Phases of Financial Life: Save or Borrow?

Your entire financial life follows a predictable three-phase pattern that determines whether you should

save or borrow right now. In your youth, you consume more than you earn,

building up debt for education. During your working years, you finally earn

more than you spend, allowing you to save for retirement. Then in old age, you live off those

savings while your consumption increases again. This is called trading over time,

and understanding which phase you're in changes everything. Banks act as middlemen between savers with

low time preference and borrowers with high time preference. The interest rate you pay or receive

compensates for delayed consumption, inflation risk, and default risk. Here's the kicker: