By Thiago Kodic '16
Never spend your money before you have earned it, Thomas Jefferson told us. Makes perfect sense, right? Except he was completely wrong (#foundingfatherfail). Economic theory and two Nobel prizes (Modigliani and Chicago’s Friedman) tell us the exact opposite: since the vast majority of Boothies are expected to have successful and high-earning careers, we should spend the same today as we would in 5, 10 or 30 years.
There is obviously a lot of uncertainty involved, and no-one is suggesting we all go out and buy a couple of private jets today (at least wait until you get your signing bonus). Implicitly, many of us are following this philosophy: living in distinguished accommodations (yes, I am referring to MPP), enjoying all Chicago has to offer in good food and nightlife, and travelling the world, while taking massive student loans. This lifestyle is inherently unintuitive but ultimately optimal.
You must now be thinking: but Thiago, how will I spend all my hard-earned loan money? Buying cool things seems like a good answer, but once again is very wrong. Tons of research point to the insight that material goods make us happy in the short run, but we quickly adapt and lose interest in that fancy new floating bluetooth speaker (everyone else, though, is going to freak). The solution is to collect experiences and memories: not only will they make you much happier in the long term, they will also help shape who you are as a person: more experienced, open-minded, knowledgeable, and interesting. You’ll have a better life, and yes, very likely a better career.
Pretty much every single MBA alumni ever reminisces about their time in business school: the best two years of my life is a commonly heard phrase. So my plea to each and every one of you is the following: Go all-in. Make the most of this experience. Don’t hold back because of money. Explore Chicago, the US, the world, and get to know your classmates on a more intimate level. Do whatever will make you happiest. If that means maxing out on your student, home equity, or even credit card loans, so be it. You could even try negotiating an advance from your employer/investors/parents if you run out of money in the spring.
I’ll end with a better quote than the one I started with, from Henry David Thoreau: Wealth is the ability to fully experience life. You’ll have plenty of money in the future to pay off those loans, but an environment like Booth will be difficult to find again. And don’t forget to take those vacations every year! Trust me, you’ll be happier.
Thiago is trying to apply everything he learnt in microeconomics and as a result, is hoping he’ll have enough money to make it to graduation.