Monday, November 20th, 2017
In an earlier article, we looked at our brain's faulty wiring when it comes to connecting with our future selves. It's like giving your morning latte to the guy or gal sitting next to you on the subway every day. Crazy, right? Why would you give up what you love today to benefit someone you don't know? That's how your brain thinks about the you of 10 years from now.
So How Do We Connect With That Self in the Decades to Come?
"It's normal for investors to have a tough time imagining themselves in old age," he says. "In fact, there was a research study done at Stanford where participants were asked how much they were willing to save for retirement. As a test, some were shown a computer-aged photo of themselves to see if that had any effect on their savings rate. It turned out that the people who saw the photo chose to save more. Seeing their 'older self' allowed them to better envision themselves decades in the future."
But if you don't have a computer program that can age your latest selfie, Toronto's Peter J. Merrick, CFP and author of The King Of Main Street – Business, Mentorship, Succession, and Legacy has some interesting questions to get you there, like:
After you have a clear picture in your head of these goals, Peter recommends using the following financial planning process adapted from the FPSC:
But that pesky notion of instant gratification can stall even the most clearly laid plans. To help you stay focused on your newly documented goals, Dr. Moira Somers, a neuropsychologist from Winnipeg who specializes in financial well-being, recommends talking about money and doing so often.
"It puts a ground wire to the emotional charge that money can bring," she says. "The fact is that most people don't talk about it at all. We're often trained not to talk about money in those situations and at those times when it really, really matters."
She laments that many of her patients seek her advice when they're on their second or third marriages, wanting to not end up divorced again. They're seeking out how to have the money conversation, but Dr. Somers warns: "You have to develop the emotional and social skills to talk about money skillfully."
The Most Important Money Talk Is With Yourself!
Goldie finds it's really helpful for people to understand the power of compound growth when trying to better connect with and envision their future.
"For example, if you consider that potentially doubling your money every 10 years or so results in multiplying your savings by 8 times in 30 years – that's motivating," he says.
Maybe that's why Albert Einstein is said to have called the power of compound interest "the most powerful force in the universe."