Most people are comfortable with the notion that their identity has been in large part formed by the past events they have experienced. It may not have occurred to them that this shaping process works in both directions; that their memories of past events may have been shaped and reformed by their identities; that events as they recall them may not always be accurate and faithful recreations of what actually occurred. It is not so much that people falsely remember things that never happened (although that does happen from time to time). Rather, it is more that old memories, particularly formative ones, are sometimes remembered selectively so as to create and reinforce a particular view or "spin" on what happened that seems most correct to present identity. In fact, memory is never an objective record of events, but always something that is filtered through identity; always something that is re-enacted and re-called; always a recreation. Likewise, the events that happen to people never have any intrinsic meaning, but rather only make sense in terms of the life story they are used to tell, and there is always more than one way to tell a story
To illustrate this point, consider the almost always negative manner in which depressed people tend to look back upon their pasts. It is a common feature of substantially depressed people to view themselves as having always been depressed, even when external evidence (e.g., reports of family members and friends) suggests this was not the case. Depressed people are not trying to "put one over" when they misrepresent history in this fashion. Rather, they actually remember the past as always having had the negative tone that their present has. They may actually have memories of happier times, but they are not spontaneously able to access them. If someone brings a happy memory up, it will often appear to the depressed person to have been an aberration - an isolated positive event in an otherwise uniform sea of negativity.
As another illustration, consider the varying ways that different people may respond to a significantly negative set of events such as having been severely abused. One person may end up internalizing the abuser's messages that they are no good and unworthy. They may end up essentially hating themselves, self-abusing, and chronically getting into relationships with other people who will abuse them. This person's self image could be described as that of a "deserving victim" with their abuse experience featured as the seminal event in their lives. Another abuse survivor may come to hate abusers, rather than herself. They may pity themselves and feel that they have been ruined. This person's self image could be described as that of an "undeserving victim", but still with the abuse featured as the seminal and life-defining event. Still another survivor might understand themselves to have been grievously harmed, but refuse to define themselves as a victim. Because they do not define themselves as a victim, they are not limited to seeing themselves as a victim or acting in a passive manner towards others they are involved with, and are thus open to pursuing various opportunities that are not available to "victims" (e.g., opportunities that have to be fought for rather than just handed out). An angry survivor might become a tireless crusader against abuse. A survivor who refuses to be defined by abuse, however, can become anything he or she wants.
Examining your own perspective on the past can help you to understand how that perspective influences your present and future opportunities. The more that perspective is biased or distorted, the more you are likely to sell yourself short, see what you are capable of becoming in an artificially constrained and limited way, and miss significant opportunities for fulfillment.