When was the last time you had to choose between two equally convincing options? In our life, we come across a lot of such circumstances. Do we evaluate all of them fairly?
We are affected by the bias of today vs Tomorrow. It’s quite evident in money-related decisions. The allure of money today is harder to resist than the promise of money Tomorrow. We acquire debt to buy today rather than save to buy later. This complicates life. We value short-term gains more than long-term gains. This mindset is not limited to personal lives. It applies to the economies of countries too. When there is a need for spending money, economies tend to focus more on crossing today rather than sustaining tomorrow.
Consider the following situation - an economy gets a loan when there is already an outstanding loan. It’s very tempting to pay back an old loan rather than to execute new projects with this money. New projects take a lot of effort and time. Why spend money on pursuing decades-long projects, when you can do a small project to show off in coming elections? In the near term, it feels logical. On the longer timescale, it becomes unsustainable. This logic applies to our personal lives as well.
Decisions such as loans, assets, education and daily expenses compete for our money. We spend nearly 2 decades getting ourselves ready to make money. At the personal level, assets and Education (skill building) are the major capital expenses. (i.e.) You won't see its value today, but it's important for tomorrow. This is well known to many. A lot of us forget its actual cost. All these decisions cost money, giving rise to monetary risk.
The risk is that you will lose out on earning today in hopes of Tomorrow. You lose out on solving today's problems by hoping for the future. It's rather tempting to drop all these efforts and pursue your job today than to upskill yourself. We see a lot of youngsters drop off just after school Education for jobs to earn money today. They have forgone their future earning potential by denying to upskill themselves today. Similar decisions can happen at any point in life. Due to our Bias towards today, we often settle for short-term gains rather than long-term gains. You need to invest today to gain in the future.
Similar to an economy struggling when it forgets long-term goals, we would struggle with future scope too. It's not to say that abandon all short-term goals. You do need to balance both. It's to say that, weigh your choices better by knowing our inherent bias of today vs tomorrow.
Keep Thinking!