We live in a world of consumption, where people seek immediate gratification with the latest and greatest gadgets and products as soon as they hit the shelves.
Think about Apple and the ridiculously long line of people who queue for their updated iPhones!
When it comes to money management and becoming rich, though, patience and delayed gratification make all the difference.
Patient people are more likely to save their pennies than seek "easy" (and expensive) credit because they are happy to wait for a new car or big-screen TV.
They don’t have to have it all yesterday!
One of the common Rich Habits that I've found among successful people is their ability to delay gratification.
Successful people possess higher patience and an aptitude to postpone the enjoyment of their work.
They have the ability to work hard to accomplish a goal that isn't achieved for a long time.
Learning to delay gratification rather than seeking immediate satisfaction is essential for success, particularly when it comes to things like investing, business and making money.
Yet it's not easy to change ingrained habits and the approaches to life that you’ve been practicing since childhood, but once you’re aware of the importance of the concept of delayed gratification, it’s entirely doable.
Start with small alterations to your thought patterns by acknowledging your habits intended to provide immediate gratification.
Remember, if it comes too quickly, chances are you will lose it again just as easily.
All good things take time!
As Warren Buffet wisely said: “Wealth is the transfer of money from the impatient to the patient.”
If you’re wondering what I’m on about let me explain…
The definition of delayed or deferred gratification is the ability to resist the temptation for an immediate reward and therefore wait for a later reward.
The later reward is generally much larger than the immediate one, and that’s why it's worth the wait.
Research into the ability to delay gratification shows that there are a number of other positive outcomes from this skill, including academic success, physical and psychological health, and social competence.
Similarly, a person's ability to delay gratification relates to other skills such as patience, impulse, self-control, and willpower, which are all involved in self-regulatory behaviour.
So, if we think about the rich and successful, one of their key Rich Habits is the ability to delay a smaller instant reward for a later more generous one.
But we need to remember that this skill isn't natural for most people.
We love it!
While evolution made us that way long before our modern monetary system came about, unfortunately, the desire for instant gratification doesn’t help us when we’re trying to become wealthy.
In fact, it hurts us.
That’s one of the reasons many high-income earners are not ‘rich.’
You’ll often find the more they earn, the more they spend and they end up on a treadmill where they tend to spend more than they earn because they need to support a lifestyle that has little or no enduring value but has high fixed costs to maintain.
Typically they spend on things like big houses, fancy cars, and impressive vacations.
They live a life of instant gratification, where they live in a peer group of other big spenders and where they have to work harder and harder to maintain the lifestyle they no longer feel they have the time or energy to enjoy.
This is what we typically call the rat race!
Delayed gratification and money
When it comes to the latest gadget or fad, most people have no self-control.
This is made even worse in the technological world we now live in where we all have access to instant money – real or otherwise.
Too many people use their credit cards for impulse purchases that in reality, they have no way of repaying any time soon.
Unfortunately, this type of mindset can quickly lead to financial ruin.
It’s time, to be honest with yourself– are you a slave to instant gratification?
If so there are a number of strategies to break the cycle, but first, you must recognise this Poor Habit.
Using your credit card for impulse purchases or taking on unnecessary debt for such non-appreciating assets as cars or, worse still, a personal loan to go on holiday is never a good idea.
Too many people see the limit on their credit card as their money – it’s not.
When you take on consumer debt it involves using dollars you'll hopefully earn in the future for current expenses (or splurges) and paying the bank interest for the privilege of doing so!
This means that the "bargain" price you paid today is likely to cost you much more over the long run because you're using credit to pay for it.
One key difference between people with consumer debt and those without, everything else being equal, is that the person with no consumer debt has mastered delayed gratification, while the person with consumer debt has not.
In its simplest form, the ability to wait 15 minutes to get two marshmallows instead of one marshmallow is delayed gratification – more on this fact a little later!
The ability to wait to buy something after you’ve saved for the item, rather than impulsively purchasing something as soon as you realise you want it, is delayed gratification.
The ability to invest money today to have money when you retire is delayed gratification.
Like I said: learning delayed gratification isn’t easy but it can become a skill in your Rich Habit toolkit if you follow a few simple tips.
1. Write down a list of money goals and put them somewhere that you can see them every day.
Another idea is to tell someone else what your money goals are, perhaps a mentor, who can then help keep you accountable to them.
2. Every time you're tempted to purchase something consider whether it's a want or a need.
If it's a want, such as a new suit or handbag, then delay for at least 24 hours before deciding whether to buy it.
Most of the time, that 24-hour period will be enough time for you to see that you don't need it at all.
For more expensive purchases, then you should delay for even longer.
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If you’re buying that “doo dad” online how about putting it in your shopping cart but don’t click the checkout button.
Instead, come back in 24 hours and if you still “need” that item then buy it.
You’ll be surprised how often the desire has disappeared.
3. Another strategy is to get advice from someone older than you are to discover what they wish they'd done differently with money when they were your age.
It's likely that they'll share ideas with you that you've never thought about.
And in my experience, they're probably going to disclose that they wish they'd started saving and investing earlier in life rather than spending their money on things they thought they needed at the time.
Let me explain further...
Many people think that delayed gratification is the secret to success.
I certainly believe it’s one of them.
There have been numerous studies about delayed gratification over the years, so I thought I'd share two of them with you now to illustrate how it works.
In 1972, there was an experiment that tested children’s ability to delay gratification.
Now, in this experiment, a researcher offered a small child a choice.
They could have one marshmallow now or two marshmallows if they could wait a mere 15 minutes.
The researcher left the child alone in the room with one marshmallow on a tray.
The child was filmed with a secret video camera.
Of course, most of the children couldn’t wait and soon ate the marshmallow straight away.
However, about 30 per cent were able to delay gratification and get the second marshmallow.
The ones who could wait for the second marshmallow were more successful later in life!
- They got higher test scores in school.
- They had fewer problems with drugs.
- They were much more likely to go to college.
- They had lower body fat.
- And they made more money as adults.
According to the researchers, the children in the experiment used a number of techniques to delay gratification and control themselves.
- Some of the children turned around so they didn't see the tray or the marshmallow.
- Some covered their eyes so they couldn't physically see the marshmallow.
- Some even kicked the desk or pulled their hair to distract themselves.
- Others stroked the marshmallow as if it were a doll.
Sure, they were childish techniques, but they worked.
What was clear from this experiment was that 30 per cent of the children were lucky to have developed self-control from a young age.
But, many people think that adults can also develop self-control through practice.
With that self-control, they become more successful and reach their goals.
In other words, this series of experiments proved that the ability to delay gratification was critical for success in life.
If you think about it you can see the impact on the success that having the ability to delay gratification can have everywhere you look.
- If you can delay the gratification of watching television and get your homework done now, then you’ll learn more and get better grades.
- If you delay the gratification of buying sweets or crips at the store, then you’ll eat healthier when you get home and be healthier too.
- If you delay the gratification of finishing your workout early and put in a few more reps, then you’ll be stronger and fitter.
Why did some children naturally have more self-control and thus were destined for success?
More research was conducted into delayed gratification to find out the answer.
Researchers at the University of Rochester decided to replicate the marshmallow experiment but with an important twist.
This time, they split the children into two groups.
According to the study results, the first group of children was also exposed to unreliable experiences, such as the promise to bring bigger crayons or more stickers compared to the small selection that the children were originally given.
These promises never materialised.
Conversely, the second group of children had reliable experiences where the promised better crayons and stickers were provided to them.
It doesn't take Einstein to work out what consequently happened to the marshmallow experiment!
The first group, having experienced those broken promises, had no reason to trust that the researchers would ever bring a second marshmallow so quickly ate the first one in front of them.
The second group, however, had experienced delayed gratification training because their promises were kept.
So they had learned that waiting was worth it because they'd previously received better crayons and stickers.
They also had the capability of waiting longer.
On average, according to the results, they waited for an average of four times longer than the first group.
In other words, the researchers found that the child’s ability to delay gratification and display self-control was not a predetermined trait, but rather was impacted by the experiences and environment that surrounded them.
In fact, the effects on the environment were almost instantaneous.
Just a few minutes of reliable or unreliable experiences were enough to push the actions of each child in one direction or another.
Over the decades these marshmallow experiences have become very popular but they're the only pieces of the delayed gratification puzzle.
Human behaviour (and life in general) is a lot more complex than that, so let’s not pretend that one choice a four-year-old makes will determine the rest of his or her life or how rich or successful they will be.
However, my observation is that the studies do highlight a very important Rich Habit.
Waiting for the second marshmallow, or better crayons or stickers isn't easy.
In fact, for children, it's particularly hard.
What we can learn from this is that you need to find the ability to be disciplined and take action instead of becoming distracted and doing what’s easy.
Success in nearly every field requires you to ignore doing something easier (delaying gratification) in favour of doing something harder.
The lesson from all of this is that we all can develop the Rich Habit of delaying gratification and accepting what good things are worth waiting for.