As we run headlong into a brand-new year, two looming illusions await each of us. The first is what author Nick Murray terms “the fatal illusion of Now.” The second illusion is our dependence upon prediction and prognostication. The latter illusion is obviously front and center during this time of the year.
Illusions are both powerful and dangerous because they rely on our senses for affirmation. Professor Dan Ariely at Duke University demonstrates this in this brief snippet where he shows the vertical-horizontal illusion.
As Dr. Ariely explains, this illusion depends upon our vision in order to work. More than 60% of our brain is dedicated to vision. If we can’t see this, how are we to avoid illusions that tease our other senses?
The illusion of “now” places the worries of today as the top priority. However, we don’t save and invest for “now”; we invest for the future. We can’t control every aspect of what is occurring “now.” Risk occurs in the future and therefore can’t be meaningfully measured in the present. We can only influence the outcomes of the future by how we act or react to “now”.
For much of the past year, our collective attention has been focused on COVID-19 and the public health response relating to it. Everything surrounding the pandemic has been reduced to a single variable, yet neither our health or wealth work that way.
Of course, in the early weeks of every year, prognostications abound. This will happen, that won’t. Mostly these are silly exercises in futility but they are fueled by our innate desire to know exactly how the future will unfold.
If you want a good laugh take a look at almost any early year 2020 economic/market forecast and compare this to what actually transpired. Nobody can accurately predict the future, although many try. It’s an illusion.
Thankfully, there’s a common remedy to these dangerous illusions. The solution is to vigilantly focus on your desired long-term destination against the backdrop of history. While it may not be intuitive, the problems of “now” don’t need to be addressed at all. Destinations, along with the risks and realities of these destinations define our lives.
Simply put, you can’t improve your life and decrease your money anxiety by relying upon illusions. Remember, big mistakes can come not just from actions that you take, but also actions that you don’t take. Start there.
Related: Do You Own Your Future?