Merrit H. Egan grew up on a dairy farm but claims his parents raised him to be great. He lived up to those lofty expectations by becoming a successful and prominent physician in Salt Lake City. Merrit and his wife had 11 children and they did their best to pass on the legacy of success to them.
One of the Egans’ daughters is Natalie Gochnour, Associate Dean of Business at the University of Utah and Chief Economist of the Salt Lake Chamber of Commerce. In an article in the Deseret News she was asked what the best financial advice she received from her parents was. Although she claims the advice she provided “doesn’t seem profound” I beg to differ. I have undergraduate and graduate degrees in accounting and have read dozens of books and hundreds of articles on personal finance and I don’t think I have ever read anything that sums up the collective wisdom of personal finance better or more concisely.
The simple but profound financial advice passed down to her from her parents consists of only 7 words: Place a substantial premium on the future.
Faithfully following this advice will influence numerous decisions that affect your finances. If you place a premium on the future:
- You will use your resources wisely today.
- You will be extremely careful with debt. Debt discounts the future, so you will enter into it cautiously and pay it off as quickly possible.
- You will save and invest for the future.
- You will choose your career thoughtfully, picking something that uses your unique talents and abilities, allows you to grow and develop, and provides for your needs.
- You will invest in education to make yourself as useful and knowledgeable as possible.
- You will develop talents and skills that will enrich your life.
- You will participate in life-long learning, both within your occupation and in other areas of interest.
The Paradox of Putting a Premium on the Future
Some people reject the idea of putting a premium on the future. They believe the way to happiness is to live for today, with no thought for tomorrow. This philosophy is as old as men and is reflected in the popular saying, paraphrased from the Bible, “Eat, drink, and be merry, for tomorrow we die.” People holding this philosophy believe putting a premium on the future will make them miserable today.
This would seem logical, but the paradox of putting a premium on the future is that you can do so without discounting the present. In fact, sacrificing now to obtain goals in the future, whether that means studying, developing talents, improving job skills, or saving and investing gives our lives meaning and makes us happier both now and in the future.
The next time you face an important financial decision, make the choice that places a premium on the future. Doing so consistently will improve your financial situation and make you happier and more successful.
In what ways are you “placing a substantial premium on the future?” I would love you hear how everyone is putting this important principle into practice.