Some of you may perceive your future self as a better version of who you are today – like a fine wine that gets better with age! For others, chances are this far-off distant future version of yourself may feel like a stranger. And both have implications for your present-day self.
Let me explain.
According to Hal Hershfield, a professor at the UCLA Anderson School of Management, if your future self feels closely aligned with who you are today, you will be more financially responsible, behave in accordance with a stricter moral code and prioritize your future wellbeing. Whereas, if you regard your future self as a different person from who you are today, and therefore conceive of her as a stranger, you are a lot less likely to prioritize her wellbeing, financial and otherwise.
As an aging researcher interested in gender, I am particularly concerned about how all this plays out for women’s financial well-being in retirement.
Women face the following challenges:
1. Lower average lifetime earnings due to the gender wage gap
2. Career interruptions to care for children, aging parents or older relatives
3. Longer life expectancy
4. Higher rates of chronic health conditions
My concern is that our inability to relate to our future selves prevents us from making decisions that our in our best long-term interest, such as negotiating better pay, benefits or working conditions.
Consider the story of Janice. A young graduate from Concordia University who studied at The John Molson School of Business. Janice is looking for her first job out of university and a marketing agency is very eager to employ her. The agency made an offer of $45,000 and Janice immediately accepted. After all, this is her first real job and with the possibility of a looming recession on the horizon she did not want to lose this opportunity.
Had Janice negotiated a $5000 increase in salary she would have started her career at $50,000. Assuming a modest annual raise of 3% over a 40-year career, the compounded difference over a lifetime is significant. In fact, it is hundreds of thousands of dollars significant!
Of course, negotiating one’s salary has an impact on immediate earnings, but it also serves your future self as it sets the baseline for future raises, bonuses, and retirement savings.
Janice, and all the women that Janice represents (you know she is in good company), don’t negotiate because they lack confidence, fear the backlash and never learned HOW.
Negotiating, however, has nothing to do with ability or skill and everything to do with social roles, a lack of role models who can demonstrate effective negotiation skill and networks that provide information about salary norms and negotiation strategies.
All these issues are important because the rules are different for women.
Janice cannot negotiate like Joel, but she still needs to learn how to negotiate for her current and her future self!
Many people wrongly assume that good negotiators are born, not made. That’s not true.
All of us can learn how to become better negotiators by having a systematic framework to help us think through the more challenging aspects of a negotiation and solutions that benefit all parties involved.
But Janice’s future self cannot wait to figure out this negotiation thing because her future financial security depends on her current self’s willingness to ask for what she wants, needs and deserves!
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