What if your future self, at 60 years old, could suggest to you at 25 to reduce your spending and give your credit card a “purchase pause”? Or at 35 you could ask yourself at 80 what changes you made to your lifestyle to provide a fulfilling and prosperous life?
It’s not that crazy a concept.
In 2013, Hal Hershfield, formerly of Stanford University, conducted a study that found differing conceptions of our future selves can dramatically influence the long-term choices we make. Specifically, people who identified most with their future selves planned their life with the long-term in mind, saving more money and consequently amassing more wealth.
With 2019 well and truly under way and Australians likely nursing a financial hangover from the Christmas period expected to total nearly $30 billion for the first time, according to finder.com.au, many of us are likely reassessing the future.
Personally, I’ve found factoring in my future-self beneficial in some life-changing decisions.
Despite not being aware of this concept at the time, I still vividly recall the day after visiting a construction site in London’s Docklands in my late teens when I decided I wanted to live there one day. More than a decade on, I ended up buying my first home there. Sounds simple, but it wasn’t and required less consumption and more saving back then for benefits in the long term.
Planning buying your first house in your teens may not be for everyone, but it’s hard to argue that if you want to change your overall financial future for the better, who better to have a chat with than someone with your best interests at heart and who you trust – yourself?
So, what’s the trick?
Firstly, for some fun, it may help to try an app like FaceApp to digitally age a photo of yourself.
Then, imagine that older version of yourself 10 or 20 years down the track giving you the keys to your future home, sharing an anecdote about selecting wedding rings, speaking warmly about your growing family or putting more away in superannuation.
Put simply, mindset matters, and it helps to adopt a positive attitude, particularly towards financial health.
In an age of curated social lives, whether it's possessions, lifestyle or jobs, just because someone else is following a particular path doesn’t mean you have to. Find your own path and decluttering your possessions and finances is a good start. Review your budget, plug spending leaks, consolidate accounts, opt for less paper, shop around for utilities and review your insurance cover.
Then, put your future-self first by committing to a savings plan, today.
Planning for the long term also means reducing risk and maximising opportunities, today. So be cognisant about how you use credit, plan for unforeseen events and take advantage of tax concessions in super. Lastly, ongoing investment in skills, capabilities and knowledge will only help in this rapidly changing world. You’ll thank yourself in a few decades time.
Changing habits is hard, I know. However, there is power in long-term thinking – and a quick chat with your far older self is a good place to start.