have a couple teens with more coming.  Several have shown interest in finances, FIRE, stocks, etc.  One was my nephew.  I buy them The Simple Path to Wealth and the ChooseFI book.  From there we had some interesting discussions.  I also made my teens as part of their economics/personal finance credits read The Latte Factor among other books and that book generated the best questions.  I think I may need to add The Latte Factor to my give away list.  I don't think it is the best book but if it sparks the best discussions and thoughts about finances then I need to buy it for the younger people.  It seems you need to find something that sparks their interest and from there the discussions cover lots of ground.  I think now that I am in my 40s I forget how I looked at the world in my teens.  Plus things have changed.  Discussions are the best way to slip in the knowledge (bullet points) you want to impart and then if they are interested I buy books or require reading if they are my own teens.  I buy them for my kids friends as they graduate but only for the ones that are closest to us or I know have interest in the subject.  Even if they just read the parts that apply to them now they hopefully we go back and read more later on.  So my advice is good conversations if you have young people in your life.  See where the conversations lead and educate from there.  Bullet points I think are often over looked but a good discussion is priceless.  I love the bullet points you all have listed.  Great refresher for me when talking to the kids!

[skip207]

If I could go back and give myself some advice it would be thus:

Take more risks.  Move up the career ladder and dont be afraid of going to new places.  It almost always works out so dont be worried that it wont. 

Keep your technical skills up to date and always be ready to learn the next key skill in your sector.  Dont focus on the stuff you are doing now, focus on whats coming 1-2 years ahead. 

Invest in funds.  Forget single stocks.  Use your tax free allowances.  Start your pension but also invest in other wrappers which allow earlier access as the govt will change the goal posts on your pension keeping you in work longer.

Always push your self with lending esp mortgages.  Buying a 3 or 4 houses to finally get to the one you like you could do in 2 houses rather than 4.  Thats a lot of tax and fees etc.  Dont worry about paying off the mortgage as it will come in time.

Keep going to the gym and make best use of your time.  Dont be lazy!

Spend money on the things that give you enjoyment and not on "things".