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We are strangers to ourselves!

If you haven’t started saving for your retirement, have you ever wondered why you have not?

It’s coz, deep inside, you would rather spend money on yourself rather than having it to give it to a stranger even if that stranger happens to be an older you!

Hal Hershfield, a social psychologist at New York University did an experiment. He made the participants strap on a virtual reality headset. Half of them saw a digital representation of themselves for a minute and then had a chat with a researcher.

The other half also saw an avatar of themselves – but their faces were altered to make it look like how they would be at age seventy. This group gazed at the seventy-year-old version of themselves for about a minute and then had a chat with a researcher.

Later, the participants were told they had received an unexpected $1,000 and were told they could spend on themselves or save it.

Participants who saw images of their current selves put an average of $80 into the retirement account. But those who saw images of their future selves allocated more than twice that amount, $172!

In another, but similar, experiment, some participants saw a morphed image of an old man and some saw a morphed image of them that looked like they were seventy.

Again, participants who saw the image of themselves at age seventy saved more than those who had simply seen a picture of some seventy-year-old.

Hershfield says, ‘Thinking about the future self, elicits neural activation patterns that are similar to neural activation patterns elicited by thinking about a stranger. Do you understand what he is saying?

Envisioning yourself far into the future is not easy and you think of that future self as an entirely different person. Reason why, you would rather spend the money today rather than having it saved for a stranger. Even if that stranger is the older you!

Now you know why ads of mutual funds and investment options are not working as much as they should. And here is what they should do…

They need to make you think of yourself today being the same as the one who would be in the long-term. In other words, they need to morph your picture and make you look like a seventy-year-old and mail it to you. With their brand message.

You will see it and will feel sorry for yourself. Or, at least, for that older you. And will start saving!