Building Bridges to Your Future: Psychology Meets Personal Finance

I recently attended a work conference in California held at the UCLA Anderson School of Management with my colleagues and several professors from the University. The opening remarks were given by the co-hosts; executives from LPL Financial and Professor Hal Hershfield. Professor Hershfield is a Professor of Marketing and Behavioral Decision Making and an expert in the area where psychology and economics overlap. Professor Hershfield was discussing his new book, Your Future Self: How to Make Tomorrow Better Today. The book is what inspired today’s episode of What the Wealth.


Your Future Self

Your Future Self: How to Make Tomorrow Better Today is about how it’s hard for our current self to relate to our future self. We tend to view the person we will be in ten or 20 or 30 years as totally separate from the person we are today. And this is why it’s so hard to pursue long-term goals.

We have no idea if that future person will have the same worldview, beliefs, core values, and goals that we have currently. Add to that the fact that we have no idea what is in store economically or politically that far out, and you can see why trying to understand our future selves and our future goals becomes so difficult.

Lab experiments back this up. When people are asked questions, readings were taken to identify their current thoughts, traits, beliefs, and goals around how they identify with the future. The experiment showed that after about two seconds, the subject’s brains clicked off and had difficulty positioning thoughts around the future.

Short Versus Long-Term Thinking

In just a few seconds, scientists could see a big difference between the subject’s short and long-term thinking. Their brains, our brains, quickly come back to the short term.

It’s pretty clear to see this in action when it comes to personal finance, investments, retirement, and other financial goals and why it’s so hard for people to stay on track when pursuing these things. We view the person who will benefit from those things as so far away that they become an entirely different person, separate from ourselves. We don’t know how to align our current and future selves.

It’s easier to think about the here and now. But we know that in order to have long-term financial success, we have to create and stick to long-term goals. The trade-off should be using short-term actions to develop behaviors that will allow us to reach our long-term goals.

Just Do the Next Thing

Think of some short-term goal; losing 50 pounds in six months, for example. You might start thinking of which eating plan, Paleo, Mediterranean, Vegan. How many calories per day, 1,200, 1,600, 1,800? Which kind of workout, cardio, HIIT, yoga? All of this can get overwhelming, too much to think about, too many decisions to make, and we just give up.

Now, imagine how much harder it is when we’re talking about a long-term goal like saving for retirement, which is decades away for some of us. In his book, Professor Hershfield suggests doing just one thing. If you’re trying to lose weight, do one pushup, just one.

Just do something that gets you closer to your goal. This gets us started, which is the hardest part for many people. And when you do just one thing, what often happens is that you keep going. No one does one pushup because you’re already down on the floor in position, so you might as well do a few more. This method reinforces that you can do things that will help you reach your goal.


The study went on to explain how to incentivize things that have long-term benefits when the long-term is hard to grasp. How do we get our minds and actions to forego short-term gains to pursue long-term goals? We can incentivize the short-term actions that will help us meet our long-term goals.

If we go back to our weight loss scenario. Part of weight loss is working out, and it can be hard to motivate yourself to go to the gym. So you incentivize it. Is there a show you love? You can only watch it while you’re on the Peleton.

Or you can leave your phone in your gym locker. You need your phone, right? Of course, so you’ll get up in the morning and go to the gym to retrieve it. And while you’re at the gym, you may as well work out! You’re delaying gratification, creating small habits, and rewarding yourself for following through on the actions that will help you reach your goals. These tricks can help us decrease the mental gap between our current and future selves. They both deserve our best efforts.

If you have questions about financial planning, reach out to us. And check out my new YouTube channels. The videos are short, walk and talks, where I take a stroll and talk about whatever’s on my mind. I also have a Paradigm Wealth Partners channel.

Listen to the Full Episode:

What You’ll Learn In Today’s Episode:

  • Why long-term goals are so hard to pursue.
  • The importance of defining future goals and how to identify how it connects to you now.
  • The difference between long-term and short-term thinking.
  • How we view our future self and what we can do to align ourselves with them.
  • The trick to just getting started and moving yourself toward your goals.

Ideas Worth Sharing:

  • “We almost view ourselves 10-15 years down the road as a totally separate person, and I think that’s why it’s SO hard to pursue long-term goals.” – Jonathan Bednar
  • “Short-term actions create the behavior that will help you pursue the long-term self you want yourself to be.” – Jonathan Bednar
  • “By delaying immediate gratification today, we build these small building blocks and habits.” – Jonathan Bednar

Resources In Today’s Episode:

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