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Time Perspective

4 Tips for Financial Balance When You’re Future Focused

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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When I took MagnifyMoney’s Time Personality Quiz, my results got a little sassy with me. “Even your mom probably tells you to live a little,” they said snidely. (Okay, they didn’t say anything snidely but I couldn’t help but imply the tone.)

But the thing is, those results are accurate. I’m extremely future-focused when it comes to both time and money. That means I delay gratification today so I can save more for tomorrow – to the point where I’ve admittedly missed out on worthwhile opportunities because I wanted to invest my money instead of spend it.

“A balance of focus on the future with a dash of living life to the fullest in the present will help keep your mind and bank account well balanced,” advised my results from the Time Personality Quiz. I think they’re right – and that I could be doing a little better with that whole balance thing.

Are You Future Focused?

You might be too future-focused yourself if you’ve ever been afraid or stressed about spending money, even when you had the cash in the bank. Your focus on future goals may leave you neglecting your present wellbeing if you haven’t taken a trip for fun in years, or bought something new for yourself, or invested in different experiences.

You may also be too future-focused if you can relate to one of my worst habits, and one I’m trying hard to break this year. I hate to say it, but more than a handful of times I’ve caught myself wishing away the present because I wanted to hurry up and achieve a future goal.

Because financial independence is a big goal, I tend to periodically catch myself thinking, in just 10 more years I’ll get to do X, Y, and Z [that I’m putting off now] because I’ll be financially independent!

It’s easy to get caught up in all your big future plans and miss out on enjoying the present as it happens when you’re too future-focused.

It’s Not All Bad News!

This is not to say being mindful of the future is a bad thing. It’s important to think about your future stability and security, and to have a plan for how you’ll achieve your big, long-term goals.

But the goal should be, as my Time Personality Quiz results reminded me, finding a balance between enjoying and appreciating the present while saving and investing for the future.

My resolution for 2015 was to allow myself to live more in the present in order to find more balance. Here are the action steps I’m taking to help me achieve this and develop a better mindset about time and my financial goals.

Practice Gratitude

The quickest way for me to stop stressing about financial goals and what I can do right this minute to achieve them: practice gratitude. Nothing grounds me in the present faster than taking a moment to ask myself, what good things happened last week? What can you appreciate about your finances and your situation today?

This helps me change my thought process and patterns. Before, I thought about financial independence and what I can do to get there even faster.

I’d start thinking of ways I could save more money, earn more money – and then I’d cut back on something small that I could have enjoyed in the present (like attending an event) or I’d spend the next week working as many hours as I could to earn more money.

Now, I think about financial independence and I appreciate that it will realistically take me at least 10 more years to achieve it. Then I go grab a notebook and write down all the good things that happened last week, all the things I’m happy about today, and everything that I’m looking forward to doing in the next week.

This helps me stay grounded and focused on what’s happening now. I’ve done what I can to get myself set up for my big financial goal, and the only factor missing now is consistent action over time. Instead of wishing away that time, I’m practicing gratitude and not taking any day for granted.

Keep a Close Eye on Your Budget

My budget is a helpful tool when it comes to reining in my future-focused mindset. It allows me to track my spending, both on necessary expenses and discretionary purchases.

At the end of the month, I can see exactly where my money went. I know how much I saved, how much I had to pay for bills, and how much I spent on wants.

This enables me to do two important things:

  • Understand exactly how much money is usually available for spending on fun stuff, so I can allocate some money for present spending without feeling guilty or stressed
  • Celebrate the amount I put into savings and investments

Balancing the present with the future doesn’t mean I can’t get excited about the progress I make on a regular basis, and a budget helps highlight that for me. I can allow myself to feel happy about those future goals I’m working toward – but I can also see that I do have a set amount of cash I can put toward enjoying life today, too.

Prioritize Wants and Needs

Thanks to practicing gratitude and appreciating what I do have, I find that I want less stuff on a day to day basis. This makes it really easy to forego a lot of little things – and allows me to prioritize wants and needs according to what I truly value.

I prioritize travel, books, and new experiences. When I want to enjoy one of these things, I do not allow myself to feel guilty about it. This ties into keeping a budget: because I track my finances carefully, I know I have a set amount to spend on things simply because I want to.

This makes it easier to allow myself to make purchases that, before, I would have agonized over. I save for wants that I value and prioritize above all others, and then spend on those things in the present – without feeling guilty about it.

I also do this intentionally. I still avoid impulsive purchases so I’m not stuck with things I don’t need (or even want!) and a whole lot of buyer’s remorse.

Have a Plan

It’s hard to stop worrying and focusing on the future when you have no clue what the heck it looks like. Sure, no one has a crystal ball and there’s no telling what any one of our tomorrows could bring.

But you can create a plan that you want to follow and enjoy. This helps give some structure to your time – and once you set up your plan and automate your action steps, that means you can worry less about the future and enjoy today more.

My plan is, as I mentioned, to reach financial independence. Once I achieve this milestone, I want to live abroad and travel frequently.

After crunching the numbers, I know I need to invest at least $2,000 per month for the next 10 years to reach financial independence. As long as I’m doing this, I’ll achieve my goal. I can then automate my investment contributions – and use the rest of my time to focus on making my present just as great as I’m working to make my future.

I’m finding more balance with living in the present moment while still taking care of my financial future by practicing gratitude, keeping a budget, prioritizing my wants and needs, and creating a plan I can automate. You can take these steps to focus on that balance between your present wants and your future needs, too.

Discover how your time-perspective impacts your relationship with money! 

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Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kali Hawlk
Kali Hawlk |

Kali Hawlk is a writer at MagnifyMoney. You can email Kali at [email protected]

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Time Perspective

Are You Healthy Because of Your Financial Habits?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Yes, you are healthy because of your financial habits. Or at least that’s the conclusion of a recent study the New York Times highlighted by researchers from the Olin Business School at Washington University.

They found that the people who decide to contribute to 401k plans are more likely to act on poor health indicators, even when adjusting for factors like income and initial health levels. They showed improvements in negative blood test results 27% more often than those who don’t contribute to 401ks.

They say it’s because of an “underlying individual time-discounting trait” – which makes perfect sense to us.

Our recent global study of time personality and money decisions with Dr. Philip Zimbardo supports that time perspective has a profound impact on personal finances.

Dr. Zimbardo’s Time Perspective Inventory measures five dimensions, which explain our individual views of time. And these drive every action we take.

They are:

Past positive: Our degree of positive memories

Past negative: Our degree of negative past memories

Present hedonism: Enjoying the present

Present fatalism: Having a feeling of helplessness

Future orientation: Acting on future outcomes

People who aggressively contribute to 401ks are future oriented.

They spend disproportionate amounts of their time thinking about and acting on things that they perceive will better their futures.

That naturally includes things like 401k contributions and following doctors’ orders when a test comes back with a negative result.

But is being future oriented the best thing for your finances?

It’s rare that contributing to a 401k is a bad thing in itself.

But we have found that future oriented people don’t have materially better financial acumen or outcomes, at least when it comes to avoiding the most damaging pitfalls – bankruptcy, foreclosure, and late payments (we did not explore investment returns).

That’s in part because future oriented people may be tempted into other, riskier investment vehicles that may lose them money. Such as choosing to buy a home they will ‘grow into’ that they later cannot afford, or chasing stock picks.

They may also be more prone to buying more insurance than they really need, siphoning cash away from everyday necessities.

Rather, a balanced time perspective that has some heightened level of future orientation is healthy. But extreme levels can undermine impact.

The researchers say that time traits are difficult to change.

And while it is challenging, we don’t believe it’s impossible.

The first step to change is an understanding your own time personality and its dominant traits.

You can take our quiz to find out your own time personality at MagnifyMoney.com/timeperspective.

You’ll get tips on how to avoid the traps that financial products use to prey on your time personality type, and that awareness can put you on a path to better health, financially and personally.

Have questions for us? Get in touch via TwitterFacebook, email [email protected] or in the comment section below!

 

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brian Karimzad
Brian Karimzad |

Brian Karimzad is a writer at MagnifyMoney. You can email Brian at [email protected]

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Time Perspective

Once-Bitten, Twice Shy: How Past-Negative People Should Handle Their Money

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Once upon a time, a generation of people grew up to be past-negative individuals. They had a great distrust of the banks, were wary of investing in the stock market and embraced frugal mentalities – their mainstream music even glorified thrift shopping.

We’re not talking about Depression era babies; we’re addressing the millennials who experienced the Great Recession.

The many millennials graduated college and entered a job market, which either fell out from underneath them or made it incredibly difficult to find a job. A substantial percent of the generation struggled with student loan debt; others saw their parents or grandparents lose their retirement funds in the stock market. It’s understandable why the generation tends to be once-bitten, twice shy about money. They are hung up on negative memories and are overly cautious towards the future.

Typically, past-negative people are those who live a life of regret and focus on their unhappy memories instead of enjoying the present. While not all Millennials are past-negative individuals, a frightening portion of the generation are past negative about their finances and prefer to “invest” in cash.

Frugality and thrift shopping may be great financial habits, but an overly cautious approach to money can cause issues in the future.

The Financial Implications of Being Past Negative

Historically, being a past-negative person has been viewed as strictly an unfortunate scenario for a person’s mental wellbeing, but it can actually play a positive role in their financial health.

People who are past negative (or once bitten, twice shy) are less likely to fall into financial trouble because of their overly cautious nature. They evaluate consequences and financially plan for the future, which means they likely always pay their bills on time, may have a retirement account and likely have savings, an emergency fund and budget their spending.

The downside of being once bitten, twice shy is the tendency towards being overly cautious with money.

Past-negative people who have debt are likely managing it well by making on-time payments, but they should still shop it around and look for the best rate possible.

Past-negative people are less likely to succumb to financial issues like bankruptcy, foreclosures or massive debt – but they’re more likely to miss out on returns from investing. The desire to stick with the status-quo and stay within their comfort zone, often makes past-negative people hesitant to invest in the stock market or take any risks with their money. They’d prefer to just tuck money away in a savings account instead of taking a chance on losing money in the stock market.

Sure, this mentality will likely help avoid financial ruin, but it also means missing out on return on investments and making money in the stock market. Money just stored away in a savings account, especially earning only 0.01% interest, won’t be beating inflation. Their money would actually be losing purchasing power.

Year-to-year there may be some dips in the market, but a diversified portfolio will be much better in the long-run than money just stored in a low-interest savings account.

Practical Tips to Harness your Past-Negative Feelings:

1. Switch to save: If you’re stuck in debt, then don’t expect an existing lender to help. You can reach out and shop around elsewhere to find a better deal.

2. Make new memories: It’s important for your mental health (and financial) to enjoy new positive experiences, like a new restaurant, quick trip or a new class. Experiences should trump material possessions.

3. Smooth(er) sailing ahead: Set aside some time to think about investing, and not just throwing money in a savings account. Your employer’s retirement plan probably has someone you can speak to for advice.

4. If you’re going to tuck away money into savings, at least find an account that pays more than 0.01% in interest.

Find out your time perspective by taking our simple quiz.

Got questions? Get in touch via TwitterFacebook or email [email protected]

 

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at [email protected]