Do it for your future self

Carl Richards is a Certified Financial Planner™ and creator of the Sketch Guy column, appearing weekly in The New York Times since 2010.  The following article is reproduced with permission from his weekly newsletter and his website can be found here.

Greetings, Carl here.

Who do you think you’ll be in a year? Five years? Twenty years?

One of the big problems with setting goals, especially financial ones, is that we’re really bad at imagining our future selves. Just remember what you imagined you’d be as an adult when you were a kid. I’m guessing there are some gaps between that dream and your current reality.

When we talk about financial goals, we’re often talking about long timeframes. Consider retirement, for example. That could be upwards of 20 or 30 years from now. You can’t even imagine yourself at that age, let alone plan for it. That’s your parents, not you!

We do the same thing with our children. When my first daughter was born, college was the last thing on my mind. But by the time we had our fourth child, I had a good idea how fast 18 years would go by.

When we start talking about our distant future selves, it’s easy to rationalize the decision to not do anything. In fact, our future selves can actually often feel like some other annoying person constantly stealing heaps of fun from our current selves.

And yet, while our future selves may feel like a big old pain in the neck, it’s important to realize that appeasing that person is still very much in our best interest.

So what’s the solution?

To start with, we need to get really clear on our goals. And I’m talking broadly. You don’t have to know exactly what college your first-grader is going to go to and exactly what the tuition is going to be. Just don’t pretend that 18 is a long way off. It’s not. So you better start saving now.

You may feel like you’re still 30, but if you just celebrated (or mourned) turning 40, it’s time to get real. Our future selves will be here faster than we think. Remember all the stupid stuff you did as a teenager? Don’t be the 60-year-old that wants to hit your 30-something self over the head for doing stupid adult stuff, like not getting clear on your financial goals.

Time with family, mainly outside, and service in the community. That is my Statement of Financial Purpose. Do you know what yours is? Click here to listen to me explain more and get a guide on how to create one for yourself.


P.S. As always, if you want to use this sketch, you can buy it here.