Page 146 - Morgan Housel - The Psychology of Money_ Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

An underpinning of psychology is that people are poor forecasters of their
future selves.
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Imagining a goal is easy and fun. Imagining a goal in the context of the
realistic life stresses that grow with competitive pursuits is something

entirely different.

This has a big impact on our ability to plan for future financial goals.

Every five-year-old boy wants to drive a tractor when they grow up. Few
jobs look better in the eyes of a young boy whose idea of a good job begins
and ends with “Vroom vroom, beep beep, big tractor, here I come!”

Then many grow up and realize that driving a tractor maybe isn’t the best
career. Maybe they want something more prestigious or lucrative.

So as a teenager they dream of being a lawyer. Now they think—they know
—their plan is set. Law school and its costs, here we come.

Then, as a lawyer, they face such long working hours that they rarely see
their families.

So perhaps they take a lower-paying job with flexible hours. Then they

realize that childcare is so expensive that it consumes most of their
paycheck, and they opt to be a stay-at-home parent. This, they conclude, is
finally the right choice.

Then, at age 70, they realize that a lifetime of staying home means they’re
unprepared to afford retirement.

Many of us wind through life on a similar trajectory. Only 27% of college

grads have a job related to their major, according to the Federal Reserve.⁴⁶

Twenty-nine percent of stay-at-home parents have a college degree.⁴⁷ Few
likely regret their education, of course. But we should acknowledge that a