Delayed Gratification - Good or Bad?
by Kyrk Davis
Oftentimes in the financial planning community, we use and hear the phrase "delayed gratification." This is the idea that we should avoid spending money on things we enjoy today, and save/invest it, so that one day we can eventually spend it and receive the "gratification" we've been putting off. Dave Ramsey is famous for saying "live like no one else, so that one day you can live like no one else." That's all well and good, but personally, I don't like the idea of denying myself all of the things that bring me joy or gratification. I say ignore that advice!
Now, before you cash out your 401(k) and empty the emergency fund for a weekend trip, take a minute to hear me out. I tell you to ignore that advice because more often than not, deprivation leads to failure and overspending. Anyone who has tried crash dieting and eliminating all of the "bad" foods from their lives has likely failed and binge-eaten their way back to square one. Trying to completely restrict ourselves from things we like hardly ever works. This is also true with our finances.
To have a healthy relationship with money, I believe we need to learn to do three things with it: save, give, and spend. Keep that order in mind. Establish a savings rate you would like to hit, set aside some money to give to causes you believe in, and lastly, spend some on the things you love that give you gratification. Establishing your priorities and using moderation is key.
If you want to take it a step farther, you can work towards changing your mindset around saving. Don't look at saving/investing as delaying gratification. Learn to find gratification in the act of saving itself. My favorite days of the month are paydays, not because they fill the checking account (although that's nice too), but because that's when I see money going into my SIMPLE IRA. I also love the 15th of every month, when my automatic contribution goes into my ROTH IRA, and I can track my progress.
I know, I'm a nerd, but I have changed my mindset so that I don't feel like that deduction from my checking account is deprivation, or delayed gratification. I find gratification in watching my investments build, and working toward my future goals. If you can change your mindset, I promise it will help you find more joy, and help you accomplish your goals - avoid costly setbacks.
What goals and dreams have you set for you and your family? We can help you set up those automatic contributions to make working towards them easier, and we can help you prioritize your budget so you can still enjoy life today. Give us a call.