There are plenty of ways you can be nicer to your future self — get better about not procrastinating, exercise more, stop signing yourself up for commitments you have no interest in fulfilling.
Obviously, you’re going to feel more motivated to do all those things if you quit thinking of present you and future you as two distinct people, an easy psychological trap that makes it more difficult to comprehend the consequences of your choices. But as writer Ismat Sarah Mangla explained in a recent Quartz column, there’s a caveat to that: In some cases, the best strategy for saving money may be to pretend that future you doesn’t exist.
It sounds counterintuitive — after all, it kind of undercuts the whole premise of saving for retirement, or really saving in general — but it’s the principle behind a tried-and-true accounting trick called “zero-sum budgeting.” Here’s how it works: Whatever amount of time you’re budgeting for — whether it’s a week or a year — make sure you’ve gotten down to zero at the end of it.
Let’s say you’re setting up a monthly budget. Tally up all the money you’re set to bring in this month — your regular paychecks, plus anything you may get from a side hustle or any other source of income. Do you have the number? Good. Now believe — and act — like that’s all the money you have in the world for the next 30 days. No savings. For example, Mangla wrote, “if you’ve allocated $200 for school clothes, adhere to that for the month even if you blew all of it on your kid’s dress for fall formal. You may have to adjust it in the following month.”
After a few rounds of this, the thinking goes, you’ll be conscious enough of where your money’s going to spend only as much as you bring in. Tying spending to a strict, finite timeline is key: Research has shown that imagining time in smaller chunks makes people more proactive about their goals: A study published last year in the journal Psychological Science found that people are better about planning for the future if they think of their goals approaching in days, rather than years (“I’m going to retire 14,600 days from now” has a little more urgency, and ticks down a lot more quickly, than “I’m going to retire in 40 years.”)
And if you have money left over at the end of the month? Great! Don’t roll it over into next month’s budget, though — remember, the you of next month doesn’t exist in this system. Instead, get it out of your checking account and into something useful: “Allocate it into a savings account for an emergency fund, invest it into a Roth IRA, or even use it for a much-needed upgrade on furniture,” Mangla wrote. “But whatever you do, give it a purpose,” and get it out of sight. It’s one of those rare times when “live in the moment” actually sounds like sound financial advice.
