The Importance of a Long-Range Time Perspective in Building Wealth

by | Jun 30, 2016 | Personal Finance 101 | 0 comments

A fascinating reality that many people are not aware of is that each socioeconomic level, from the lowest to the highest, is differentiated by an individual’s perspective on time. Not by education, or origin, or current situation, but by how that person views time.

At the lowest socioeconomic level, time perspective might be as little as a few hours to a few days. Planning for the future could mean thinking ahead to where the next meal is coming from, or how to scrape together the weekly room rent.

At the highest level, occupied by persons controlling second- or third-generation wealth, the time perspective embraces years, decades, or even generations. These people make important day-to-day decisions based on their effect years or decades into the future.

What we have learned is that successful people are intensely future-oriented. In fact, the very act of long-term thinking can sharpen your perspective and dramatically improve your day-to-day decision-making.

Another aspect of the time perspective is future intent. The more clearly you can picture where you want to be in the future, the easier it is for you to make intelligent decisions in the present.

A critical component of future intent is sacrifice. Learning to delay immediate gratification in the near term in order to enjoy greater rewards in the long term is a key component of wealth accumulation.

A very common problem for Americans is retirement savings and planning. The median savings for a married couple nearing retirement is only about $104,000, and this amount must last for 15 to 20 years.

It’s apparent that a lack of time perspective and future intent has compounded this problem. Millions of Americans have gotten into the habit of spending everything they earn and saving little or nothing. Fully 70% of Americans live from paycheck to paycheck.

Many millionaires and multimillionaires are average middle-class earners. But, because they were able to save 10-15% of their incomes regularly, they are now wealthy. With the help of compounding, an investment of $100 monthly from age 21 to 65 at 7-8% (the average growth of the stock market for the past 80 years), would total more than $1 million in savings.

Developing a long-term time perspective and a strong future intent will change the way you think and act in the present. You may forgo an expensive new car for a reliable used model, invest in stocks or rental properties instead of building a mansion with an inheritance, and so on. Keeping your mind firmly on future benefits and the importance of the time perspective will enable you to enjoy a comfortable, even wealthy, retirement. Let us help you develop that long-term perspective. Contact us today.