Today’s guest post comes from Andrew Syrios over at AndrewSyrios.com. Today, Andrew reminds us of the importance of delayed gratification.
No matter what you’ve heard from get-rich-quick gurus, infomercials or game show hosts, becoming wealthy is not a quick and easy affair.
Yes it occasionally happens. People win the lottery sometimes (although they usually lose all that money). I even considered buying Bitcoin when it was less than $10 a coin!
But alas, it was not to be. That shouldn’t matter though, because the only way to properly approach becoming wealthy is the get-rich-slow method.
To master the get-rich-slow method of gaining wealth, one must learn to defer gratification. I believe it is the single most important skill one can possess. You must live below your means now in order to live above society’s mean (i.e. average) later.
In other words, you must save and invest wisely.
There is nothing better to highlight this concept than the famous Stanford Marshmallow Experiment. The experiment put young children in a room with a marshmallow for fifteen minutes. The kids were told that if they could go the whole fifteen minutes without eating the marshmallow, they would get two marshmallows at the end.
Most of the kids failed. But a handful of them found a way to defer their gratification and get to that second marshmallow.
Years later, they evaluated how the kids did in life and found a marked difference between those who waited for the second marshmallow and those that did not. James Clear sums up the results,
The children who were willing to delay gratification and waited to receive the second marshmallow ended up having higher SAT scores, lower levels of substance abuse, lower likelihood of obesity, better responses to stress, better social skills as reported by their parents, and generally better scores in a range of other life measures.
The same is true for wealth as it is for marshmallows.
Shiny objects are all around us and easy, but expensive credit is offered to virtually anyone with a pulse. But the difference between those with financial freedom, or even just financial security, and those without is the ability to say “no” to such temptations.
Buying consumer goods on credit is the absolute worst thing you can do. In that case you are mortgaging your own financial future for some fleeting good in the present moment. Your approach should be exactly the opposite.
Instead of deferring payments to the future for something you get now, you should put as much of the money you get now as possible into investments (my preference being real estate). That way you use your money now to pay yourself in the future.
As simple as it sounds, the mindset of deferred gratification is the best way to build wealth. There are no shortcuts here folks, at least none that can be relied upon to consistently work. But there is good news for those who are willing to be patient and work hard. There are proven and tested ways to become financially independent. There is no need to reinvent the wheel, just defer gratification and wait for that second marshmallow.
Editorial note: To figure out just how long it will take you to reach financial independence, see this post from Mr. Money Mustache called The Shocking Simply Math Behind Early Retirement.
Be sure to pay Andrew a visit. Also, check him out on BiggerPockets podcast episode 121.
Great post!!! Delayed Gratification is the hardest/easiest thing that you can do in order to reach the wealth that you people desire. Like most things in life, it requires discipline in order to reach our goals. In today’s consumer driven society too many people are looking for the here and now instead of long term, which is sad. Discipline is something that is not employed enough these days 🙁
Mustard Seed Money recently posted…The History of Credit Scores
I had someone once say, well if I’m going to eat the whole box of cookies by the end of the week, why wait? On the other hand, I can have 1 or 2 cookies a night. For me I make it a time to pause and enjoy and stretch out the treat of having cookies. *shrug*
Yes! Delayed gratification is an excellent way to practice self control, curb impulse spending and create a habit of frugality. I find that it is a constant learning process for me, but the practice of mindful spending and delaying purchases has made an impact on our financial future.
Mrs. Adventure Rich recently posted…Money Map Musings
Yep – delayed gratification is super important!
The question I have is whether delayed gratification is learned or inherited?
Learned 100%. Either painfully or by rubbing two brain cells together. Good influences can help developing minds but ultimately its up to the individual.
Fairly sure Mr 1500 has written about his family if you want to dig them up they are good reads 🙂
PS: Where are my spendypants stories! Its been too long.
On the consumer goods on credit angle, I only have one exception to that rule. 0% finance allows me to invest the money now and slowly pay the money back over time. I have done it for my last two couches and it works well. It also helps to have an offset mortgage so my bank account earns money for every day the money is there. Also note that I could have paid for them outright but it made more sense financially this way.
Other than that I agree with everything you wrote 100%
The trap with that 0% is that you miss out on savings. All those that choose the 0% subsidize the discounted rate. The furniture stores by me always advertise 0% finance or 15-20% off. Think about that. Same goes for brand new vehicles, would you rather pay 0% or have cash off? Every now and then I have seen the 0%+a discount, but I think the discount is not as great.
It’s tough to delay gratification if you grow up in the US. Everything is available almost instantly. We’re trying to teach our kid that sometime you have to wait a bit. It’s a tough lesson for them.
Joe recently posted…Investing with RealtyShares – see how I’m doing with real estate crowdfunding
Couldn’t agree more Joe. The culture of the United States is not one of modesty and deferral — kids grow up having everything and that kind of life becomes entirely “normal” for many of them.
How many people can honestly say their lifestyle has declined as they’ve grown up?
For many, living on their own during college is something of a rude awakening.
Mr. Tako recently posted…August 2017 Dividend Income And Expenses
What I find fascinating is that, the older I get, the easier it is for me to “resist the marshmallow” and delay my gratification. It may be that I have most of what I need, and can hold off, or maybe “with age comes wisdom.”
I also think that my desire to get rid of stuff now makes me rethink purchasing any new stuff.
Good article
kdrevik@39months.com recently posted…Interesting info on re-balancing investments
Same here and I agree. I now have plenty of stuff that I havent had time to use or barely use at all and its mostly collecting dust. Certainly has given me a better perspective on what I spend money on which is saving me quite a bit going forward. You wake up and realize you dont really need as much of this stuff as you thought you did.
Great points. For me personnally, it also has to to with figuring out what actually brings joy and satisfaction to your life. Most of our consumer culture items really don’t bring satisfy those needs for me. For me, time is most improtant, living below one’s means is what allows for time to be bought.
PedalsorPennies recently posted…Make some extra cash – Officiate
I love the Stanford Marshmallow Experiment. I’m just ashamed I’m the kid who ate *all* the marshmallows 🙁
The Side Gig Guru recently posted…Dividends: I love them and I cannot lie
A great reminder and all very true. Develop some self-control and do the right things over many years and it will pay off.
I did not know about the Stanford Marshmallow experiment. It will be interesting to see what these kids are like going forward into the future. And delayed gratification is certainly the way to go. Learning to occupy yourself with other things makes obtaining goals all the more sweeter, particularly when you get to FI. I do admit, however, I wish it would go faster (and that I wouldn’t age at the same time).
Jason recently posted…Guest Post: Balance Your Social Life and Finances-10 Ways to Save Money When Eating Out
There is a big uncontrolled factor in the marshmallow experiment. Some kids just don’t care about marshmallows. They are lukewarm about the 1st one, and they don’t want a 2nd one. Maybe they will give the 2nd one to a friend.