This post is featured in the Carnival of Wealth hosted at Personal Dividends
If you are a dedicated wealth creator and have been brave enough to revisit the shopping centres after running the Christmas gauntlet, confident in your ability not to buy anything, you may have noticed something interesting. All the latest gadgets still line the shelves, there are still red tags to be found on the items that you might like to buy and the friendly retailers are still there waiting to help you weigh up the pros and cons of each purchase (read: sell you as much sh#t as they can).
That’s right, nothing has changed! If you were religiously practicing your wealth fundamentals during the festive season and you have noticed these things, then you may just stand a chance for the year to come. If you are a relatively new wealth creation player and are drawn to the well lit stores like a moth to a flame, then the road ahead could be perilous!
Instant gratification is what we are seeking each time we buy a shiny new item from the shop, spend money on things that we don’t actually need or use our money in similarly nonconstructive ways. Being able to delay your urge to buy these things is a very important part of wealth creation and it really does require some pretty strong will power. As most of us have not renounced all of our worldly possessions, the desire to buy nice things runs deep, so it’s best to give in to the urge every once in a while, least it overwhelm you! There are a few tricks you can employ however, that will help you stave off the urge a little longer and hopefully allow you to make conscious and educated decisions in the end.
Clever sales and marketing people have been perfecting the art of taking your money since the start of time and they know of your need for instant gratification. The tactics being used these days are increasingly more direct and require you to make quick and impulsive decisions about buying now to save on a “never to be repeated price” or taking it today with “no money down”. Poor consumers, its tough to fight the impulse to spend when everyone is making it so easy for them to do so!
Holding out is not easy when every fibre of your being tells you that you need to have that special something right now, especially when it is right in front of you! It really is an emotional roller coaster and society plays a very big part in influencing our decisions. As kids we learn very quickly how nice it is to have something we want immediately and generally have less self control. This can have a flow-on effect later in life if we don’t develop our skills in this area, but often it becomes harder to delay gratification as time goes on and we have greater access to ways we can achieve this (for most, it’s called a credit card). You see the trouble is that delayed gratification is linked to self control and who really ever has any fun controlling themselves?
The video below shows a re-enactment of a very famous (and very funny) experiment called the Marshmallow Test. This video is seriously worth watching, the premise of this is that humans show a preference for a reward that arrives sooner rather than later i.e. instant gratification.
The creator of the test (Walter Mischel) followed the kids in his test over a number of years into adulthood and found that those who were able to hold off eating the mashmallow were more successful later in life. To be honest, I think that most of them did remarkably well!
Some people are better than others at controlling their emotions, but I don’t know of anyone who can do it all of the time. If you continued to extended the time before those kids got their second marshmallow, then you would quickly increase the rate of failure. Everyone is entitled to slip a little every so often and you can’t hold out forever, but the intelligence part is understanding your needs Vs. your wants and looking ahead to what delayed gratification can bring.
“Delayed gratification is passing up short-term gains for long-term rewards.”
Spending money on things now, no matter how small can have a big effect on your financial position later in life. I’m not really into frugality myself, I’d rather find ways to create wealth than save a few dollars on a coffee, but I don’t go off spending indiscriminately either. For me delayed gratification is not pocketing the interest on savings, but re-investing it instead. Much more tempting is selling up my assets to live completely debt free, but I have a long term goal and understand the difference between good debt and bad debt. Your situation will be different from mine, but refining your emotional intelligence is just as important. If you get this right, then your ability to create wealth will increase exponentially!
Delayed Gratification Without Self Control
Ok, so you definitely would have eaten the marshmallow and are just plain bad at controlling yourself when it comes to spending. Never fear, there is a solution. This strategy is guaranteed to help you develop your emotional intelligence and fix your instant gratification urges. The process is very simple and almost painless.
It’s not always necessary to hold out on buying something if you are purchasing it with money that is yours to spend. What this means is that it should be paid for from your pocket money allocated out of your budget. That’s right, there are ways to spend money guilt free. Pretty cool right?
Depending on how much you earn and the amount of pocket money you allow yourself (really this should be less than 10% of your take home pay), most of the things you are going to be able to buy will be relatively small. If you want something bigger, then you will have to force yourself to save. Buying on interest free or using credit cards is cheating, don’t sell out your emotional intelligence for a quick fix!
The benefit of having pocket money to spend is that you are able to reward yourself by buying small things to stop the instant gratification cravings, but you should challenge yourself and commit to larger and more gratifying things as you improve your skills. Eventually you might even find yourself ‘spending’ you money on things that actually make you money!
How are your delayed gratification skills?
Image by DaveBleasdale