What is Delayed Gratification?
What is Delayed Gratification?
Many people wonder “What is delayed gratification and how can it help with my finances?” Delayed gratification is when you resist the urge to indulge in an instant reward and instead choose to exercise self-control. In return for this self-control, there is a potentially greater financial reward in the future.
The “marshmallow experiment”
Instant gratification was first explored about 40 years ago by psychologist, Walter Mischel. This experiment has become known as the ‘marshmallow test’. He tested young children’s ability, or inability, to curb their urge to have one marshmallow immediately (instant gratification) rather than wait and receive two marshmallows, as promised to them, at a later time (delayed gratification).
This test is still relevant today. Many of us seek instant financial gratification now, rather than having the ability to resist temptation. If we have the ability to delay gratification, we can achieve a greater financial reward at a later date.
In today’s materialistic society, we’ve been bombarded with messages convincing us that instant gratification will make us feel better. Combine that with our easy access to credit cards and rapid changes in technology, instant gratification is tempting us all.
While instant gratification might make us feel good for a short time, it may actually hinder our long-term financial goals.
Delayed Rewards
By exercising self-control and resisting the urge to buy something that acts as an “instant reward“, you give yourself a better chance of being able to reach your financial goals.
For example, you could give up your daily coffee so you can afford your end-of-year holiday. Or, you might make monthly contributions to your superfund to give yourself a comfortable retirement.
While exercising self-control in the short term isn’t easy, resisting temptation can have its own rewards. Imagine how you can indulge yourself once you’ve finally achieved your goal!
How can delayed gratification help with your finances?
The next time you want to impulse buy, pause and think about whether you really need to spend the money now. Impulse control is important and it ensures you will reap the benefits of a long-term reward.
How can delayed gratification help you achieve your long-term financial goals?
There are a few things you can do financially that will ensure you reach your long-term goals:
- Save up enough money before making a purchase to avoid credit card debt, a pay day or a personal loan. When you do run up a debt, make sure you can afford to pay it off when the bill comes in or alternatively, pay it off as soon as possible.
- If you invest in a term deposit, don’t get tempted to take it out before the maturity date. Savour the wait so you don’t lose the interest you’ve earned.
- If you’re saving up a deposit to buy a property, try to save up for a bigger deposit, so you’ll potentially borrow less in future. This may mean you are vulnerable to future market or price changes.
- Reinvest any dividends you might get from your shares to increase your total number of shares. Doing this could result in greater returns long term.
Take control of your future
Exercising delayed gratification can help you to take control of many aspects of your life, so why not start with your finances?
Use a savings calculator to work out how much you need to put aside each payday to reach your financial goal. Or, use this budget calculator to find out what you spend your money on.
MBA Financial Strategists – Helping You Reach Your Financial Goals
At MBA Financial Strategists, we can help you reach your financial goals. Whether your goal is to become better at delaying gratification, work towards being debt-free or saving enough to buy a property, we can help you.
Contact us today and start your journey towards reaching your financial goals. Simply call us or make an appointment with a financial adviser directly at a time that suits you.
Source: AMP June 10, 2016
1 https://www.apa.org/helpcenter/willpower-gratification.pdf
2 https://www.apa.org/helpcenter/willpower-gratification.pdf