Thinking in longer time horizons
Humans can be pretty good at short-term thinking — but we’re not very good at thinking about the long-term consequences of our present actions.
The pressures of modern life make it incredibly difficult for us to project the implications of our choices and decisions far out into the future.
“As we live longer in more complex and interconnected societies, short-term thinking is being displaced as the main factor for a successful and sustainable future; now long-term planning is key for such achievements,” argues Stelian Nenkov, a Senior Quantitative Researcher at WorldQuant.
We easily confuse desires, wants and needs and tend to choose short-term gains over long-term benefits.
“A proper goal is something that you really need to achieve. Desires are things that you want that can prevent you from reaching your goals. Typically, desires are ﬁrst-order consequences,” writes Ray Dalio, the founder of the world’s biggest hedge fund firm, Bridgewater Associates.
To make smart life-changing decisions, don’t confuse ‘goals’ and ‘desires’.
Be careful of your one-off decisions, they are laying the groundwork for a pattern of behaviour that can have future consequences you didn’t imagine. The compound interest of those decisions have huge implications over the course of a lifetime.
Long-term thinking is the best short-term strategy
Thinking in 5, 10, or 20-year time frames is one of the best heuristics for making life-changing decisions.
The decisions you make today aren’t anomalies, they’re laying the groundwork for the life you’ll be leading 20 years from now.
Thinking about the long-term implications of your short-term decisions forces you to consider their true implications.
Every major decision, whether it’s choosing a career path, accepting a job offer, choosing a life partner, deciding to have children, quitting a job, starting a business, or moving to a new city has major implications on your life.
Legend has it that when Jeff Bezos left his high-paying Wall Street job to start Amazon, he applied what he now calls the “Regret Minimization Framework” to make a decision. Here’s his explanation of his decision model:
“If you can project yourself out to age 80 and sort of think, ‘What will I think at that time?’ it gets you away from some of the daily pieces of confusion. That’s the kind of thing that in the short-term can confuse you, but if you think about the long-term then you can really make good life decisions that you won’t regret later, ” Jeff Bezos once said.
Bezo’s ‘Regret Minimization Framework’ is applicable for anyone making a life-changing decision. When you think long-term, you are likely to evaluate the consequences of your actions today with a lot of caution.
Will you regret your decision not to pursue your life’s purpose or dream career in the next 10 years?
Make a decision today you won’t regret in 20 years. Don’t make a decision you will be happy with tomorrow. There is a difference.
Don’t sabotage your future self.
Most people over-optimise for the short or medium-term when they think they are optimising for the long-term. A better strategy is to take short-term steps with a focus on the long-term.
“Most people overestimate what they can do in 1 year and underestimate what they can do in 10 years,” says Bill Gates.
If you think about the long term, then you can really make good life decisions that you won’t regret later. In any major decision, if you get stuck when it comes to making decisions, try this.
1. Flash forward to your 80-year-old self and think “Would I regret not doing this?” If the answer is yes, do it right away, screw the results.
2. Or, flash backwards to your 15-year-old self and ask “Would 15 year old me have wanted to do this?” If the answer is yes, do it right away, screw the results.
Every decision gets you closer to either your best future self or worse self.
Later in life, you don’t want to look back and feel regret for neglecting certain areas of your life (finance, career aspirations, etc.) because you didn’t take the necessary steps to make things better in the future.
The need to draw on our capacity to think long-term has never been more urgent. The only way to overcome the tyranny of the now is thinking in longer time horizons.
Understanding the risks ahead of time and then planning how best to minimise them is the best recipe for long-term success.
Our shortsightedness can create a wide array of problems for us in the future. It’s time to start thinking about the long-term consequences of your decisions today and their impact on the life ahead of you.