Future You or Present You, Still You

Programs that foot the bill for a large purchase for you today in exchange for a monthly payment are fascinating.

These programs — better known as Buy Now Pay Later or BNPL — feel a little bit like cheating or magic.

What do you mean I can pick up this $600 TV today, even though I can’t afford it? With no initial payment due, no less.

It feels like you’re playing with toy money.

Of course, in practice, it’s not cheating or magic at all and you are dealing with real money. In exchange for the immediate gratification of getting what you want now, you’ve simply agreed to borrow from Future You.

Instead of paying $600 today, you’ve agreed to pay for it in installments over 6 months. The opportunity cost is also the same, just spread out over time: Future You is going to have $100 less each month for the next 6 months to spend or save.

Even though the cost of the TV is $600 whether you pay for it today or tomorrow, there’s something about deferring the expense that has a way of making it feel like someone else’s responsibility. And without having to contend with any of the costs immediately, it becomes much easier to make the purchase. So easy in fact that it’s driving many consumers into a dangerous amount of debt.

Here’s the reality that’s likely missing for many of these consumers:

Present You and Future You are the same person.

If you make decisions that are bad for the long term, you will pay the price at some point even if it’s not today.

Conversely, if you make decisions that are good for the long term, you will reap the benefits in time.

Whether you’re trying to escape the gravitational pull of immediate-but-costly gratification or to motivate yourself to do something valuable for your future, it helps to remember these three facts.