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The Importance of Delayed Gratification

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importance of delayed gratification

The following article is from Mike, our staff writer. 

Are you the type of person who is very impulsive with money?  Do you spend money faster than you can earn it?  If so, your spending habits could be keeping you from reaching your financial goals.  Being impatient with money may cause you to spend more than you earn using credit cards, dig yourself into debt, and deal with the stress that comes along with owing people money.

If you want to be financially successful you need to master the art of delayed gratification.  In other words, you need to be able to resist the temptation for an immediate reward in order to receive a much larger reward later.

For example, I could drive to Costco right now, whip out my credit card and come home with a 70 inch TV right now.  But unless I’m able to pay off that purchase in full when my credit card bill arrives I’m going to be stuck paying interest on it.  If I end up paying only the minimum amount due each month I’ll end up spending far more than the purchase price of the television itself.  Instead, it makes more sense for me to save my money until I have enough to pay cash.

Another problem with letting your money burn a hole in your pocket is that you’ll face diminishing returns.  Each time you make an impulse purchase you’ll experience a little high, but with each new purchase that high will go away faster and faster.

For example, let’s say I did go out and buy that 70 inch television.  At first I’d be really satisfied with my new purchase, but before long I’d get used to it and it wouldn’t seem special anymore.  And once I saw my neighbor’s new 80 inch TV, mine just wouldn’t be good enough anymore.  This is exactly how people get caught in the trap of trying to keep up with the Jones, and that’s a surefire way to fall into debt and lose control of your finances.

Should You Delay Your Retirement Too?

Since the main theme of this blog is about retiring early, it makes sense to wonder if the concept of delayed gratification should apply to retirement too.  After all, delaying retirement does have its benefits as you may qualify for a higher Social Security payout and your nest egg will last longer since you won’t have to tap into it until later.  On the other hand, life is short and you don’t want to delay your retirement so long that you won’t have time to enjoy it.

For a real life example, take my father-in-law.  He worked for the US Post Office for many years and he filed his retirement paperwork the minute he reached retirement age.  He had enough and didn’t want to work anymore.  Within just a few months he regretted the decision and wished he had stayed on another year to eliminate his debt before retiring.

He ended up getting a part time job as a crossing guard to help supplement his income, which wasn’t bad because he actually didn’t mind the job and he got some extra exercise.  And at least he got to enjoy a little bit of his retirement before he passed away.

Have you mastered the art of delayed gratification?  What tips do you have for people who still struggle with impulse purchases?

Photo Credit: flickr RobotSkirts

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Melanie Lockert is a freelance writer currently living in Portland, Oregon. She is passionate about education, financial literacy, and empowering people to take control of their finances. She writes about breaking up with debt, freelancing, and side hustle adventures at DearDebt.com. Currently she puts more than 50% of her income towards debt, while living a frugal, fun life. In addition to her love of personal finance, art and music, she is also a karaoke master.

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{ 16 comments… add one }
  • Ernie Zelinski May 16, 2014, 1:19 am

    Yes, I have mastered the art of delayed gratification a long time ago.

    I have been saying for years that there are two reasons why a lot of baby boomers, who made decent incomes all their work lives, now don’t have enough for retirement. These are the two reasons:

    1. Instant gratification takes too long.
    2. A “necessity” is any luxury that the neighbor happens to have.

    Of course, these baby boomers are in severe denial about who caused their present financial dilemmas. But, as Larry Wingate (the author of “You’re Broke Because You Want to Be”) says, ” I don’t care what problems you have had, and how little income you have had, I will find someone who had it much more difficult than you and still
    saved enough for retirement.”

    Back to my delayed gratification. Even though I have enough cash on hand for some time to buy three or four brand new BMWs for cash, I have never owned a new car. The most I paid for a used car was $12,500. The last car I purchased was a new-looking 2003 Solara for $9,500.

    I could go on about the things I sacrificed in my life so that today I am in better financial shape for retirement than over 95 percent of baby boomers. By the way, I only worked half of my adult life, and lately when I have worked, I have only worked a maximum of 4 or 5 hours a day.

    Here are some of my favorite quotations from my book “The 777 Best Things
    Ever Said about Money” that put money in proper perspective:

    “Money will appear when you are doing the right thing in your life.”
    — Michael Phillips

    “If you borrow money to make money, you’ve done something magical.
    On the other hand, if you go into debt to pay your bills
    or buy something you want but don’t need,
    you’ve done something stupid. Stupid and short-sighted
    and ultimately life-changing for the worse.”
    — Seth Godin

    “The amount of money you make will always be in direct proportion
    to the demand for what you do, your ability to do it, and the difficulty
    of replacing you.”
    — Earl Nightingale

    “Riches do not respond to wishes. They respond only to definite plans,
    backed by definite desires, through constant persistence.”
    — Napoleon Hill

    “The art of living easily as to money is to pitch your
    scale of living one degree below your means.
    — Sir Henry Taylor

    “People who don’t respect money don’t have any.”
    — J. Paul Getty,

    “If you want to fix your money problems, get your head examined.
    It’s your mindset and attitude about money that will either
    draw it in to you or repel it away from you. What’s in your head
    determines what’s in your wallet.”
    — Darren Hardy

    Incidentally, if you would like a free copy of my ebook “The 777 Best Things Ever Said about Money”, just find my email address on my website, and send me a request to send it to you. Let me know if you would like it as a Kindle edition or iBook
    edition. (A review on Amazon would be appreciated if you like the book.)

    Ernie J. Zelinski
    The Prosperity Guy
    “Helping Adventurous Souls Live Prosperous and Free”
    Author of the Bestseller “How to Retire Happy, Wild, and Free”
    (Over 200,000 copies sold and published in 9 languages)
    and the International Bestseller “The Joy of Not Working’
    (Over 250,000 copies sold and published in 17 languages)

    • retirebyforty May 16, 2014, 8:51 am

      I’m pretty good at delayed gratification too. Well, I don’t feel the need to buy the latest and greatest gadgets and gears. I guess I prefer cash in the bank than more stuff. The exception is when we go on vacation. Then I spend a little more freely.

      • Ernie Zelinski May 17, 2014, 12:16 am

        Me, too! I love vacations.

        And don’t get me wrong. I love spending money, particularly now that I make a great income.

        I totally agree with you, when you say, “I prefer cash in the bank than more stuff.”

        Fact is, studies have shown that people get more satisfaction out of spending money on experiences than on material possessions — what we call “stuff.” A vacation is always a great experience.

        In short, I belief in having money in the bank to pay for “it”. No financing of anything — even cars and houses! And once I pay for “it”, whatever “it” is — even a house or a car— I must still have plenty of money in the bank, much more than the vast majority of people, so that I can pay for a lavish vacation whenever I want one.

  • [email protected] May 16, 2014, 1:50 am

    I never think of it as delayed gratification, because that term implies that you are depriving yourself now so that you can get something even more opulant later. To me, this whole frugal journey is about redefining what gratification means. Cars, clothes, electronics… are these things truly gratifying, or do they just fleetingly occupy our attention and provide false fulfillment?

    • retirebyforty May 16, 2014, 8:53 am

      That’s a good way to look at it. I think I’m doing the same thing. Unnecessary purchases are not important to me anymore. It’s not really delayed gratification if I don’t really want them anyway. 🙂

  • darren May 16, 2014, 5:11 am

    I think this is an area I struggle in although I’m probably doing better than most. I wish I could have found some way to delay buying my brand new truck in 2010 and brand new SUV in 2001. I traded in a perfectly good, paid off car both times and financed my rides. To this day, I don’t even really care about my truck like some people care about their rides…washing and waxing their cars everytime they get a kittle dirty.

    Who knows exactly what the opportunity cost of my “emotional purchases” were? I probably could have bought another rental property…[sigh]…

    • retirebyforty May 16, 2014, 8:56 am

      Thanks for sharing. Yeah, it can be tough sometime. We got a new vehicle in 2010 as well. Our previous car broke down and we needed a bigger car. I guess we could have gotten a used car, but I think it evens out if we keep the car for 10-15 years.

  • Chris May 16, 2014, 6:18 am

    “An ever increasing craving for an ever diminishing pleasure…” C.S. Lewis.

    I learned my lesson a year after I purchased my first 50 inch flat screen in 2009. I walked into Best Buy on a Saturday because I needed a $5 computer cable. What did I walk out with? A $1,799 50″ plasma that was on clearance which I put on my credit card. I realized about a week after I bought it, that I’m going to have credit card payments for the next couple years. The sad feeling of being tied to debt was far worse than the gratification that I enjoyed for about 20 minutes. I vowed then that I would no longer buy on emotion and I would save before my purchase.

    That same year, I started using a Mac program called Moneywell which has been awesome. It’s basically a digital money envelope system that uses the idea of “money buckets.” I would recommend it to anyone.

    • retirebyforty May 16, 2014, 8:56 am

      That’s why I don’t go into Bestbuy anymore. 🙂 Thanks for sharing.

  • I’m really good about delayed gratification except when it comes to food. I have a hard time resisting a taco or a drink.

    • retirebyforty May 16, 2014, 8:57 am

      Good food is tough to resist. 🙂

  • kammi May 16, 2014, 7:14 am

    I don’t think of it as delayed gratification. I just don’t want any cheaply made ‘stuff’. The quality is just SO bad and the items don’t last for a LOT of the goods and services and I seriously find that when I ‘eat out’, I can usually make a better meal with less salt, and to my standards (I can’t eat many things or get sick when certain ingredients are used; I broke out in hives the other day when I last ate out). I go through shoes and clothes like no other (I walk a LOT) so when I purchase a shoe or a pair of jeans it has to last.
    I like quality if I spend money in something, like an investment. I keep learning because at some point, I just want to make things myself and forget about paying for badly made stuff. I just want to move from the US and live in Europe as soon as I can, so I consider it just striving towards my goal when I save and invest and taking away from my goal when I spend on junk.

    • retirebyforty May 16, 2014, 9:00 am

      I’m trying to avoid cheaply made stuff, but I have a hard time buying quality stuff. It just seem too expensive for me. It’s probably better in the long run, though. For those items that are used often, it’s better to buy quality. Cheaply made stuff have their places too. 🙂

  • Sharon May 16, 2014, 12:31 pm

    Since I took early retirement at 52 last year I haven’t spent much money. I bought the company car I had which had about 28,000 miles on it for $9,000. That was an unexpected bonus that I was able to do that as I expected I would have to buy a new car. Yay! Everything my husband and I own is paid for and we don’t want anything. Our key is that we have a small, but great house and a wonderful backyard. We spend most of our time outdoors. #1 rule – can’t buy something unless we get rid of something. When I do have a hankering to do a little shopping, I go to the dollar store to get a book or crossword magazine. Sometimes I pick up a few other things, but most of the time the total is $10 to $20 of things we need. Life is a kick now without work.

  • 1stuhave2findthetunnelb4ucthelight May 18, 2014, 11:03 pm

    I think there is some confusion about delayed gratification vs. impulse buying. An impulse buy is usually a bad decision in any circumstances regarding one’s finances. I suppose a good budget puts in “mad money” or whatever one wants to call it to allow you to impulse buy up to a limit. This could be material goods, some service, and probably most often purchase of food/beverages that really aren’t smart financial purchases.

    I’ve heard a variety of ways to stop impulse buys, such as only purchasing with cash, freezing credit cards and wait till they thaw until you make the purchase, etc.

    You mention the thought of delaying retirement as a form of delayed gratification. Sounds like that makes sense, put off having freedom from the day to day grind of work (or delaying collecting pension/social security), so that you’ll have a more comfortable retirement.

    One could look at RB40 as not being able to delay gratification when it comes to a full time high paying professional career. It could easily be argued, no matter what his investments are doing, RB40 would be doing better financially if he “sucked it up” and put up with his trained profession/work. Hard to argue financially it makes sense to not be making all the additional money for future retirement that the previous career provided. $50K on rental sale, heck RB40 would make more than that using delayed gratification and going back to work for a year at his old job (and doesn’t mean you wouldn’t have still made the $50K profit).

    However, as important as more and more money may seem, it takes guts to leave a high paying career and go down to a single income when one has a lot of good high paying trained career working years left. Significant delayed financial gratification given up leaving a high paying career, can’t argue that.

    Buying material goods, spending money on vacations, giving up income to spend more time with family are all part of life. For example, RB40 just spent a significant amount of money on a trip that would have been better financially to be put in a no-load mutual fund, etc for retirement. Is that delaying gratification for retirement going on a trip?

    I think it comes more to trying to make smart decisions on purchases/things/experiences. Could you get by on less fancy car? Could you take a vacation in a more cost effective manner? Do you need to replace the flooring this year? Are you buying something of true high quality that is more cost effective in the long term? Are those new dress shoes really necessary? Did you really need to eat at that nice restaurant?

    Maybe a 70″ TV could be creating memorable family movie’s together or shared gaming experiences with your children that a 25″ TV might not provide. Maybe that bike you want will create years of an enjoyable sport activity for you. Maybe the trip to Hawaii is because you want to share a similar experience you’re family provided you as a child? Maybe buying a dog/cat provides more enjoyment despite the fact that having a pet isn’t a smart financial decision (especially when they are sick)?

    The important thing being, do these things fit into your budget or not?

    If not, you’d better make smart choices about what activities/things you like to buy or take another job/second job to make things fit into your budget. Maybe get into hiking vs. into biking, as an example, as a less expensive activity to enjoy.

    Life is short, and you never know when it will be taken away, or when you health will go.
    Many people think they are immune to getting an chronic illness, cancer, or think that they’ll have the same physical ability when they are 50, 60, 70 years or older. That’s the argument to quit work as early as you can. It’s also the argument to go ahead and spend some money on experiencing life, even if it could sometimes mean you’ll have less in retirement or worked a little longer at your job. Sometimes experiencing life unfortunately cost money or require giving up some income.

    It’s all about balance. The great thing about getting to retirement for people as they are now at retirement. The negative thing, is that, most people at retirement are “no longer a spring chicken” anymore. Would you give up some money to be younger again? Don’t get me wrong, I’d retire tomorrow if I could, and I’d have made some different decisions with material things/experiences in life. However, no regrets on those things.

    • retirebyforty May 19, 2014, 10:05 am

      Thanks for sharing. I appreciate your thought. We just have to do what’s best for our situation. Year, I could have stuck with the job, but I know it wouldn’t have worked out. Life really is short and if you should enjoy it while you can. As long as your family is doing okay financially, there is no need to increase the stress level by working a lot. 🙂

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