Delayed gratification is the most important trait for financial success. To delay gratification is to resist the temptation of immediate pleasure for future benefit.
Nature has wired us to seek instant rewards and not worry about tomorrow. Modern consumerism culture and advertising make it almost impossible to resist the temptation to spend money.
However, numerous studies have highlighted the importance of delaying gratification – none more famous than the marshmallow test:
The Marshmallow Test
The marshmallow test was conducted in 1972 at Stanford University. Researchers wanted to test children’s ability to delay gratification.
They placed a treat (marshmallow) in front of each child. The child could eat the marshmallow. Or, if they waited 15 minutes without eating the marshmallow, they would get two marshmallows as a reward.
Some kids ate the marshmallow right away. Others resisted the temptation for a few minutes but gave up after that. Some kids resisted the temptation for 15 minutes. They ended up getting two marshmallows as a reward.
Researchers studied these children later in life. They found that kids who could wait 15 minutes tended to do better in life – as measured by exam scores, educational attainment, health, etc.
The simple ability to delay gratification for 15 minutes provided a strong indicator of success in life.
Delayed gratification and Personal finance
We spend a surprising amount of money on impulse purchases. By delaying gratification, you can save and invest that money instead.
I was not great at delaying gratification. I have since figured out that delaying gratification is a skill that I can learn… like learning to play tennis or learning to cook. And like any other skill, it takes time and patience to learn.
I started with small changes. Whenever I wanted to buy something on Amazon, I added that item to the cart instead of clicking the Buy Now button. Then I waited a week.
After a week, if I wanted to buy that item, I would buy it. But most of the time, I found out that I no longer felt like buying that item after a week.
After the success with Amazon purchases, I have extended this simple act of pausing before buying to all my purchases. The act of pausing also helps remind me of the real cost of buying something.
These changes have helped me save money and avoid lifestyle inflation.
Wealthy people do today what others won’t.
So they can have tomorrow what others won’t.
Delayed gratification in other areas
I have also used this skill in other areas – personal, career, marriage, social, etc.
Every day we choose between instant rewards or future benefits. For example, spending time on social media vs. working. Staying in bed or going to the gym. Checking your phone or paying attention to your spouse.
These may seem like small choices, but their effects add up over time.
Making difficult choices every day is hard. But it is totally worth it. In the immortal words of Robert Frost – “Two roads diverged in a wood. I took the one less traveled, and that has made all the difference.”