How a strong connection with your future self could help your financial plan

To effectively plan for the future, it helps to try and connect with your future self.

One reason you may find it difficult to imagine your future self is that most of us feel significantly younger than we actually are. Even when looking in a mirror, it can be hard to correlate our real age with how we look or feel.

In fact, according to a US study of more than 500,000 people, most feel around 20% younger than they are, KFF Health News reports.

A key problem with this struggle to imagine our future selves is that it can make it harder to commit to saving for retirement. In our 30s, most of us consider our 60-, 70-, or 80-year-old self as an almost total stranger.

Work on getting to know the future you

One way to overcome the difficulty of thinking about your future self is to work on getting to know the future you. In the same way that you’d nurture and cultivate friendships or a connection with your partner, you need to spend time nurturing your relationship with yourself.

This could help you to strengthen your feelings and empathy for the person you’ll one day become.

US professor, Hal Hershfield has studied this disconnection with our future selves and created the diagram below to illustrate the gradually evolving relationship of our current self and our future self.

Connecting with your future self could help you save more

Hershfield’s diagram of pairs of circles representing the current self and future self

Source: BBC (Judgement and Decision Making, Hal Hershfield, published in 2009)

Hershfield went on to study how connectedness to the future self affected people’s financial planning.

Presenting participants with a choice to receive a small reward soon or a larger one later, participants who showed a greater connection to the future were far more willing to wait for the bigger reward.

Progressing to look at the savings that participants had in real life, he found that the stronger the connection the participant felt to their future self, the more savings they had.

Unexpected life events could accelerate your ability to imagine your future self

Sometimes hearing news of something happening to someone you know can spark you to assess your own life in a new light.

This could be sad news, such as the sudden death of someone close to your own age, or happy news – like finding out about an unplanned pregnancy.

I recently read about a couple in their 40s. After years of trying for a family, and ultimately accepting that it wasn’t to be, the wife discovered she was pregnant at the age of 43. Her husband was aged 47.

Following the initial shock, the pair were delighted by the news. But the husband acknowledged that his future self suddenly appeared in sharp focus.

Being able to clearly visualise himself attending his son’s graduation in 18 years’ time galvanised him into action. The very next day he:

• Increased his pension contributions
• Improved his health insurance
• Contacted his solicitor to update his will
• Talked to a financial planner about taking out additional life insurance
• Calculated how much he needed to invest each month to send his son to private school.

This tale correlates very closely with Hal Hershfield’s research and conclusions.

The idea of becoming a father helped spur the man in the story into action but, to stay the course, he also knew he’d benefit from having a trusted financial planner by his side.

Use all of life’s moments to help you get to know your future self

Clearly, we can’t all rely on a shock announcement to fast-track our ability to get to know our future selves better, but it’s a story that we can learn from in small ways as we progress through life.

From the welcome to the unwelcome, and all the happenings that fall in-between, we can learn to use life’s moments to help us get to know our future selves just that little bit better.

If you are keen to start to know your future self better, I can help

One of the first conversations I have with clients is about their future aspirations and life goals.

In understanding how you’d like your future to look, I can then work with you to devise a financial plan targeted at helping you achieve your future ambitions.

I can then help you make a stronger connection with your future self – and your financial plan – by using sophisticated cashflow modelling software.

Read more: How cashflow forecasting helps you plan your financial future

The technology can help to answer some of life’s big financial questions, such as:

• Will I be able to afford to retire when I want to?
• Can I afford to help my children with a deposit to buy a property?
• Am I going to run out of money in later life?

With a clearer picture of how your finances might pan out, you may find it easier to think about what this may mean for your future self.

For example, you may discover that you can afford to retire earlier than you expected, or you may realise that you need to factor in additional savings if you want to help your children or grandchildren onto the property ladder when the time comes.

With all the information available, you can see a complete overview of your current financial situation and how this might look in the years ahead. It’s also possible to change the information provided and illustrate how different future scenarios might affect your finances.

Life rarely follows a straight path

As we have learned from the story above, life rarely follows a straight path and life-changing events – good and bad – can alter your future plans at any time.

Crucially, asking these forward-thinking questions, and having the means to predict an answer, could allow you the necessary time to take appropriate action to correct any potential shortfalls. Alternatively, it could confirm that you already have suitable measures in place to cope should your worst fears come true.

Get in touch

If you’d like to know more about how I can help you connect with your future self and design a financial plan to suit your vision, then please get in touch.

You can call me on 07769 156 250.

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate cashflow planning.

Foster Denovo Limited is authorised and regulated by the Financial Conduct Authority.