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Future Self

OUR LIVES are an ongoing struggle between the shortsighted desires of our current self and the financial needs of our future self. This is a battle that our current self wins with alarming regularity. Think of the diets that fail, the commitments to exercise that fall by the wayside and all the dollars that somehow never get saved.

We can blame all this on the instincts we inherited from our hunter-gatherer ancestors. They didn’t need to worry about dieting, exercising or saving for the future, so none of these things comes easily to us.

In fact, our instinct to consume today is so strong that it can take an enormous financial incentive to get us to delay gratification for just a few weeks or even days—a phenomenon known as hyperbolic discounting. Yet today’s impulsive spending decisions come at an enormous cost to our future self. If we don’t spend that $100 today and instead invest it, our future self might have $300 or $400 to spend. If we charge today’s $100 purchase to a credit card, that’s $100 our future self will have to repay, plus perhaps 20% annual interest.

How can we get ourselves to make sacrifices today, so we have a better tomorrow? It’s often a struggle—but a few strategies can help. We might put good behavior on autopilot, by signing up to make payroll contributions to our employer’s 401(k) plan, and by arranging to have money pulled from our bank account each month and invested directly in our favorite mutual funds.

We might also tell others about our commitments to improve, so fear of their disapproval bolsters our resolve. We might try to visualize our goals, making them so tangible and desirable that they seem even more appealing than today’s pleasures. In addition, we might write down every dollar we spend, so we’re more conscious of what we buy. Maybe most important, we should constantly ask ourselves a single crucial question: Will my future self be happy with the choices made by my current self?

Next: Hedonic Treadmill

Previous: Instincts

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