24 KIPLINGER’S PERSONAL FINANCE^ 09/2017LISE METZGERAHEADran a successful ad campaign from
2012 to 2016 that encouraged saving by
letting customers use a tool to see age-
enhanced images of themselves. Mobile
apps such as FaceApp and AgingBooth
can help you connect with your older,
future self. If you can stand seeing your
future gray hair and wrinkles, it could
help boost your account balance.Picture this. When imagining your finan-
cial life in the years ahead, clarity counts,
says Newcomb. Instead of thinking, “I
want to be financially secure,” be spe-
cific: “I want to live in an upscale retire-
ment community near a golf course.” Not
“I want to relax and enjoy myself,” but
“I want to travel to see my children and
grandchildren twice a year and treat my
family to a Disney vacation at least once.”
A vague desire for peace of mind might
become “I want to have at least $1 mil-
lion in assets, not including my home.”
Empowerment is the key to emotional
well-being, at least when it comes to fi-
nances. People who believe they create
their own financial destiny are happier
with respect to their money than those
who believe they have less power, ac-
cording to Newcomb’s surveys. Again,
that conclusion applies to people of
both genders and of different ages, in-
come and education levels. Amazingly,
feeling in control has more than twice
the impact on financial satisfaction that income does.
The lesson is that it’s important to stay involved in deci-
sions about your finances, even if you work with an adviser.
Non-earners need to recognize where they exert control
in their family’s financial life: Do they shop for the house-
hold? Plan vacations? Make decisions about living costs
or children’s schooling? Celebrating even small successes,
such as opening a 401(k), can help build confidence. And
surmounting near-term hurdles—say, curtailing restaurant
meals to save for a trip—can work wonders in making you
feel up to a lifetime of financial challenges. ■ANNE KATES SMITH Your Mind and Your MoneyTo Save More, Focus on the Future
A
s regular readers of this column
are aware, financial health has
both economic and emotional
dimensions, and the right balance of
the two is crucial for success with your
money. If you have any doubts, consider
the blissful spendthrift on the road to
financial ruin, says Sarah Newcomb,
a behavioral economist at investment
research firm Morningstar. Or the fear-
ful penny-pincher, who may be wealthy
but doesn’t feel secure. Newcomb is
on a mission to help investors and the
advisers who work with them master
both economic stability and emotional
well-being. Two aphorisms sum up her
thinking on those two fronts: “Time
is money” and “Power is happiness.”
Newcomb is the author of Loaded:
Money, Psychology and How to Get
Ahead Without Leaving Your Values
Behind. I spoke with her recently at the
annual Morningstar investor confer-
ence about her latest research, which
shows that the further ahead you think
and the clearer your picture of the
future, the more you’ll save and the bet-
ter you’ll manage your cash and credit.
The impact that thinking ahead has
on your savings might surprise you.
Newcomb’s survey of several hundred
U.S. residents found that living-in-the-
moment savers who looked ahead less
than a year typically had saved less
than $20,000; people who had thought about their finan-
cial lives 20 years hence had saved 20 times more. Even
looking ahead by just a few years increased savings four-
fold. The time-horizon effect on personal finances was
significant for people of different incomes, ages, education
levels and genders, and it had a greater impact on saving
than did those demographic factors. “Income matters,”
says Newcomb. “But mindset matters more.”
The problem is that only 70% of those surveyed had
thought 10 to 20 years ahead; just 8% had planned out their
whole financial lives. Fortunately, there are ways to trick
yourself into staring down your financial future. One is
to picture yourself there. Discount broker Merrill EdgeWhen imagining
your financial life,
clarity counts.
A vague desire
for peace of mind
might become
“I want to have at
least $1 million.”
ANNE KATES SMITH IS A SENIOR EDITOR OF KIPLINGER’S PERSONAL FINANCE MAGAZINE.