Being in control of your finances can be empowering – and the way you think about your future could help you get there. Adopting a long-term mindset can help us to better connect with our future selves. And by thinking ahead and setting meaningful goals, this could contribute to improving your financial wellbeing in the present.
As the cost of living remains challenging for many people, it’s understandable if you’ve found it hard to think clearly about the future. It’s important to remember that money concerns are normal, even if you’re doing well financially. More than half (51%) of average earners, and more than 1 in 3 top earners worry about money. This shows our mindset can play a key role in our overall financial wellbeing.
In this article we’ll outline the benefits that long-term thinking can bring you – both now and in the future. Unless otherwise stated, all statistics are from our 2023 Financial wellbeing research, conducted with over 10,000 UK residents.
What is a long-term mindset?
A long-term mindset is about planning for the here and now as well as the future. It’s being aware of the bigger picture, as what happens here and now is just a snapshot of what’s to come as we live longer lives. That’s why our financial plans shouldn’t just cover present-day issues, but long-term goals, too. Only 17% of UK adults have a plan to achieve their long-term money goals.
People are on average living longer and life is likely to become more multi-staged with more opportunities to retrain, upskill or take breaks during our professional lives. This means it’s important we learn to balance managing our money now with being prepared for what’s to come.
In practical terms, this could mean building a pot of money, or ‘transition fund’, that you can rely on at a time when there might be an interruption to your income. For example, if you want to retrain to take a new career direction or take time out to care for a family member. However, while having a long-term mindset is important for all these reasons, it doesn’t mean neglecting yourself today – we can all benefit from finding ways to enjoy and create meaning in the present.
Five things a long-term mindset can bring you
1. A connection with your future self
A long-term mindset can establish a deeper connection with your future self and may also bring you peace of mind in the here and now. Where do you want to live, who will you spend time with, and what will bring you joy and purpose? Answering these questions could give you a clearer idea of what truly motivates you as a person and help you to set goals for your long-term savings. 66% of people with high levels of emergency savings report having a concrete connection to their future self. In contrast, only 5% of people with high levels of debt reported the same connection. Our Best Life tool can help you to visualise your goals.
2. A sense of control
We might not be in charge of many of the external factors that affect our lives, like the economy or world events. But developing a long-term perspective can bring a sense of control over your present and future. This is because it will help you identify goals and put practical steps in place to achieve them. As the familiar three stages of learn, work, and retire become perhaps less aligned with the reality of our life today, it’s key to remain flexible and prepare for a varied, multi-stage future. Begin cultivating your long-term mindset with our financial wellbeing tool.
3. Goals you can achieve
Building a long-term mindset may give us more control over our futures as we set realistic financial goals to aim for across our lifetime. By having achievable targets that you can stay on track with, it could help you to feel more positive for the future.
If you’re hoping to retire at your State Pension age, a good benchmark could be to aim for 70% of your pre-retirement income to achieve a comfortable lifestyle after you’ve finished working. Those with long-term goals have their own measure of success, so spend less time comparing themselves to others. With less ‘bad’ comparisons to dampen your spirits, it could help you adopt a more positive and optimistic way of thinking.
To get started with saving, read our article Simple steps to hit your saving goals.
4. Resilience against the unexpected
Having a long-term mindset can impact and change your behaviour for the better by instilling positivity and building your resilience in the face of unexpected challenges. 26% of people could only live off their cash savings for less than a month if they lost their jobs. If you’re concerned about the cost of living, visit our cost of living support page.
5. Space to enjoy the present
Just under 1 in 4 people are very aware of the day-to-day experiences that give them joy and purpose in life. By building a long-term mindset you may feel more secure financially and able to enjoy today.
Learn more about saving your money and preparing for the future with our article How to save money – ideas and everyday tips.
Plan ahead to create the future you want
Creating a long-term mindset takes practice but building one can bring a sense of control over your financial future. If you find it difficult to picture your life in a year, it might not be easy to plan for what your life will look like in your 50s, 70s or 90s.
How far you’re able to clearly think about the future is known as your mental time horizon, and expanding this is something that can be trained. Try focusing on 3 months from now, then 6 months, 12 months and so on until you’re able to create a clear and satisfying picture of your future. By doing so, you can break down achievable goals and unlock more positive thinking and financial control.
Want to get started? Our retirement income planner tool could help you see if you’re saving enough for the lifestyle you want when you stop working. Planning ahead can help you to create the life you want whether that’s in retirement or here and now.