Igrew up with a friend who came from neither privilege nor natural intellect, but was the hardest-working guy I knew. These people have a lot to teach because they have an unfiltered understanding of every inch of the road to success.

His life’s mission and dream as a teenager was to be a doctor. To say the odds were stacked against him is being charitable. No reasonable person at the time would consider it a possibility.

But he pushed. And—a decade older than his classmates—he eventually became a doctor.

How much fulfillment comes from starting from nothing, bulldozing your way to the top of medical school, and achieving one of the most noble professions against all odds?

I spoke to him a few years ago. The conversation went like this:

Me: “Long time no talk! How you doi—”

Him: “Awful career.”

Me: “Haha, well—”

Him: “Awful career, man.”

This went on for 10 minutes. The stress and hours had worn him into the ground. He seemed as disappointed in where he is today as he was driven toward where he wanted to be 15 years ago.

An underpinning of psychology is that people are poor forecasters of their future selves.

Imagining a goal is easy and fun. Imagining a goal in the context of the realistic life stresses that grow with competitive pursuits is something entirely different.

This has a big impact on our ability to plan for future financial goals.

Every five-year-old boy wants to drive a tractor when they grow up. Few jobs look better in the eyes of a young boy whose idea of a good job begins and ends with “Vroom vroom, beep beep, big tractor, here I come!”

Then many grow up and realize that driving a tractor maybe isn’t the best career. Maybe they want something more prestigious or lucrative.

So as a teenager they dream of being a lawyer. Now they think—they know—their plan is set. Law school and its costs, here we come.

Then, as a lawyer, they face such long working hours that they rarely see their families.

So perhaps they take a lower-paying job with flexible hours. Then they realize that childcare is so expensive that it consumes most of their paycheck, and they opt to be a stay-at-home parent. This, they conclude, is finally the right choice.

Then, at age 70, they realize that a lifetime of staying home means they’re unprepared to afford retirement.

Many of us wind through life on a similar trajectory. Only 27% of college grads have a job related to their major, according to the Federal Reserve.⁴⁶ Twenty-nine percent of stay-at-home parents have a college degree.⁴⁷ Few likely regret their education, of course. But we should acknowledge that a new parent in their 30s may think about life goals in a way their 18-year-old self making career goals would never imagine.

Long-term financial planning is essential. But things change—both the world around you, and your own goals and desires. It is one thing to say, “We don’t know what the future holds.” It’s another to admit that you, yourself, don’t know today what you will even want in the future. And the truth is, few of us do. It’s hard to make enduring long-term decisions when your view of what you’ll want in the future is likely to shift.

The End of History Illusion is what psychologists call the tendency for people to be keenly aware of how much they’ve changed in the past, but to underestimate how much their personalities, desires, and goals are likely to change in the future. Harvard psychologist Daniel Gilbert once said:

At every stage of our lives we make decisions that will profoundly influence the lives of the people we’re going to become, and then when we become those people, we’re not always thrilled with the decisions we made. So young people pay good money to get tattoos removed that teenagers paid good money to get. Middle-aged people rushed to divorce people who young adults rushed to marry. Older adults work hard to lose what middle-aged adults worked hard to gain. On and on and on.⁴⁸

“All of us,” he said, “are walking around with an illusion—an illusion that history, our personal history, has just come to an end, that we have just recently become the people that we were always meant to be and will be for the rest of our lives.” We tend to never learn this lesson. Gilbert’s research shows people from age 18 to 68 underestimate how much they will change in the future.

You can see how this can impact a long-term financial plan. Charlie Munger says the first rule of compounding is to never interrupt it unnecessarily. But how do you not interrupt a money plan—careers, investments, spending, budgeting, whatever—when what you want out of life changes? It’s hard. Part of the reason people like Ronald Read—the wealthy janitor we met earlier in the book—and Warren Buffett become so successful is because they kept doing the same thing for decades on end, letting compounding run wild. But many of us evolve so much over a lifetime that we don’t want to keep doing the same thing for decades on end. Or anything close to it. So rather than one 80-something-year lifespan, our money has perhaps four distinct 20-year blocks.

I know young people who purposefully live austere lives with little income, and they’re perfectly happy with it. Then there are those who work their tails off to pay for a life of luxury, and they’re perfectly happy with that. Both have risks—the former risks being unprepared to raise a family or fund retirement, the latter risks regret that you spent your youthful and healthy years in a cubicle.

There is no easy solution to this problem. Tell a five-year-old boy he should be a lawyer instead of a tractor driver and he will disagree with every cell in his body.

But there are two things to keep in mind when making what you think are long-term decisions.

We should avoid the extreme ends of financial planning. Assuming you’ll be happy with a very low income, or choosing to work endless hours in pursuit of a high one, increases the odds that you’ll one day find yourself at a point of regret. The fuel of the End of History Illusion is that people adapt to most circumstances, so the benefits of an extreme plan—the simplicity of having hardly anything, or the thrill of having almost everything—wear off. But the downsides of those extremes—not being able to afford retirement, or looking back at a life spent devoted to chasing dollars—become enduring regrets. Regrets are especially painful when you abandon a previous plan and feel like you have to run in the other direction twice as fast to make up for lost time.

Compounding works best when you can give a plan years or decades to grow. This is true for not only savings but careers and relationships. Endurance is key. And when you consider our tendency to change who we are over time, balance at every point in your life becomes a strategy to avoid future regret and encourage endurance.

Aiming, at every point in your working life, to have moderate annual savings, moderate free time, no more than a moderate commute, and at least moderate time with your family, increases the odds of being able to stick with a plan and avoid regret than if any one of those things fall to the extreme sides of the spectrum.

We should also come to accept the reality of changing our minds. Some of the most miserable workers I’ve met are people who stay loyal to a career only because it’s the field they picked when deciding on a college major at age 18. When you accept the End of History Illusion, you realize that the odds of picking a job when you’re not old enough to drink that you will still enjoy when you’re old enough to qualify for Social Security are low.

The trick is to accept the reality of change and move on as soon as possible.

Jason Zweig, the Wall Street Journal investment columnist, worked with psychologist Daniel Kahneman on writing Kahneman’s book Thinking, Fast and Slow. Zweig once told a story about a personality quirk of Kahneman’s that served him well: “Nothing amazed me more about Danny than his ability to detonate what we had just done,” Zweig wrote. He and Kahneman could work endlessly on a chapter, but:

The next thing you know, [Kahneman] sends a version so utterly transformed that it is unrecognizable: It begins differently, it ends differently, it incorporates anecdotes and evidence you never would have thought of, it draws on research that you’ve never heard of.

“When I asked Danny how he could start again as if we had never written an earlier draft,” Zweig continued, “he said the words I’ve never forgotten: ‘I have no sunk costs.’”⁴⁹

Sunk costs—anchoring decisions to past efforts that can’t be refunded—are a devil in a world where people change over time. They make our future selves prisoners to our past, different, selves. It’s the equivalent of a stranger making major life decisions for you.

Embracing the idea that financial goals made when you were a different person should be abandoned without mercy versus put on life support and dragged on can be a good strategy to minimize future regret.

The quicker it’s done, the sooner you can get back to compounding.

Next, let’s talk about compounding’s price of admission.