Stop Borrowing From Yourself

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Stop Borrowing From Yourself

Back in 2008, famous psychologist Philip Zimbardo came out with “The Time Paradox,” a book where he focuses on how our perception of time affects our lives. His Time Perspective Inventory scores individuals in six different time perspectives: two past, two present, and two future perspectives.

Although we can only materially experience the present, Zimbardo says that people who live in the future are by far the most successful. Western civilization rose and prospered because of our future-oriented culture. Unlike present hedonists who live in their bodies, Zimbardo writes, “Futures live in their minds, envisioning other selves, scenarios, rewards, and successes.”

Mr. Money Mustache (real name Pete) is a 30-year-old retiree residing in Longmont, Colorado who encourages his followers (“Mustachians”) to become financially independent ASAP. In his recent blog post, “Are You Giving the Shaft to your Future Self?” he embellishes on these future recommendations and tries to make a future time perspective attainable for even those who are predisposed to the present or past.

He writes:

Every financial transaction you make today is not so much a deal with a mortgage company, car dealer or department store. It’s a deal with your future self. After all, when the 20-year-old version of you borrowed $32,000 to buy that fully loaded Honda Accord, who ended up having to pay it back? The past self got the new car with no responsibility, and her successor in the present holds the result: a debt hangover and a car that’s now worth only a tiny fraction of the new price. Past You gave Present You the shaft.

This method of thinking can be applied to all common enticing purchases to show how sometimes you’re just thumbing your nose at the future rather than being “the generous benefactor that your Future Self deserves.”

This tendency to be stuck in present enjoyment and forget about future cost is especially true for young people, even those young people have the most to gain from forward thinking.

When it comes to retirement savings, Austin Fey shows in “The Benefits of Saving and Investing Early” how even just saving a small amount while you’re under age 30 can produce, through the magic of compound interest, more savings than dedicated contributions later in life.

Start small. Even $250 of savings a month is $3,000 per year. If you save and invest that from age 23 to age 32, you will likely have over a million dollars in retirement.

However, each day you fail to save is another day where you tighten the ball and chain around your ankle and promise to be a slave to your job for another year and another year after that. Retirement is about financial freedom — including the freedom to have any job you want. If you’re complaining about your job today, why not do something to help your future self? Save and invest now so your retirement can come sooner. Shop for a new job now, so that your future self can be happier.

Hard work today is the best gift you can give to your future self. As Mr. Money Mustache says, hard work “builds skills and earns you money. And the satisfaction you get from the subsequent lifetime of looking back on all that hard work is even better than the money and skills.” While luxury and convenience today “leave your future self poorer, fatter, and with fewer skills. You may create a pleasant memory or two, but memories of hedonism are less satisfying than those of hard work.”

Stop borrowing from your future self. You deserve better than that.

Photo used here under Flickr Creative Commons.

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Megan Russell has worked with Marotta Wealth Management since 2005. She loves to find ways to make the complexities of financial planning accessible to everyone. Her most popular post: The Complete Guide to Your Washing Machine