As we enter yet another decade
consider not only what the future might bring, but how you think about the future. You are already thinking about the future in your everyday automatic mode, as many of the decisions you make today are related to how you think they will play out in the future. Consider trying a new approach. Think about something in the future using Critical Thinking.
As an example, we’ll use the Economy (ugh!)
This is a tremendously difficult subject to understand, let alone predict. Even the “experts” often get this wrong. However you just can’t say “I don’t know” and do nothing, because you are already doing something. You are saving (or not), spending (or not), looking for a job (or not), making vacation plans, buying a home or car (or not) .. you get the picture. You are already taking action, based on certain assumptions you have made about the economy. This is a good candidate to see how your thinking is driving your behavior.
Nobody really knows what the economy will be like in 5 or 10 years from now
, so how do you make decisions that are directly related to the state of the economy in the future? Such as, buying a house, or refinancing, or how much to save (or withdraw), or to retire or take social security early, buy a car, or take out a loan now or wait, or a CD for 1 year or 5?
The first step is to make a list of assumptions
about what you think the future looks like, and why you think that way. Such as; (a) The economy will make a full recovery and be robust because it always has over time; (b) The economy will be better, but companies and consumers will stay very frugal because this recession was a real wake up call for many; (c) The economy will stay in the dumps and things will be just as bad or worse in 5 years from now because the deficit, war(s), energy, health care, etc., will continue to drain our economy.
Given these Assumptions, now make predictions
: For example with assumption (a) a robust economy: that could mean a lot of jobs; interest rates under control – not too high, not too low, stock market at 15,000 or higher. Now take this to the next step. If employment is high, chances are you will be employed, and if you are employed, you will have a steady income, so you won’t need to have a tremendous amount of liquidity, and that means you can invest with a long term strategy. On the other hand, if you assume the economy will remain in the dumps, you’ll want to have a lot of liquidity, you’ll want to think more short term, might postpone that home purchase, might even look at alternative skills training in case you lose your job, or can’t find one, etc. You should spend about an hour on different scenarios (assumptions) and see how that changes your thinking.
The Thinking goes like this …
(1) Assumptions about the future, allow you to
(2) make predictions about the future, and this allows you to
(3) come to conclusions about the future, which can
(4) turn into actions in the present.
What happens if the assumptions are wrong?
Assumptions only have a probability of being correct, but are not guaranteed. To minimize the downside of being incorrect, you’ll want to consider metrics or measurements or indicators that can either raise confidence in your assumptions or suggest you go to plan B. Continuing with the economy as an example, maybe you’ll choose the unemployment rate as a metric. If it continues to rise or is flat, then you might conclude the economy will remain poor. However, if it starts to go down, and hits, say 8 percent by the end of 2010, then this might be a good indicator that the economy will make a full recovery.The economy is a tough one. However, your current actions are already incorporating your “automatic” view of the future … now try this with a little more conscious (manual) thinking. You can use this approach with anything … your future relationships, your children, your parents, your future at work, the market for your products, where you think technology is going, your heath, etc.
The Takeaway:
We constantly think in automatic mode, making assumptions, coming to conclusions and taking action … that’s how our brain is wired to work. Every so often, stop and Think consciously about something. We call that “Manual” mode. Write down those assumptions, see if they make sense, and draw conclusions from them
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