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Why can't we connect with our future selves?

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People plan to save money, but when the time for action comes and they need to sacrifice current spending, they reverse their decision

Have you ever tried to imagine what you will look like 40 years from now? If you haven’t, it could be worth doing so – your future self would certainly be very grateful. According to research carried out by Hal Hershfield1, a social psychologist at UCLA Anderson, being able to realistically picture your future self in an accurate and positive way can improve your ability to make decisions that will positively impact your life in years to come.

However, the study also indicates that many struggle to picture, and consequently connect with, the person they’ll become in the future. This disconnect with the future self can result in future needs, such as saving for retirement, being brushed aside, and immediate desires, such as spending money on eating out, instead being prioritised. Our recent survey2 into the saving habits of people in the UK reflects this statement. The survey revealed that, while 36% of people in the UK feel as though they need more control over their financial future, more than half (54%) say they treat themselves when they want.

In order to better understand the subject, and the role this plays in people’s saving behaviour, we investigated Hershfield's research further, and spoke to Professor Darren Duxbury from the Newcastle University Business School, and the Behavioural Research in Finance (BRiF) group.

Temporal discounting

According to Hershfield, people characteristically tend to care less about future outcomes than they do about present ones – prioritising smaller, short-term rewards, over larger, more long-term ones. This phenomenon is known as temporal discounting. In terms of putting money aside for retirement for example, many people would rather spend £100 today, than save this and reap greater rewards during their later years. Our recent Family Finances Report3 indicates that Gen O are particularly guilty of this, with 76% of people in this age group suggesting that spending on daily life is more important to them than long-term goals like buying a home.

Duxbury explains that “people succumb to the present bias, exhibiting more impatience the closer in time an object or event is.” However, he goes on to say that “this creates a tension between future plans and current actions.”

One of the reasons temporal discounting may occur is that the needs of the present self simply trump those of the future self. Many people would like to save, but simply don’t have the means to do so. Our survey found that three quarters of people in the UK don’t have enough disposable income to save, with one in five indicating that their finances make them feel stressed.

Having said this, there are a number of people who are in a position to save, yet are still reluctant to do so. One in 10 people we surveyed suggested that they prefer to live in the moment and spend when they want, rather than save for the future.

The Stranger Within

People’s inability to relate to a self that is not the present one is another reason why temporal discounting occurs. This is where self-continuity, or people’s ability to imagine and visualise themselves in the future, comes into play. Hershfield proposes that the self is a collection of selves over time, each with their own wants and desires, and that the selves are connected to varying degrees. The greater the time frame between the selves, the more tentative the connection. For example, the present self is far more likely to be able to connect with the 5 years from your now self, as opposed to the 40 years from your now self.

24%
of Gen Os have no plans to start a pension in the near future with 61% feeling retirement is too far off to think about

So much so, Hershfield’s research found that when certain people think about themselves in the distant future, they consider this self a different person entirely. The study established that those who think about their future self as a stranger, are also those more likely to consume in the present, rather than postpone and gain larger rewards in the future. This is due to the fact that, if people see their future self as a stranger, they are likely to make decisions for their future self as though they were making these for another person. In terms of saving for retirement, if people consider their future self as a different person, they’ll have no more reason to save money for themselves than they would giving the money to a complete stranger.

Considering our survey indicates that the majority (61%) of Gen O consider retirement too far off to think about, and a quarter (24%) have no plans to start a pension pot, it becomes even clearer that many display a lack of empathy with their future self.

Why is it important to connect with the future you?

There are varying levels of attachment between the selves, some people are extremely connected to their future self, others less so. Importantly, it’s the very degree of connectivity that establishes the extent to which people discount future rewards, or the degree to which temporal discounting is applied by any given person. In other words, the way in which the present and future self is perceived is a strong indicator of decision making over time.

Discover how the psychology behind instant gratification could help you save

The more a person sees their future self as an extension of their present self, the more motivated they’ll be to act in a way that will benefit their future. In terms of finances, if the future self is thought of as similar to the present self, people are more likely to ‘donate’ to their future self in the form of savings.

Ultimately, outcomes and events that are easier to picture often feel as though they’re more likely to occur. Those who are able to vividly imagine their future self in a positive light, are often those who also find it easier to connect to their future self. Being able to connect with your future self, and understanding what their needs and wants will be, can be extremely important in terms of being motivated to save for the future.

Additional sources

[1]www.researchgate.net/publication/51738840_Future_self-continuity_How_conceptions_of_the_future_self_transform_intertemporal_choice
[2]The research was run in consultation with Future Foundation and ICM. The findings are based on 5,000 online interviews among a nationally representative sample of UK adults aged 18 and above, carried out in February 2016 and analysed during February/ March 2016.
[3]Over 2,000 people aged 18-55 who live as part of one six family groups were interviewed to produce the report’s latest tracker findings for Q2 2016, with additional interviews among 18-35s taking the total in this age group to 1,073 for the spotlight on millennials.

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