Ep.63- We Are Our Future Past... For About 2 Years

Read Time: 3 Minutes.

Since 2017, I have started to self-reflect more and more. One question that I've asked myself over and over again is, "how did self-made millionaires get to where they are".  It's a tough question because the clues could be all over the place, early upbringings, key events, external factors, market trends and etc. 

To make sense of it all. I have come up with my own framework that's simple but not too simple. It can be summarized as "we are our future past".  



For most of us, our present situation is simply a mirror that reflects the actions of our past. For example, when a high school graduate is accepted to Harvard, it's a reflection of one's work for the past four years, not the last two weeks.  Again, when one gets his/her first job after college, it does not reflect what he/she did that weekend before, but what his/her culminating experience for the past 1-2 years in college.

Similarly, if you want to understand how a person gets to where he/she is financially, look beyond what they do now. Instead, look closely what they have been doing in the past 2 years.

Why look so far back? It's because the present can be deceiving. For example, when you see a person buying a $8 latte and debt free, what you don't see is when he/she did not get to enjoy the $8 latte for the past 2 years straight, because he/she was aggressively tackling debt.



2 years is a good timeframe, because, in my opinion, anything longer than that tends to have a diminishing impact on the present. 

For example, my college education may have helped me get my first job and possibly second job. But after a few years, the college name alone without tangible experience started to play less of a role in getting my third job.

Similarly, most of us are in our current financial standing, because of what we did 2 to 3 years ago. We are just living with the consequences now.

For example, if you struggle to cover the expenses when your car breaks down, it's the failure to save up for an emergency fund in the past 12 months.  If you know someone who bought a house recently, it's most likely because he/she has planned for it in the past year or two, not the past week or two. 



If we flip it to the future, what we do now usually doesn't have an immediate effect. Instead, it will  yield substantial results in a year or two.  In other words, keeping a long term vision is key.

What does it mean in terms of making financial decisions? It means planning ahead for the next 12 or even 24 months. For example, if I were to get a new car, I'd plan out how much I can save in order to buy it outright, and back out the number of months to get to the time it takes, whether that's 12 months or 24 months. 

If I were to buy a home, a even bigger financial decision, I would plan it out for probably longer than a year, simply because there are more moving pieces than buying a car. It's rare for most people to have all the requirements of buying a house ready coincidentally. It usually means good credit score, ample down payment, good income, and low debt. 



If I were to learn anything from anyone, I would always ask what did he/she do in the past couple years to get to where he/she is now. The present is simply a mirror that reflects the consequences of all our decisions in the past couple of years, not weeks.

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