By: MJ Gonzales | Executive Chronicles
Of all kinds of investment, getting a health insurance plan is possibly the least popular one. It’s not that everyone sets aside their health, but apparently because of the future fallacy. Many predict their imminent selves will be the same as their present versions. Here’s why you avoid future fallacy and be realistic about your future.
One time, I encountered a taxi driver who’s not paying his monthly SSS (Social Security System) contribution. I am confused whether he’s in his late 40s or early 50s, so I asked his age. It turned out, he’s more than 60-year old and that means he’s senior citizen who should getting his pension by now. I asked why he didn’t pay. He said he learned he had to pay 60-month (five-year) worth of contribution. He then lost his eagerness to settle it. I don’t want to ask more, when he divulged that he has 15-year old high school student daughter.
Like that taxi driver, many workers believe that they will be robust to keep earning longer. We visualize achieving promotions, receiving higher salaries, and career advancement. Of course, who wants to think about financial crisis, layoffs, grilling office politics, job discontentment, and moral bankruptcy? However those are realistic probabilities. Furthermore, no one could avoid aging, death, and several life transitions (birth, schooling, and building family).
“The reality is that spending in anticipation of having a huge income or being rich without big expenses causes you to dig a big financial hole for your future self, one that your future self probably can’t deliver on,” Trent Hamm’s sentiment about his own “future self-fallacy” experience shared on The Simple Dollar, one of the best and recognized international personal finance sites.
On the other hand, the idea of “time discounting” is also plays role why also people neglect saving according to Business Insider.
“In non-psych speak, that’s simply the preference for immediate over future rewards — from choosing to eat a cupcake now over fitting in your jeans later to spending $500 on a new TV instead of saving that cash for future use,” Business Insider