Instant Gratification or Delayed Gratification, or Both!!!
I am not a psychologist or psychiatrist, but this gratification phenomenon always interested me, especially dealing with people and money. Which is better: instant or delayed? What if you could have both? Is it possible?
It seems to me, unscientifically on my part, that both are possible.
Most of us have seen the very cute "Marshmallow Experiment" where the teacher puts one marshmallow on a plate in front of a young child and tells him/her that if they can wait 10 minutes before they eat the marshmallow, they will get a second one. Of course, over half cannot wait that long, but beg for the second one anyway! Big smiles are on the children who did wait because they received double!
Granted, adults do not care about marshmallows (usually!), but what about not saving money today for a rainy day fund in case the stove or water heater dies? Or for the purchase of a different car? Or longer term: saving for retirement? Is not saving instant gratification over delayed gratification? Probably in most cases. Like the marshmallow children, the regret, or stress, when not having money when you need it typically offsets the very short term joy involved in the prior day's, or year's, immediate gratification when you did not save. Admit it: when the big repair or purchase that inevitable occurs materializes abruptly, you cringe and think "Why did I not put something away for this situation?" with a feeling of despair or anger. I believe almost all of us have had this.
So how can you have the both the Instant and Delayed Gratification in this situation?
Slowly change your mind set. Realize the benefit, and more importantly, have a written, displayed goal!
Yes, very possible!
Think of what you spend money on. Do you buy coffee in the morning and a cappuccino in the afternoon every day? Do you go to the movie theater every Saturday night? Do you go to a bar and have three or four drinks every week? Do you go out to eat every Friday night and also after church on Sunday? Do you throw down $25 on the lottery twice a week? What else do you spend money on that is "non-essential" but enjoyable?
I bet you think I am going to say stop doing the above! Absolutely not if you enjoy them! Try this: instead of going to the movies Saturday night at $13 per ticket, go to a matinee Saturday afternoon for $6 per ticket. If two of you go, you save $14 (2 tickets x $7 savings). $14 saved for a year is a $728 savings. You still have the enjoyment of instant gratification of watching the movies, but also the delayed gratification of the saved money.
But that is only HALF the solution. The other part is you MUST put that saved money into a savings account or some kind of an investment account. If you do not put it out of reach, it will be spent on something else. It is human nature. When you go to the movie, use your smart phone to transfer the saved $14 into your money market fund right then. Or take the change and stop at the bank on the way home. ATM's are 24 hours! This is critical if you wish to succeed.
Same idea applies to the lottery: spend half the amount and bank the other half. Skip the cappuccino in the afternoon and put the $5 in the bank daily, $25 a week. Or only buy two beers at the bar and put the same amount in the investment account.
So you may be asking: Where's the Immediate Gratification in not playing the lottery or having my cappuccino? Two things will happen: first, you will be extremely pleased with yourself for doing it, and that gratification is as strong as the beer you gave up; and secondly, there is gratification at seeing that savings or investment accounts grow. And when that water heater dies and needs to be replaced, the delayed gratification for having the money saved eliminates, or at least reduces, the stress and anger associated with the predicament.
Finally, you can have instant gratification with the delayed gratification system.
I suggest that with every $1000 saved, take 10% out and blow it!! Reward yourself for all your hard work (which you will realize was not really that hard!). Doing this will be gratifying-instant gratification, will give you a reason to continue saving, and maybe help find more ways to save more money and watch the amount grow- for the instant and delayed gratification!
In summary, here are the keys: You do not have to give up anything enjoyable, just downsize, though quitting will double your savings. You keep the benefit of what you love without going "cold turkey". Spend $10 on lottery each week instead of $25 or $30, or a 12-pack instead of a 24 pack of beer. Next, as soon as you did NOT spend the money, bank it or invest it. Finally, reward yourself for meeting your preset goal, be it $100, $1000, or $5000. Like any "change" you make in yourself, getting in the habit is the most difficult at first until it becomes habit. Realize the goal, write down the goal, display the goal so you see it and remember it, and the gratification of success will feel instantly good.