Imagine being a kid presented a cookie with a stipulation. You’re told you can either eat the treat now or wait 15 minutes and receive two cookies instead of the one. You want the cookie, obviously. At that age, would you have what it takes to double your reward. What’s 15 minutes, after all, when you can double the amount of snacks you’re getting for free?
The truth is most five year olds want instant gratification. In the famous Stanford marshmallow experiment, a mere third of the kids tested were able to wait the full 15 minutes. The informal name of the study comes from marshmallows being one of several different treats offered to the kids.
From a young age we’re taught about the virtues of patience. Not everyone takes these lessons to heart. The study found that the kids with the most self-control were more successful. These kids who delayed their gratification scored higher on the SATs and were less likely to be obese. Those impatient kids – the majority of the bunch – didn’t fare as well on these indicators.
Adults might be able to wait the full 15 minutes for a cookie or a marshmallow, but waiting longer than that is difficult. That’s especially true when it comes to finances, where the benefits might not come to fruition for years. The temptations to seek instant gratification by spending money are many. The benefits of delayed gratification, however, far outweigh the short-term rush of spending. Here’s why.
Your Future Will be Bright
The cliché goes that “good things come to those who wait.” There’s truth to that. Those who wait and take control of their impulses will find themselves in a much better financial situation than those who don’t. As the Stanford experiment found, those in control fare better in life than those who aren’t.
That translates over to debt levels, as it’s a lack of self-control that’s often the cause of high debt. Not always, of course, but those people who are willing to “suffer” in the short term with fewer nice things, an older car and a modest apartment will likely end up with less debt than their counterparts. Such a person would also be more likely to pay off their school debts rather than letting the interest pile up.
Those playing the long game will also be better off in saving for their retirement and letting their investments raise over time instead of constantly draining their accounts or reacted strongly to the changing markets.
Blogger and certified public accountant Lance Cothern sums it up nicely.
“Impulsive purchases are not okay if you haven’t set aside money for those purchases,” he wrote. Consumer debt (credit card debt, car loans, personal loans, etc) is the result of not having enough money to pay for whatever you’ve purchased. Consumer debt is using dollars you will earn in the future to pay for current expenses.”
Planning Leads to Happiness
Everyone loves a vacation, but there’s something that people have been proven to love more than that: planning a vacation. As exciting as it is to travel and see new places, researchers in the Netherlands determined that people presently planning a trip are happier than people who just returned or who had never gone on a trip.
There’s something immensely satisfying about the planning process and laying the groundwork for the future. The same could be said about finances. By thinking long-term instead of the present, you too can find extra happiness. The satisfaction of being on the right path and not giving in to outside pressures is worth the effort.
It’s not easy to delay gratification for a long term rewards, but go about it like the vacation planners do by coming up with a plan.
Ever go to a thrift store and sit in awe of the things you can get in excellent condition for pennies on the dollar? Or the sheer amount of stuff stored in a friend’s garage? All this waste is the result of impulsive buys. Almost everyone is guilty of this, as the act of buying something new releases satisfying endorphins in our brains.
A few unnecessary appliances or an overflowing wardrobe are minor problems. What’s far too common is when someone impulsively buys a car or a house without doing their research. These purchases can be devastating to someone’s finances, credit score and happiness despite the initial rush of good feelings.
The people who sit back and delay before taking the plunge end up in a much sounder financial condition. Ignore the pressure of buying and think about each purchase. How useful is the thing you’re buying? How long will you actually use it? If you don’t like the answers when asking those questions, then hold off on the purchase.
When in Doubt, Delay
With the majority of people – both kids and adults – unwilling or unable to show self-control, the people who have this ability are fortunate to have this advantage. After all, aren’t two cookies better than one?