Fantasy vs. Reality: Paving a Path to a Promising Future

On Saturday night, I had dinner with Wendy and Dennis, two Get Rich Slowly readers who recently moved from Phoenix to Portland. We talked about a lot of things — most of them nerdy. We also chatted about the ever-evolving nature of Get Rich Slowly.

“I've noticed you're writing more about credit cards lately,” Wendy said. “Is that because you're using them more often?”

“Well, maybe,” I said. I thought about it for a moment. “My stance on credit has certainly changed in the past five years, so that might be part of it. But it's probably just an accident. I seem to cover subjects in phases. I might write a lot about frugality for a while, then write a lot about investing, then about making more money. I guess I've just had more to say about credit cards recently.”

Wendy confessed that the credit card information doesn't do much for her. “I'm phobic about credit cards,” she said.

“That's okay!” I said. “There's nothing wrong with being phobic about credit cards. I used to be scared of them too. I'll never argue that you're making a bad choice by avoiding credit cards.

“I'm open to the possibility of using credit cards when I know I'll use them to spend only the money I have,” Wendy said, “but I'm not ready yet. For a while, Dennis and I had a prepaid card, and even with that, we had control issues.”

Numbers versus emotions
We talked about how our money problems didn't happen because we were bad at math, but because we were unable to separate money from emotions.

The first tenet of the Get Rich Slowly philosophy is that financial success is more about mastering the mental game of money than about understanding the numbers. Wendy summarized this perfectly when describing her past spending habits: “When I bought things, I didn't buy them with numbers; I bought them with emotions.” She's trying to do better now, but it's still a challenge.

You always think the Future You will have more money,” Wendy said. “It's okay to spend today because you'll find some way to pay for it tomorrow. But you never think that the Future You might drop out of college or have kids or get into a car accident. The Present You doesn't really know the Future You.

I loved this insight. I've thought often about how the Future Me always seems to be vastly different than the Present Me — and different than I would have predicted. Yet I used to make dumb decisions in the present as if my future self would somehow develop the superpowers to save me. Instead, Future Me simply ended up cursing my past choices.

Fantasy versus reality
How tough is it to predict your future path? Here's a simple test: Think about where you were five years ago — where you lived, who you spent time with, what you did. How does that compare with where you live today, who you spend time with, and what you do with your time? Chances are your life today is much different than it used to be — and much different than you might have predicted it would be.

Here are two examples from my own life:

  • When I was a junior in college, I expected to graduate, settle in a big city, get a job as a counselor or therapist, get married, have kids, and live happily ever after. I had no inkling that five years later I'd own a house in my hometown, work at the family business (something I swore I'd never do!) in a job I hated, and have over $20,000 in consumer debt. No inkling. (Only the “get married” part of my expectations proved to be correct.)
  • Five years ago, I was buried under more than $35,000 in consumer debt, still worked at the family business in a job I hated, and hadn't even conceived of Get Rich Slowly. (I was just beginning to read personal-finance books.) I could never have imagined that today I'd not only be out of debt, but also have substantial savings and be a full-time writer.

Sometimes your future life fails to live up to your expectations, and sometimes it exceeds them. But in nearly every instance, you cannot predict where life will take you. In fact, you can't even predict what will make you happy! No wonder Present You often does such a poor job of setting things up for Future You.

Present You versus Future You
When I speak to college students, I warn them to not spend based on their expectations for the future. It's tempting to believe your future self will be richer, smarter, stronger, and more successful — but that doesn't always happen.

What can you do about it? How can you strike a balance between today and tomorrow? There's no mystery. You can fund your future by making smart choices in the present, including:

  • Have a plan. Based on who you are today and what you know about life, set goals for the future. Sure, these goals may change. That's okay. Use these goals to create a budget or financial plan in the here and now.
  • Practice conscious spending. Stop spending on the small, unimportant stuff so that you can afford the things that matter to you. This requires long-term thinking, but it's worth it.
  • Avoid debt. Don't expect your future self to be able to cope with the financial mistakes you make today. Don't make things tougher for yourself than you have to.
  • Save for retirement (and other goals). Remember the extraordinary power of compound interest: The more you save today, the less you need to save tomorrow.

Before our dinner conversation returned again to dorky topics, Wendy made a final observation: “Once I stopped thinking about the Future Me as being different than the Present Me, my whole perspective changed. I started making decisions on what I needed and could afford today instead of what might happen tomorrow.Exactly!

To stop making poor decisions with money, it's often necessary to ignore fantasy and deal with reality. Instead of counting on Future You to save the day, do the hard work now. Your future self will thank you for it.

More about...Planning, Psychology

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Russ
Russ
10 years ago

This is an excellent post. The first time I tried to think back to a 10-year-younger version of myself, I was shocked at how unrecognisable I was. The 30-year-old me thinks the 20-year-old me was a naive reckless and nerdy fool, and the 20-year-old me would probably regard the 30-year-old me as a conservative overpaid jerk. I am comfortable with this. My values and ethics have almost entirely changed, and continue to do so. And therefore, I expect the 40-year-old me will probably also be very different. So when people tell me that finance is all about long term goals,… Read more »

Sam
Sam
10 years ago

I’m phobic about credit cards too. When talking with one of my neighbors he, who loves his credit card rewards, only puts bills and other items he would pay for anyways (i.e. gas) on his credit card. I might do that, switch my bills from auto pay from checking to auto pay from my credit card, but I won’t go back to using credit for day to day spending. While I always paid of my credit card in full and accumulated a ton in rewards I realized after I stopped using credit that I spent at least a 1/3 more… Read more »

LifeAndMyFinances
LifeAndMyFinances
10 years ago

I think Wendy’s idea is completely true. We always believe that our future will be better than our past (financially speaking). I think this is why there are so many kids graduate college and then suddenly feel the need to reward themselves with a new car that will drown them in payments for the next 5 years. They believe that they’re going to be living the life and making big money. The reality, though, is that many of them won’t find the job that they are seeking, and they might get caught in a career that they never visualized. We… Read more »

Nancy L.
Nancy L.
10 years ago

When I was in college, I wrote some notes to myself as a 25 year old, a 30 year old, and as a 40 year old. When I was in college, we still used typewriters and punch cards, so the idea of the Internet or personal computers was extremely foreign, so naturally a few goals are charmingly archaic to look back on. The amazing thing to look back on however is how closely my life has followed the path I envisioned for myself back then. Even at age 21, I realized that I wanted to be living in a suburban/rural… Read more »

Rob Ward
Rob Ward
10 years ago

Great insight. I’m ticked at my past self (only a year and half ago) for purchasing yet another brand new car with another brand new car payment. We could be so much farther along with paying off the rest of our debt if we had just bought a beater. Oh well. Live and learn.

Now the key is remembering to not make similar mistakes again.

Marco Ricci
Marco Ricci
10 years ago

I’m in complete agreement with the statements at the end of the post.
One might think that just because “the Present You doesn’t really know the Future You”, planning is useless.
On the contrary, planning forces people to prioritize, thus affecting one’s spending habits in a positive way.
But what if someone’s hierarchy of values is dominated by the urge of buying expensive shoes? 🙂
I think that educating people about “conscious spending” is the real challenge.
Bye,
MR

Anonymous
Anonymous
10 years ago

Saving for retirement and emergencies is recognizing that a Future Self will likely be different from a Present Self. The point is that many people err on the side of being overly confident and optimistic when imagining future states. This has been pretty well established in the literature.

This blog makes me realize how different we are when it comes to money. I have no trouble envisioning scenarios in which I’ll be short of cash, and I err on the side of underspending today.

sjw
sjw
10 years ago

@4 Nancy L

One of my high school teachers always said – and had as a big sign at the front of the room – “Nobody plans to fail, but some fail to plan”. Which I think sums up the issue you noted.

Anonymous
Anonymous
10 years ago

Also, I wonder how many people who are afraid of credit cards had the opportunity to practice using them as teenagers with education from their parents?

Rob Bennett
Rob Bennett
10 years ago

There’s a paradox here. You don’t want to tell people to focus on the present. It’s caring about only the present and not planning for the future that causes debt in the first place. But you are right that there are limits to our ability to see into the future and that we need to keep those in mind in all planning efforts. I try to imagine more than a single future scenario and adopt money plans that work well under as many of the somewhat likely scenarios as possible. For example, if you win the lottery, you will wish… Read more »

Mom of five
Mom of five
10 years ago

I would guess that many folks will reach a holding pattern at some point in their lives. Although we’ve got two more kids than we did 5 or 10 years ago, our life and our goals have not changed substantially at least in the last 8 years since we completed a large addition on our home. And barring some unforeseen disaster, our life likely won’t be too much different 5 years from now either. 5 or 10 years ago, I’d have been happy to discover our current financial situation. I’d have said we’d met all our goals. However, now that… Read more »

Jackie
Jackie
10 years ago

“I started making decisions on what I needed and could afford today instead of what might happen tomorrow” — that’s a great way to go about things. I take it a step further though, and don’t assume that things will always be as good tomorrow as they are today. Of course I hope they will be even better, but realistically they could also be worse. (People get laid off, etc.) If you leave yourself plenty of wiggle room, things usually go very well.

AC
AC
10 years ago
I remember listening to a financial advisor on a talk show suggesting to visualize when using credit cards you are STEALING from your future self.
Peggy
Peggy
10 years ago

Am I the only one who expects my Future self to have LESS money? So I avoid debt (including credit cards) at all cost, and constantly invest in tools and learning new skills.

First Gen American
First Gen American
10 years ago

#8, it’s funny, my favorite teacher had a sign below her clock that said “time will pass, however you may not”.

My life didn’t wildly vary from my goals. The only difference is that I had planned on paying off my mortgage debt by now. I’m a little behind schedule. Of the things that I can control, they are pretty much where I want them to be. I just hope everyone stays healthy, alive and well. Everything else is just gravy.

Mom of five
Mom of five
10 years ago

#14 Peggy. I think that’s where I am too. I do think we’ll have less money in the future. I also think the economy of the last couple of years was a real bucket of cold water for me. For the first time in my adult life people we know to be good workers couldn’t find comparables jobs to the ones they’d lost, at least not in a reasonable time frame. They’ve been forced to make do on much less. I suppose it’s been like that in other parts of the country for awhile now, but in the Northeast, not… Read more »

Britton
Britton
10 years ago

JD — on a completely unrelated-to-finances note, I highly approve of the dinner conversation. You’d get along fabulously here in Austin. 😉

chris
chris
10 years ago

I too have a hard time evisioning a future with more material wealth. I think I will personally be okay and I think both my aging parents and IL’s will be finanically self-sufficient, but will need way more care and attention than they do now. Culturally, I think we are in for a long rough patch until we realize that trying to constantly growing GDP is not sustainable and that we need to live lives with less money and more emphasis on community and relationships we are sunk. BTW I think my 40’s self likes my 20’s self better (the… Read more »

Kent @ The Financial Philosopher
Kent @ The Financial Philosopher
10 years ago

@ Rob #10: Good points! I believe, however, that no paradox exists here. One can remain in the present moment (make conscious choices) AND have conversations, so to speak, with the past and future selves. One may listen to what the past and future selves have to say; however, one need not live in the past or future to do this. If there is a paradox, it is that living for a brighter tomorrow kills today. Tomorrow never comes; tomorrow is death; life exists in the present moment. The solution to the paradox is contentment. The solution to remaining in… Read more »

Allison
Allison
10 years ago

“You always think Future You will have more money.” This doesn’t just apply to five years from now, it applies to two weeks from now!

david stuart
david stuart
10 years ago

at 49 single/never budgeted in my life.

until last year a dodgy builder took me for 10k.

total debt 48k.made a plan to clear it in 4 years.1st year come dec–ive reduced it by 12k/which i would never been able to do unless budgeting.

Alexandra
Alexandra
10 years ago

I tend to hope that the future Me will have more money, but plan for the future Me to be unemployed.

I have had to pull back from this scenario recently, becuase I realize that I am constantly squirrelng money away for later, while not living up to my full potential today.

I have had “Saver’s remorse” too many times recently to be fully happy with my savings plan.

numpadninja
numpadninja
10 years ago

perhaps it’s nerdy of me to distinguish between the definitions of nerdy, geeky, and dorky, but i’d say the topics of discussion were geeky and not nerdy.

retirebyforty
retirebyforty
10 years ago

Excellent observation about future me. I’ve never looked much into future me. Yes, I know people always talk about 5 years plan and 10 years plan and where you want to be, but I’m already busy living with my present self. In the last year or so I’ve been putting more thought into future me and I am making changes so I can be where I envision in the future. It’s dangerous to bet on your future earning and generate debt today. On the other hand, I’m looking into a future than I will be making less money and planning… Read more »

Gal @ Equally Happy
Gal @ Equally Happy
10 years ago

The future me vs. current me should apply to all aspects of your life. We don’t know the future and basing our present decisions on it is folly. Base your decisions on what you know and treat future possibilities as just that, a possibility (with increasing lower probabilities the further out they are).

For example, in my personal training, I counsel people not to use the old “well, I can eat that extra slice of cake now because I’ll work out later!” line because it’s almost never true.

nolandda
nolandda
10 years ago

“Yet I used to make dumb decisions in the present as if my future self would somehow develop the superpowers to save me.”

But your future self did save you. Maybe not with superpowers, but still.

DreamChaser57
DreamChaser57
10 years ago

Phenomenal post, that was quite a delightful read! I distinctly remember envisioning what my life would be like in grammar school, but those aspirations only involved my career and family. I had no inkling how to create a healthy relationship with money. My past self was completely ignorant to the world of personal finance, and my present self has paid greatly. While nothing catastrophic has happened, I simply did not capitalize on ample opportunities, and I certainly was not proactive. Surviving was the goal and expectation and not thriving. My present self is doing a favor for my future self… Read more »

Monique Rio
Monique Rio
10 years ago

First: Dorkness Rising is awesome. Second: I had the same realization as Gal #25. Making decisions now that require my future self to act better than my present self usually ends badly. Example: Writing. I have daily writing goals. Some days I don’t feel like writing so I’ll tell myself, “I’m going to read this book now and my future self can deal with writing later.” Inevitably when later comes I’m no more enthusiastic about writing and I may be a bit resentful at my past self for forcing me to choose between writing and sleep. I like and want… Read more »

The Quest
The Quest
10 years ago

Great post! I remember doing this to myself ‘back in the day’. Thinking, “I’ll buy xx now because I just know I’ll have the ability to make more money next year to pay for it all.” Inevitably, life got in the way, another kid was born, etc. etc. and I just never got a handle on my denial. Then I was hit with a job loss that caused a massive shift in my thought pattern and, I guess, an ‘awakening’ to my foolishness. Today, I live for the present. I absolutely do not count on my ‘future self’ because of… Read more »

Bill
Bill
10 years ago

Nancy L @4: You’ve reminded me of something I’ve thought about a lot in recent years.

With our current economic situation, especially in my dying industry (print journalism), I often feel more comfortable with being 65 and almost retired than being one of the youngsters who face a more uncertain future.

OTOH, I envy the young people who are getting much more, and better, financial planning information than even existed 40-some years ago.

We didn’t plan back then and for some of us, it shows today.

There’s no real moral or lesson here, just a comment.

Anree
Anree
10 years ago

I thought I was the only person that considered this idea of “Future Me”. I love when I realize that “Past Me” did something that benefits me now (i.e. Math minor, paying off debt, saving, marrying the right woman, etc). It can even be as simple as when “Past Me” irons the clothes and makes the lunch the night before for the “Present Me” who woke late and is in a hurry. I find myself literally thanking “Past Me”. I think planning and preparedness has become such an integral part of my routine that I think about “Future Me” constantly… Read more »

J.D. Roth
J.D. Roth
10 years ago

@Anree (#31) I love your comment. I think being consciously aware that your past self has made things easier for you is an excellent way to reinforce doing similar things in the future. Actually, that’s where I am with my fitness. As I’ve written elsewhere, taking the cruise in France last month was eye-opening. I saw all these 65 and 75 and 85 year olds who had trouble even walking half a mile. But I also saw folks who had made fitness a priority. They were in better shape than I am at 41. I want to be like them,… Read more »

cathleen
cathleen
10 years ago

Long story short. At a young age I had saved a lot of money, including an inheritance. Successful jobs, then started a dream business which was successful and made me extremely happy. It never occurred to me that my husband would hate the business (we worked together) and he went into a deep deep depression. It was either sell the business or get divorced! We sold it, then were both unemployed for 2 years. Neither of us had EVER been unemployed in our lives! It was a shock. We hung on to our home but used our entire savings to… Read more »

Donna Freedman
Donna Freedman
10 years ago

If you’d told me upon my high-school graduation in 1976 that two years later I’d be a single parent, I would have flatly dismissed the idea. I wasn’t planning on having kids. If you’d told me in 2000 that in a few years I’d no longer be married, a newspaper journalist or living in Alaska, I would have laughed. (I was unhappy in the marriage; I just couldn’t see a way out.) If you’d told me in 2001 that I’d be broke by 2005, I wouldn’t have believed you. I had a good job and a savings account. If you… Read more »

Briana @ GBR
Briana @ GBR
10 years ago

This is such a great point. I can’t tell you how many times I was trying to justify purchases because “future me had the money”. Then an unexpected expense would come up then I’d be SOL. Sometimes you really do have to live in the now.

Nancy L.
Nancy L.
10 years ago

@Bill (#30) I totally understand your point. In some ways my parents had it best, because they came of age in the boom years after WW2, when jobs were plentiful and housing was still relatively low priced. In some ways, I had it best, because I came of age in the first generation to really try to understand computers, so I was able to take advantage of knowing both the old and the new technology, and got a lot of opportunities simply by knowing programs that were too new to be taught in school. And in some ways, my son… Read more »

leslie
leslie
10 years ago

JD – I know what you mean about your future self and fitness/health. My parents are planning a 19 day safari in South Africa, Botswana (and a few other countries I can’t remember right now) for next summer. My dad turned 73 today and my mom turned 71. They have made fitness and health a priority their whole lives. Are they in perfect health? No…my mom just had knee surgery 8 weeks ago and my dad had a triple bypass about 10 years ago. However, they knew that when they retired that trips like this would be a priority for… Read more »

Anonymous
Anonymous
10 years ago

First time poster, this blog entry really hit home with me. Now in my 30s, I never would have envisioned the last decade of my life going the way it did. Long story short, by 24 I was well paid, had obtained several degrees, successful investor and eternally optimistic. At 29, bankrupt, jobless, homeless, and in the pit of despair. Currently, nearly recovered financially, employed, and a realist. Things are always in flux in life and there are no guarantees. The number one lesson I learned was to respect every dollar I earn. I still spend money on things I… Read more »

saro
saro
10 years ago

This is a really great post. I’d like to give it a high five. 🙂 It’s only in the last few years (I’m 33 now) that I realized my mind-set of “Oh, I’ll make money when I’m older.” wasn’t going to apply (thanks to my very pragmatic husband). I’m now making a decent amount, finally paying off my gazillions of student loans and living below my means – and it feels great! I wish I had this type of common sense when I was younger! Oh well. I’m sending this to all of my younger relatives who are in college… Read more »

Leslie
Leslie
10 years ago

I really appreciate the point about not expecting your future self to be a completely different person from who you presently are. I think I’m just starting to get to a point where I can imagine slow but steady progress with things just as they are. Even though I’m still on somewhat shaky ground, I’m in a far better position than I ever had been before. When you’ve spent the last five years going straight from college to grad school, then to a full-time service sector position in a bad economy, then starting out self-employed after moving across the country,… Read more »

shauna
shauna
10 years ago

I agree with Gal #25 – this principle applies to all aspects of life, but it’s funny how people who are normally quite disciplined in other regards don’t apply this thinking to their finances. My hubby and I blasted our way through graduate school by our mid-twenties, working full time the whole way, and constantly applied the “my future self will thank me” thinking, but we simultaneously racked up thousands of dollars in consumer debt and student loans, which we justified, I think, because we were so disciplined in every other part of our lives. In retrospect, I wish I… Read more »

bobj
bobj
10 years ago

I see the future me as a bigger saver.. the present me likes to spend..
i hope to get “back to the future” soon.

Ely
Ely
10 years ago

Great article!! I don’t think I’ve changed all that much in the last 5-10 years. I’ve been in the same relationship, a lot of similar situations. It’s more like I’m evolving than changing dramatically anyway. One example is, 10 years ago we lived in LA and home ownership was something that happened to other people. Now we’ve been in our own place for the last 5 (a personal record for living in one place). Another is that after struggling for years to live within my means, now it’s almost easy. I’ve lived on the same or less money for most… Read more »

Kay Lynn @ Bucksome Boomer
Kay Lynn @ Bucksome Boomer
10 years ago

As the others said, there are some great observations in this article. I used to spend income increases before they happened. So when the raise came through, it wasn’t joyous or extra — I was already in debt from anticipation!

Jason Baudendistel
Jason Baudendistel
9 years ago

Using credit cards is about self discipline same as any other debt it is a tool. Pay off the balance and collect the rewards points dont spend more than you can pay off and dont acrue any other debt if you can help it unless it builds assets. I am thankful i’m 25 and know this just wish I knew at 18..lol

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