"Money and Meaning: The Philosophy Behind Wealth and Value"

I grew up with a friend who didn’t have the advantages of privilege or a natural intellect, but his work ethic was unmatched. He taught me so much about resilience, tirelessly navigating the challenging road to success. As a teenager, his dream was to become a doctor. The odds were daunting—most reasonable folks would have dismissed the idea as far-fetched—but he forged ahead. A decade older than his peers, he ultimately achieved that dream and became a doctor.

Imagine the fulfillment of rising from nothing, bulldozing through medical school, and entering one of the most esteemed professions against all odds. A few years ago, I reached out to him, curious about his journey.

“Long time no talk! How’s it going?” I asked.

“Awful career,” he replied flatly.

I chuckled, trying to lighten the mood. “Haha, well—”

“Awful career, man.”

We chatted for about ten minutes, and the weight of stress and long hours was palpable. He seemed as disheartened by his current reality as he had once been driven toward his goal.

There’s a psychological principle that suggests people are poor at predicting what their future selves will want or need. Imagining a goal is a fun exercise, but lining it up with the real-life challenges that come with pursuing a competitive career? That’s where it gets complicated.

Think about it: when you’re a five-year-old boy dreaming of driving a tractor, the excitement is all-encompassing. But as you grow up, the allure of that tractor may pale in comparison to the prestige of being a lawyer. You map out a plan: law school, bustling city life, here we come!

But then reality sets in. The long hours leave little time for family, and suddenly a desire for a more balanced life emerges. Maybe a lower-paying job with more flexibility sounds appealing. Yet, before you know it, childcare costs consume most of what you earn, leading to the decision to become a stay-at-home parent. And then, after years of parenting, the realization dawns: you’re unprepared for retirement.

Many of us navigate through life in a similar fashion. It’s staggering—only 38% of college grads find jobs related to their majors, according to the Federal Reserve. While many stay-at-home parents hold degrees and likely don’t regret their education, they might give little thought to how their career aspirations at 18 contrast with the realities they face in their 30s.

Long-term financial planning is essential, yet life changes—so do our goals and desires. It’s one thing to acknowledge, “We don’t know what the future holds,” but quite another to realize that your present self may not fully grasp what you’ll want down the line. Few of us can predict the shifts in our aspirations over time, making enduring long-term decisions a complex challenge.

Psychologists refer to this disconnect as the End of History Illusion. We’re adept at recognizing how much we’ve changed in the past, yet we underestimate our potential for transformation in the future. Harvard psychologist Daniel Gilbert sums it up well: “At every stage of our lives, the decisions we make profoundly affect the people we will become. And often, when we become those people, we’re not thrilled with those past choices.”

Just think about it: young adults get tattoos they may later regret, mid-lifers rush to divorce, and older folks strive to reverse the gains they once worked hard to achieve. This cycle continues, creating an illusion that our personal history has culminated, making us believe we've arrived at our ultimate selves—a notion we tend to overlook.

Gilbert's research shows that across ages 18 to 68, we underestimate how much we will change. This realization has profound implications for our long-term financial plans.

Charlie Munger famously states that the first rule of compounding is “never interrupt unnecessarily.” Yet, how can you maintain a solid financial plan when your desires and goals are constantly in flux? This dilemma is tough. Successful individuals like Ronald, the wealthy janitor, and Warren Buffett have thrived by sticking to their paths for decades, allowing the magic of compounding to unfold. But many of us evolve dramatically throughout our lives; the idea of staying the course for decades doesn’t resonate.

Rather than a single 80-something-year lifespan, our financial journeys resemble four distinct 20-year chapters. I know young people who are just beginning to grasp this concept, eager to embark on a journey not just dictated by the past, but shaped by their ever-evolving aspirations.