UK Finance: Why we find it hard to save for our future self

“Where do you see yourself in ten years’ time?”

It used to be a favourite closing question in job interviews – and it could really put you on the spot. But imagining your career in ten years’ time can feel far easier than imagining yourself twenty or thirty years from now. Job-free, family-free, and free to live the life you want.

Asking ourselves those searching questions – how do I see my older self and what life am I leading? – is something that many of us struggle with. It has a direct impact on how we save, and our long-term financial planning.

Self-visualisation – a simple psychological technique – can help you imagine your future more clearly.

Knowing why you’re saving is knowing what you’re saving for

Remember those images in children’s books of the King’s Counting House – gold and jewels stacked floor to ceiling? It’s a powerful image of saving – but did you ever wonder – what is the king saving for?

When our career takes off, or when we start a family many of us have more income – and more reason – to save for the future.

Yet without a clear goal you can visualise, you could end up like the king – sitting on significant wealth, without really knowing why.

Others find retirement just too far off to imagine. We struggle to imagine ourselves in the future because we can’t visualise ourselves as old.

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There may be more immediate demands on our money: paying off a student loan, saving for a house deposit, or paying for childcare. Saving for the distant future for no clear reason doesn’t always appeal to our younger selves. Those ISA or pension contributions could go towards having more fun while we’re still young.

Sometimes, psychologists say, we’re not very kind to our future, older selves – and we don’t think that we’re worth saving for.

This makes it doubly hard to commit to long-term savings and pensions.

The result? Many leave themselves short of money in later years; and can’t afford the lifestyle they can now imagine all too clearly.

You can tackle this problem using a technique known as self-visualisation.

How does self-visualisation work?

Future self-visualisation is a powerful psychological technique that can change this mindset and boost your financial confidence. It’s the act of seeing your future self and your future life.

Elite sportspeople picture themselves winning an Olympic gold, hearing the crowd's roar as they step up to the podium. Jim Carrey pictured himself becoming an Oscar-winning actor years before he won – but the visualisation kept him focused.

As a saver, you can use the same technique.

Seeing yourself more clearly helps you to create a better future – and be motivated to achieve it.

Why is visualisation so powerful?

Historic research by UCLA professor Hal Hershfield shows people treat their future selves as a different person. His studies, still cited today, explore the idea that if people get to know their future selves, they respect them more and change their savings habits to support them.

He ran an experiment in 2011 in which young people had their photos digitally aged. Those who saw their older selves said they wanted to save an average of 6.2% of their salary for retirement, versus 4.4% for people who only saw a current photo of themselves. Hershfield’s study is still seen as a landmark in the field of self-visualisation and financial planning.

Self-visualisation helps us identify a personal end goal we believe in – the cornerstone of all long-term saving and financial planning.

Using self-visualisation to get the life you want

It sounds obvious, but self-visualisation takes time, and space. So don’t rush it and don’t expect to have a lightbulb moment in an instant. Think about where you would live if money was no object – maybe you would have multiple homes? City, or country? Which country?

Visualise what hobbies or interests you would pursue if you had more free time. It can help to write down your thoughts as they come to you and to include as much detail as you can, including how you hope to feel about your future life.

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It doesn’t matter how many scenarios or lifestyles you imagine, or how few. You’re recording your hopes and dreams, but visualising potential scenarios will help you create achievable goals to work towards.

In order to visualise a future you believe in, think about the moments or activities in your current life that make you happiest. It could be just gazing out over beautiful countryside, sipping a coffee at a pavement café, or helping a young child to read.

Using self-visualisation to set long-term goals

Self-visualisation helps you set your goals, but money makes them happen. Knowing your goal motivates you to start making smart, practical financial steps towards the future you imagine.

A good starting point is to put aside a regular sum of money in an easily accessible account or Cash ISA for emergencies. You can save another regular monthly amount in other tax-efficient ISAs, or your pension for medium-and long-term goals.

You have plenty of options about where to save – from Stocks & Shares ISAs, Cash ISAs or other investments, and pensions. Each has different tax advantages, pros, and cons, so taking expert advice will help you feel confident about your choice. Talking to a financial adviser can help you start off on the right foot.

Saving into a pension

A workplace pension can add a real boost to your savings – so if you have one, check how much your employer is currently contributing. Under an employee scheme, the more you put in, the more many employers will match. And if you’re self-employed or a business owner, the sooner you start a private pension the better.

In general, the longer you are investing, the more your money benefits from compounding – essentially ‘interest on interest’. If you’re investing for 20, even 30 years, this growth accelerates the longer your money stays invested. Starting early is the key.

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It can be tempting to opt out of a workplace scheme, especially if money is tight. Or, if you’re in charge of your own pension you may think that skipping the odd contribution – or even pausing for a few months – won’t make a difference.

But pausing regular contributions can have a long-term impact on the power of compounding, and the size of your pension pot when you’re older.

Small steps now will help set you on the path to fulfilling your big financial goals. Seeing into your future can make a huge difference to your peace of mind, financial confidence, and wellbeing.

Ben Stark is a chartered financial planner with over a decade of experience advising businesses and families. He is partnered with St. James's Place Wealth Management.