How Seeing Your Future Self Can Help You save More Money
Practical Strategies to Secure Your Future Happiness
In my book “The Investor’s Mindset,” I have an entire chapter dedicated to “financial time travel.”
The rules are simple, if you want to send money to your future self, you have two options:
If you want to send money to the near future, you put some money in a savings account where you’re future self can use it to pay for travel, home or car repairs, or whatever they want in a few months or years.
If you want to send money into the distant future, invest your money in things like stocks and bonds where your future self can fund their lifestyle with the money you put aside decades earlier.
Saving and investing is an act of self-love—but not to your current self, to your future self. The problem is that since the current cost of living is high and people are living longer than ever, most of us aren’t sending enough money to our future selves.
In this post, I review research that has shown that creating a vivid connection with your future self can increase your willingness to sacrifice and spend less and save more today so you’re future-self can live the life they want.
Favoring your current self=present bias
If you have zero connection to your future self, you will shun them and show love to your current self by spending a lot—and saving very little.
Favoring your current self is another way of framing “present bias,” which is the human tendency to choose immediate rewards and avoid immediate costs even if they know that those decisions are not in our best interest in the long run.
As I’ve written about in the past, present bias can cause people to save less, have less confidence in their financial decision-making, and feel anxious about their future. There is a part of our brain that knows we will one day feel the consequences of not saving enough, and that causes stress levels to spike.
Here’s a detailed breakdown of how present bias impacts your finances:
How to Avoid Financial Procrastination and Impulse Buys
“Procrastination is the art of keeping up with yesterday and avoiding today.” — Attributed to Wayne Dyer Imagine that I showed up at your office and offered to buy you lunch. I give you two options; Pizza or a salad. Most people would choose pizza and, in doing so, would be displaying a textbook example of “