Allow me to introduce you to behavioural economics, the concept of intertemporal choice, and how this relates to decision making as a single parent. At any given moment, we’re faced with choices – Netflix or jog, banana or chocolate, now or later, Air Jordans or dinner for the week. Traditional economics simply states that a rational human would make the choice that gives the most utility (happiness) given a constrained budget (hello single parenthood). Behavioural economics, on the other hand, seeks to explain the actual choices humans make, which are not always rational. Once such tenet of BE is called intertemporal choice – the interplay between making decisions now or in the future and the effect of those choices.

My study of intertemporal choice forever changed the way I viewed decisions I made, my life in general, what I valued at any given moment, money and investment.

Let’s say you buy one of those lottery scratch tickets and win $1000. The caveat, however, is that you can only collect your prize after 6 months. You go back to the shop you purchased it at to share your good news with the store owner. He says “you know what? I can give you $990 now if you want, or come back in 6 months for $1000.” What do you choose? I would bet you take the $990. Now imagine that same scenario playing out over and over, but $10 less each time for the immediate payoff. At what point do you say “you know what, it’s better for me to wait 6 months”? Is it $900, $800, $700? Whatever number you choose is called your indifference point. In other words, I’m indifferent between let’s say $900 today and $1000 in 6 months. If you offer me $899.99, I’d rather wait for the $1000.

And this is intertemporal choice – the idea that humans value the present over the future, or would rather have $900 today than $1000 in 6 month time. All this to explain why we get ourselves into credit card debt, fail to save and eat the chocolate.

Our happiness today is felt more intensely than our happiness in the future which forces us into decisions that aren’t necessarily the best for our families in the future. Intertemporal choice is also the mechanism behind interest rates; why we pay more later to get something we can’t afford now .

Prioritizing today could mean survival

Elizabeth Dunn is a psychology professor at the University of British Columbia. While on a trip in Hawaii, she was attacked by a tiger shark while surfing. She escaped with injuries to her leg. When interviewed later about the attack, she was asked about what she saw, how she felt and what the conditions were like in the water. She only remembered trying to survive, and nothing else. When you’re being attacked by a shark, it isn’t the best time to think of the smell of the salt water, time of day or where you’re going to eat dinner. You’re focused on survival and nothing else.

Life as a single parent is all about making decisions under constraints, both with time and resources. Life for me felt like survival much of the time and every decision I made was based on 1 outcome, getting us to the next day with food in our bellies and a roof over our heads. Raising a family on our own often requires prioritizing short-term survival over long term thriving. I was always looking out for the sharks. Investing? Really? I’m hoping that money magically falls out of the sky so that I can pay my rent this month.

There are several reasons why people over value the present over the future. Surviving a shark attack is one for sure, but there are other subtler reasons. One is that we know ourselves now. We are more likely to make better decisions if we are the immediate beneficiaries. It’s harder to identify with ourselves in the distant future. In fact the further out we go, the less identification with our future selves we have. Another reason is that we believe feelings are felt more intensely in the present. The future me won’t mind doing the dishes, but right now, all I want to do is watch Netflix. 

Decision making and investing

Once we recognize this cognitive distortion, we can work on correcting it so that the decisions we make today line up with the people we want to become. I suggest really getting to know the person you want to be at some future point. What do they want? What do they have? How to they feel? What thoughts do they think? The closer you are to the future you, the more aligned your decisions will be. 

In my case, I knew I needed to increase my earning capacity. How important was it for me to be able to support my son? Going back to school now meant I’d have no money and need the help of my mother. I’d need to work several jobs, go to and pay for school and care for my child. To me, the trade-off was worth it. 7 years of study, brutal exams, sleepless nights and stress meant that I could later afford to support my family. I don’t know if it was the right choice (it came at a serious cost), but it was the result of knowing my future self clearly.

Wherever you are in your journey, it’s important to align your decision making with a future result you want. Often, short term pleasures come at the expense of long-term comfort. For example, commit to sending a % of your pay to a savings account. Don’t even look at it. You will adjust, just as you would adjust to a new tax being introduced. Think of it just like that – a tax to benefit the future you. Make a public commitment to execute on a particular goal. The pain of explaining why you didn’t do it might just set you up for success. A self-inflicted punishment of not doing something might be stronger than the short-term pain of just doing it in the moment. Consider creating a consequence for not doing something that aligns with the future you.

Yes, enjoyment today has value. I feel that memories of a life well-lived today do serve my future. But most of us don’t have problems making decisions to benefit ourselves in the here and now. We have problems aligning our choices with what’s best for us on all parts of the timeline. 

Immediate problems and difficulties do often take precedence. Expand your view a little wider. Ask yourself whether the decision you’re making is in your family’s best interests on all parts of the timeline, not just right now. Don’t let the butterfly suffer because of the caterpillar’s choices.

JOURNAL PROMPT:

Write a letter to your future self. “Dear future me… “

Write about your dreams, your struggles and what you’re going through at this point in your life. Set a date for yourself to open it. A year from now, 5 years from now etc.

Get REALLY clear on who it is you want to become. Make the type of decisions THAT person would make. How does she feel?  What thoughts could you think and decisions could you make today to feel that way now?