Spending is easy. Saving is harder. Investing may be hardest of all, because it's not just squirreling money away, it's actively learning how to make it work for you, a process that takes time and effort.
Spending is easy. Saving is harder. Investing may be hardest of all, because it’s not just squirreling money away, it’s actively learning how to make it work for you. That involves some time and effort now that won’t pay off until the distant future.
In all things in life, the “instant gratification” trap lies before us. Short-term pain for long-term benefit can be a hard concept for our brains to get on board with. But falling into the trap can be damaging not just for your future self, but for your current self. Because you know that the behavior you’re engaging in—or, in the case of investing for your retirement, not engaging in—is not good for you long-term, falling into the trap can be a source of such stress and anxiety that it have major negative consequences on even the short-term joy you’re protecting.
How can we avoid falling into a trap that could be damaging to our future selves?
Make a plan. Set some goals. If you don’t have a plan, it’s easier to get sidetracked by whims and temptations. Drawing up a plan and actually writing it down or sharing it with others can help you focus yourself and creative some incentives that actually give you feeling of accomplishment now. When you set up your plan, include the specific short-term measures that will get you to your long-term goal. Plans with no specifics are too easy to ignore.
Identify Your Sirens. There are going to be temptations along the way. You probably know by now what they are, those things that give you a short-term jolt of instant gratification. Maybe it’s a day at the horse track that spirals out of control, or maybe it’s the ever-present desire to finally buy that shiny sports car you’ve always wanted. Write those down, too.
Find Some Enablers. We typically think of “enablers” in the context of “enabling” someone to keep engaging in bad habits. But enablers can help keep us on the right path as well. Take some time to think about people in your life who can help you on your journey and provide support for when you’re faltering.
Create a Mini-Reward System. As you work toward your financial goals, put some sort of system in place that allows you to experience at least some pleasure. Since you know you can’t afford both that Ferrari and a secure retirement, find another way to give yourself a little reward for taking the harder road. Just be careful that your reward doesn’t sidetrack you and doesn’t spur on the desire to do that thing you know you shouldn’t be doing.
Along the way, recognize that mistakes, temptations, and short-term detours from your goals are going to come along. These things happen. Don’t crush yourself over it. Focus on the long-term rewards that await you and remind yourself what you’re working toward and why.