Sunday, December 18, 2011

We Tend Discount the Future AND the PAST

We hear a lot of people say that they wish that had spent less in the past so that they have more now we less often hear people say that they should have spent more in the past.   We live in the present and so it is hard to compare the enjoyment now with past OR future enjoyment.  Cheapskates like us tend to over estimate the joy that we will get from having more money in the future.  This is a major reason why we over save.

We also tend to over estimate the security that money will bring.

My grandmother once told my father "If you would enjoy it get a new car now while you can enjoy it.  When you are old you will not be able to enjoy it so much."

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