“He who doesn’t look ahead remains behind.”
“Looking back gives you regrets. Looking ahead gives you opportunities.”
“Don’t look back, you’ll miss what’s in front of you.”
There seems to be consensus among the proverbs that when directing our focus, we ought to be looking ahead rather than behind. In fact, the implication is that looking behind us will lead to bad things – regrets, missed opportunities, lost ground. As someone who spends a lot of time talking about how to prepare for the future, you might think I am another proponent of forward focus but today I am going to proudly wear my contrarian hat and suggest that looking backward is not harmful, but in fact helpful to preparing for the future.
Here are 4 reasons why looking back might be the best way to get ahead.
1. It makes you a better investor. By now, you know that our investment approach is rooted firmly in the belief that no one can accurately predict the future of the economy, interest rates, elections or any other events yet to occur. The majority of the time, making investment decisions based on someone’s perceived ability to read the tea leaves fails to provide additional return as compared to investing in the broad market. Rather than look ahead, our approach is to look at the past – the actual market data – to determine what factors have added value to investor returns over time. Slightly tilting investment exposure toward the areas of the market than have outperformed in the past has yielded returns that often outperform not only the market, but most of the Nostradamus investors as well.
2. It helps you align your objectives and your behavior. Without realizing it, most of us at one point or another will do things that are counterproductive to getting what we want. Perhaps we are trying to get in shape, but we just can’t will ourselves to go the gym. It would be unrealistic to expect that never to happen, but if it happens more often than you’d like there may be something more to why you can’t get yourself to move forward toward your goals. Our histories impact the way we interact with the world and that includes the choices we make about money. Exploring what our past experiences have taught us and how they are impacting our current beliefs and behaviors is a good step toward getting your actions and your objectives in sync. Read more about how to do that here.
3. It is a motivator to keep going. We live in a world where we are often treading water and just trying to stay one step ahead of what’s coming next. As soon as we accomplish one task, it’s on to the next one which can zap our energy. We need to reenergize to keep working toward our goals, especially the long-term goals we are often working toward when it comes to our finances. It takes years of hard work to save up enough to put your child through college or to build your dream home. We need to find moments along the way to look back at all the work we’ve already done and give ourselves a pat on the back. Try to find smaller mile markers along the way toward big goals and reward yourself for the progress.
4. It makes you happier. We’ve shared before that spending money on experiences brings us more long-term happiness than buying things. One of the primary reasons that is true is because experiences help us to build positive memories. Reliving happy memories creates happiness. It’s one of the reasons that psychologists suspect that overall people tend to become happier as they age. We accumulate more positive memories to look back on.
As is the case with so many things, the ideal here is to find a balance between focusing on what’s coming next and what has already happened. Keep driving forward, just don’t forget every now and again to check your mirrors.