The Key To Good Financial Decisions—Connecting With Your “Future Self”

Have you ever received a piece of news that instantly transported you into the future and changed the way you saw everything in the present?

In mid-March, I was checking in with my wife by phone from a hotel room in Atlanta following the first completed day of my new job, and I could tell something was off. After some coaxing, she acknowledged she needed to share something, but she wanted to wait until I got home. She wanted me to keep a clear head for the new gig. Two more days. But you know I couldn’t wait for that.

Among a couple of outlandish guesses to rule out the ridiculous, I landed on the announcement we presumed was a medical impossibility—my wife was pregnant. That explained the nagging nausea over the past month. And the four positive pregnancy tests that afternoon.

To offer a touch more perspective, in addition to operating under the assumption that pregnancy wasn’t possible, my wife is 43 and I’m 47. We’d just been married five months prior. We have two amazing sons from my first marriage, ages 19 and 17, and were a year away from a blissful early empty nest hood. We weren’t planning on having any more children. Now, we’d begun an 18-year reset.

But after I talked my wife down from the initial shock—even fear—and we began to see this unexpected addition as the miraculous blessing that she is, I hung up the phone, closed my eyes, took an exaggerated inhale followed by a prodigious exhale, and a very clear vision appeared:

I saw myself 18 years from now at a high school graduation.

It was a visceral vision beyond mere imagination. I could see myself there, taking pictures, having pictures taken, shaking hands, hugging, smiling, proud, happy, content.

That vision moved me to action. The very next day, I did the following:

• Increased my 401(k) contribution.
• Upgraded my health insurance.
• Reached out to an attorney to accelerate the update to my estate planning documents.
• Inquired about purchasing additional life insurance.
• Ran a calculation to determine how much I’d invest monthly in a new 529 education savings plan.

To be clear, four of these five tasks were already to-dos based on my present reality, having just been married — and the fact that I’m a financial planner, for goodness’ sake. Yet, what that present reality lacked was such a vivid future vision of me and my family—a vision I felt so connected to that it inspired me to act immediately on behalf of my family’s and my future self.

Then, just days later, I had the serendipitous opportunity to talk to one of the world’s foremost experts on how our future perspective impacts our present, Hal Hershfield, a professor of marketing, behavioral decision-making, and psychology at UCLA, and the author of the new book, Your Future Self: How to Make Tomorrow Better Today.

I felt like I’d just experienced what Hershfield was writing about, so I asked him. “Exactly in line,” he told me. I can’t recommend the book more highly, especially because the author’s exceptional use of narrative gives this behavioral science volume a surprising page-turner quality. Still, I’ll offer here four observations that I discussed with Hershfield designed to help us apply his wisdom and research in pursuit of the most effective financial planning:

1. One of the reasons we don’t save enough for the future is that we see our future self as a different person.

“We see our future selves somewhat as separate people,” Hershfield said. He addresses this both from a psychological and philosophical perspective in the book and raises a fascinating question for us to consider: Are we really the “same” people over time?

The answer that I found the most compelling was an allusion that positions each of us as a yacht. As we journey through the waterways of time, we inevitably have to replace many different parts. Over the course of, say, 40 years, much of the boat has been replaced—piece by piece. But we’re still the same craft, I mean person, right?

2. A better connection to our future self translates to better ‘future self-care,’ like saving for the future.

Merely imagining my wife and me navigating life through an opaque future lens led me to contemplate acting beneficially on behalf of our future selves. But picturing us at a given moment in time, embracing our 18-year-old daughter, bedecked in cap and gown, in May 2041 catalyzed something more powerful and led to action.

We find this validated in Your Future Self, where Hershfield writes, “If you feel a strong connection between your present and future selves—even though your present self is different from your past self, and your future self will be different from who you are today—you are much more likely to perform the hard work of self-improvement.”

But even the moment of crystalized realization is not enough to keep us going.

3. We still need help in staying the course.

Doesn’t it often feel like life is constantly working against us? I mean, we “see the light,” we have every good intention, but then what?

For starters, the realizations that come from future-self connections depreciate pretty rapidly. “There are so many things competing for our attention,” Hershfield told me, “that I can’t possibly think connecting with my future self last Monday is going to impact that big decision 30 days from now.”

Therefore, we must act quickly. Second, whenever possible, automate. This is where we have many new advantages in the realm of financial planning. You can automate your personal savings, retirement savings, bill pay, and charitable donations. Once we’ve established these new defaults, they’ll increase our probability of sticking to the resolutions.

In this regard, Hershfield suggested, we’re better off with our financial resolutions than if we were, for example, attempting to reduce our alcohol consumption, where we’d inevitably face the next happy hour, cocktail or dinner party, and the next “No, thank you.” You can’t automate that one.

Hershfield further acknowledged the powerful role that a financial advisor can play in this regard—both in setting and staying the course. “I think about [the advisor role] as twofold: One is the advisor is intimately connected to these individual decisions…finally filling out the estate plan or increase your 401(k)…that’s partly a conversation with the client’s future self. I also think the advisor can play a really important role in those repeated decisions.” There is power in accountability and regular check ins, he suggested.

But can we overdo it?

Yes.

4. It is possible to over-correct.

Many of us spend so much time rehashing the past or imagining the future that we don’t fully enjoy the present. The latter even has a name—hyperopia, a term most often associated with far-sightedness in vision but that also has psychological applications.

And this is where we financial advisors also have an opportunity to address a problem that most people would love to have: Some clients need help—permission—to spend money. They’ve been so keenly focused on securing the future that they are hindered from fully enjoying it when it arrives.

My friend and colleague, Doug Liptak, refers to it as “The 96% Problem,” because so many wise, wealthy people have been trained not to take more than 4% of their income per year throughout their saving years that many of them will leave this earth without having sufficiently enjoyed the lifestyle their diligent saving was designed to support.

Conclusion

Yes, I realize that you, personally, can’t rely on a shocking announcement to zap you into the future and clarify your financial or other plans in an instant. I will, however, suggest that these moments—the welcome, the unwelcome, and the in-between—are great opportunities to pause and consider how we might live or plan differently.

But we need not rely on the sensational for inspiration either. You can engage with “your future self” under any circumstances, and reading Dr. Hal Hershfield’s new book of the same name is a great start.