The Hidden Power of Delayed Gratification

If you prefer watching a video instead of reading a long wall of text, check out the YouTube video instead.

Our Elusive Search

Since the dawn of humanity, we've been in search for the "easy way out" in every circumstance. But we all end up with the same conclusion, life is tough regardless of our backgrounds. For some, success in finances and life has found them - but it is not by chance.

Through mastering delayed gratification, these people have learnt to stand the test of time, practice self-control & regularly consider the long-term.

Enter the Marshmallow Experiment

In the 1960s, Stanford University conducted a series of psychological studies to determine what are the key characteristics for success in health, work & life. In one of these studies called the Marshmallow Experiment, children were brought into private rooms and had a marshmallow placed on a table in front of them.

The researcher told the child that he was going to leave the room and that if the child did not eat the marshmallow while he was away, they would be rewarded with a second marshmallow when he comes back. However, if the child had eaten the first one before the researcher came back, then they would not get a second marshmallow.

Guess what happened next...

The researcher then left the room for 15 minutes and you can generally guess what the results were.

• Some kids jumped up & ate the first marshmallow as soon as the researcher closed the door

• Others were seen scooting in their chairs in attempts to restrain themselves but eventually gave in to temptation

• A few children managed to wait the entire time.

You can find a short video of the experiment here. It is quite adorable.

Now the interesting part of this study actually came years later. The researchers did follow up studies for each child for more than 40 years to track each child's progress and what they found was surprising.

Over and over again, it was shown that the children who were willing to delay gratification & waited to receive the seceond marshmallow ended up having higher SAT scores, lower levels of substance abuse, lower likelilhood of obesity etc.

In other words, the experiment suggests that delayed gratification is a key contributor to success in life.

If you look around, you'll see this manifested in daily life

• If you delay the gratification of finishing your workout early and put in a few more reps, you'll be stronger & heallthier

• If you delay the gratification of buying that $3 bubble tea, then you'll generally put healthier things in your body & have the opportunity to reallocate that $3 for other long-term goals.

State of Society

When I was young, I remember my mother trying to teach my sibllings and I the value of money. She wasn’t afraid to occasionally say no to us when we asked for things. She would constantly remind us that money is hard-earned in hopes that she could teach us to be financially prudent and learn delayed gratification.

This concept is uncommon in today's society. As kids, most of the times we get things instantly and we don't see our parents’ decision-making process. So we end up not understanding going through that thought process of determining what we need now and what can wait. Everything ends up being instant. We see this in social media, Netflix, Disney Plus where everything is on demand.

And boy are the resulting behaviours weird..

Those entering the workforce have a misconception that a successful career is built overnight & proceeds to demand unreasonably high salaries. People think that with an average salary, they can get 100k in the bank within a year.

If you don't believe the prevalence this culture, just pay attention to the ads that we are fed with everyday.

Literally start the stopwatch, it'll only take 35 seconds.

These ads are targeted at our culture of instant gratification where people are looking for get rich quick schemes. Now there's nothing illegal with what they're doing, they're just a little bit clickbait & salesly on the ads. The fact is that they're people too that need to earn a living and in this case through running workshops. I'm sure that if you ask them honestly, they will tell you from the heart that it takes a lot of time, hard work and smart work. This leaves the participants disappointed because either

1. Their expectation of becoming overnight successes is not met.

OR

1. The participants get some value out of the workshop just not enough to justify the cost.

*Takes huge breath

And that folks is why we need to shift our mindsets away from an instant gratification culture. We need to celebrate discipline & consistent practice of good habits instead of constantly the choosing the easy way out and hunting the next get rich quick scheme.

Summary of a Get Rich Quick Scheme

So..here are 3 simple steps to fight our natural human inclination to get everything instantly. Let me give it to you now.

Adopting a Delayed Gratification Lifestyle

1. Set long term goals

Have a plan for the future. Make sure that you don’t just cover today's needs but tomorrow's as well. Setting goals will naturally translate into actionable steps and changes in today's lifestyle so that you can achieve the goals for tomorrow. That’s the foundation to having a delayed gratification lifestyle.

From a personal finance point of view, the means and tools you will use to practice this would be related to investments. Instead of using money for expenses, you would invest it so that it grows with compound interest for use later on in life. To put it in the context of what we've been discussing, you're denying instant gratification by using the money today so that you have more money in the future.

2. Keep them realistic

A farmer doesn’t plant a seed and expect to get the fruit tomorrow. The farmer also needs to consistently supply water over a period of time before he gets his fruit. Similarly, If you invest $5k a year, don’t expect it to grow to $100k in the following year. You need to invest consistently over time.

Also don’t expect to touch this amount for the next 10-20 years if you really want it to grow & ripen with compound interest.

When I invest, I treat that money as locked away in a vault that can’t be accessed unless it’s for emergency use that your emergency fund can’t cover. Otherwise, you can pretty much treat it as savings on steroids that you won’t touch for a long time.

3. Start Now

It is said that the best time to plant a tree is 10 years ago, the second best time is now. When it comes to your long-term goals, don’t procrastinate, START NOW!!!

Let me provide an illustration. Let's say we want to retire by the age of 55. Now we can either start investing at 25 or 30 which is just a 5 year difference.

If we start with $10,000 and add $5000 every year at an annual interest rate of 7%, the person who started earlier would have 581k by 55.

As compared to 392k for the one who started later.

You would've a staggering 188k less just because you procrastinated for 5 years. This is the power of starting now and getting compound interest on your side.

I personally started investing at 26 and I wish that I had started even earlier.

So take charge of your future by incorporating delayed gratification in your life. Set goals that are realistic and start now.