Carl Richards is a certified financial planner in Park City, Utah, and is the director of investor education at BAM Advisor Services. His book, “The Behavior Gap,†was published this year. His sketches are archived on the Bucks blog.
Who do you think you'll be in a year? Five years? Twenty years?
One of the big problems with setting goals, especially financial ones, is that we're really bad at imaging our future selves. Just remember what you imagined you'd be as an adult when you were a kid. I'm guessing there are some gaps between the dream and the reality.
Earlier this year, Alina Tugend outlined some of the science behind this problem in The Times:
…many of us d on't have the incentive to eat healthy or save money or add to our retirement accounts because we think of ourselves in the future as someone different altogether. In fact, a future self can seem to be this annoying other person who wants to prevent you from having fun in the present.
The reality is that when we talk about financial goals we're often talking about long time frames. When we talk about retirement, it could be upward of 20 or 30 years. You can't even imagine yourself at that age, let alone plan for it. That's your parents, not you!
We do the same thing with our children. When my first daughter was born, college was the last thing on my mind. But by the time we had our fourth child, I had a good idea how fast 18 years would go by. When we start talking about our distant future selves, it's easy to rationalize the decision to not do anything.
But there's a problem, as Ms. Tugend explained. When the future arrives:
…we're still the same selves we were last week or last month. We don't want to drink the icky liquid, and we don't necessarily feel we can afford the time to do worthwhile, but time-consuming, deeds.
So what's the solution?
Start by getting really clear on your goals. Yes, nailing down the details may not happen right away, but don't pretend that 18 is a long way off for your first-grader. It's not.
You may feel like you're still 30, but if you just celebrated (or mourned) turning 40, it's time to get real. Our future selves will be here faster than we think. Remember all the stupid stuff you did as a teenager? Don't be the 60-year-old that wants to hit your 30-something self over the head for doing stupid adult stuff, like not getting clear on your financial goals.
I promise you that your future self will be happier the sooner you reconcile today with tomorrow.
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