Monday, 30 December 2013

Delayed gratification is great...but can we take it too far?

Delayed gratification for a greater reward is something we all learn as children.  In fact, my parents used to explicitly teach it with chocolates and other rewards.  The concept of delaying reward or gratification for a better outcome is one that has been taught as a virtue for many years and we all know the benefits of it.

In our financial lives the benefits are obvious - if you save more before you buy a house, the burden of loan repayments for a similar property will be much less...or you can buy a bigger house. You can extend this type of analogy to almost any financial transaction.

But can we take delayed gratification too far?

If we are particularly good at delayed gratification we are probably better savers than we are spenders.  I recently wrote a post on the difference and how to tell which one you are.  This is not necessarily a problem but I think it can be taken too far.

With financial matters delayed gratification can be taken too far because the payoff from tomorrow will almost always be greater than the payoff today.  Does this mean that we continue to delay our gratification until we are old or unable to really enjoy the fruits of our labour?

I am particularly good at delayed gratification - if I can see a bigger payoff (especially financially) from not spending money today then it will go under lock and key.  However this means that I often set a financial goal (spending wise) that I am then delay further.  An of this was my purchase of a sports car.  I went back and had a read through my posts and I first mentioned my sports car in my 2012 financial goals...almost exactly 2 years ago.  For one reason or another I have continued to delay this purchase.

I have been thinking about my 2014 financial goals and once again looked at putting off my purchase of a sports car.  This time I was thinking of
putting it off because I have other big expenditures coming up, I was moving into my own place and was thinking about doing a trek through Peru.

If you have something that you have been wanting to do for a long time...and you saved the money for it a long time ago...perhaps you should just do it!

Now let me be clear up front.  When I say - just do it - I do not mean that you should go out and put all your material dreams on credit card, or that you should dip into your savings bucket in order to satisfy your current need for gratification.  But, if you are like me and have been putting off a big expenditure that you have saved for (and finished saving for), perhaps you should just go out and do it.

Yes you will have less in the bank account and yes you will not be able to use that same cash for something even cooler next year...but think about how long you have been saying this for.

I am thinking of finally buying my sports car this year.  If I don't do it soon, it will never happen.  There are some goals that are time dependent and for me a sports car is definitely one of those goals - I am never going to be able to have one once I have a family.

Perhaps 2014 will be a year where I 'catch up' on all those things I have been saving for, where I have achieved my savings goals but haven't actually spent on it because I was delaying for something bigger or better.

Do you delay your gratification and end up never buying all those things you save for?  I would love to hear your stories!

You May Also Be Interested In
Are you an over-spender or an over-saver?
Start thinking about your 2014 Financial Goals
2013 Financial Goals
What should I do with my bonus?

1 comment:

  1. Hi 90M,

    I certainly do save and delay gratification for larger or bigger $$ purchases

    Things that I do this for are phones, tablets, I save for travel and then you look at your investment items such as Investment Properties etc

    I'm looking to kick off my own blog on careers soon as well, perhaps collaborate and guest post if you are interested?

    All the best for an awesome 2014