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“If you don’t have a good idea, steal someone else’s.” Shepeard Mead wrote the book “How to Succeed in Business Without Really Trying” in 1952. It became a hit Broadway musical in 1961, won seven TONY awards and a film in 1967. You have seen the health insurance ads where “Present You and Future You” are both onscreen, with future you congratulating present you for decisions taken in the past, making life better for future you. This is an idea that can easily be adapted to your own business.
The “Present You/Future You” concept can teach two valuable lessons.
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Delayed gratification. Sacrifices you make by reorienting priorities today can result in substantial benefits down the road.
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If I could turn back time…When future you looks into the past, it can highlight decisions made back then, that had they been made differently, would have led to a much better outcome.
This concept has been around for a while but is getting lots of visibility today. Let us look at some examples you might use with prospects and clients to make the case for accepting your recommendations:
Future You and…Delated Gratification:
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Maximizing 401(k) contributions today. This can build a serious nest egg because your employer is putting money away alongside you. Investopedia uses the example of $23,000 a year set aside in a 401(k), earning an average of 8% a year, would grow to $1,000,000 in 20 years. (1) Their example does not include a match from your employer. This can also make the case for regular IRA contributions if the client does not have a 401(k) available to them.
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Investing in the stock market steadily over time. Investing is often done either by waiting to have a windfall or short-term trading as a recreational activity. If “Present You” had started a program of investing a set dollar amount every month on an automatic basis, you could build substantial wealth over time. Using a dollar cost averaging calculator, an initial investment of $1,000 in 2014 in an S&P 500 index tracker ETF followed by monthly investments of $1,000, would represent $120,000 invested, yet a total value of $249,003. (2) (8/26/24) No one knows what the future holds, buy “Future You” would have done pretty well. This can make the case for “taking the emotion out of investing.
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Buy and hold with quality companies. It is easy to get scared out of the stock market. It is easy to trade short term, rationalizing “no one ever went broke taking a profit.” You know the quality companies representing the majority of the market capitalization today. What if you bought several and held them? This reinforces how research from your firm can help identify companies that are good, long-term investments.
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Getting the most education and highest grades possible. Some people consider college an opportunity to party. Others consider a degree something you get, even if you just scrape by with barely passing grades. What would life have been like if you went to medical school? What type of job could you have gotten if you stuck with your original degree and was always on the Dean’s List? This can bring back memories and help clients plan financially for their children’s college education and try to focus their attention.
Future You and If I could turn back time…
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Buying and holding real estate. This is something I have always thought about. We have made money when we sold a home and bought a home, but we would have made a lot more money if we held onto every piece of property we ever owned! It’s impractical, but it is something you tend to think about. What are the transaction costs for buying and selling a house? Would your client be better off staying in their current home and buying an investment property?
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Exercising on a regular basis. A study by the American Medical Association showed about 300-600 minutes of exercise each week (45 to 90 minutes a day) has 26% to 31% less risk of death from all cause and 28% to 38% less risk of cardiovascular mortality. (3) You can save money, but you need to live long enough to enjoy it. If your client has not bought life insurance yet, it helps make the case that good health is a factor.
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Not starting smoking or other addictive behavior. This has little or nothing to do with investing, but it speaks to the difficulty of breaking a bad habit. In addition to a health cost, it also has a financial cost. According to Gallup, 21% of smokers have a “pack a day” habit. (4) If the average cost of a pack of cigarettes is $8.00 (5), How much does a pack a day smoker spend in a year? About $2,920! If they live in New York State, the $11.96 retail price brings the annual cost to $ 4,365. What is the financial cost of their habit? What will it cost them to give it up?
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Dating longer before marrying. This can be a question applicable to couples who had multiple marriages or child custody situations. Perhaps they were not ready to get married. Maybe staying single and dating each other longer would have resulted in a more secure relationship. You have heard the old saying, “Marry in haste, repent at leisure.” Does your client rush into relationships? How has that been working out?
The “Present You” and “Future You” exercise can make the case for the financial discipline and healthy behavior, it makes sense to adopt.