The subject of delayed gratification has come up in many of the things I’ve listened to and read in the last few days. Usually, when I repeatedly stumble upon the same information or piece of advice within a short period of time, I tend to think that maybe it’s something I should do some digging into.
Delayed gratification is the practice of sacrificing something you want right now to have something bigger and better in the future. Delayed gratification isn’t a complicated subject to understand at the surface level. But the more I forced myself to think about it, I started to think that maybe it is more complicated than what the general public would have you think.
In first-world countries like the United States (which is where I am), delayed gratification is commonly associated with saving money for retirement or some other financially-related item or benefit. The idea is that we should apportion enough of our income so that we have enough capital to live on in the future when our earning power is limited. Years ago, when I was a financial advisor, I would help people think about how to invest money into short, medium, and long-term investment vehicles so they would have enough money to live and do the things they wanted in life. It was fun watching how people would respond when they felt they had a clear picture of what they really needed to do to make future dreams happen.
The irony of the financial services industry is that it works well for those who have the financial means and networks to make their dreams happen, but it is an industry whose resources have for a long time been inaccessible to those living on the fringes. This is a large reason why companies like Stash, Betterment, and others have become so popular. They make it easier and more accessible for anyone to build wealth.
Going deeper, is delayed gratification (in a financial sense) exclusively a first-world problem? To a large extent it has to be. According to the International Monetary Fund (IMF), the poorest country in the world in 2020 was Burundi, located in central Africa. The gross domestic product based on purchasing power parity per capita (GDP-PPP) (i.e., the amount of money each person in Burundi earns on an annual basis) is $727, just under $2/day. Burundi is the poorest country out of 191 countries on Earth. The United States ranked 181 with a GDP-PPP of $65,112, and Qatar was at the top of the list with a GDP-PPP of $132,886 (1)(2).
Sadly, the citizens of Burundi have the unfortunate luck of having an instable government, poor infrastructure, endemic corruption, and unreliable food supplies. It’s sad to know that millions of innocent people have to suffer at the hands of a few incompetent leaders. I hate it. And when I think about delayed gratification in parts of the world like this, you simply can’t delay anything when you’re living on less than $2 a day.
The act of delaying gratification is also impacted by a person’s culture, education, and rank or class in society. In German culture, delayed gratification (as it pertains to saving money) is so deeply ingrained in their society that it’s considered a moral and societal obligation. “Far from being a purely individual pursuit, savings is seen as an activity that serves as a collective – and, indeed, national – purpose (3).” According to this same article, Germans save about 10 percent of their income, nearly twice as much as the average American or European.
Financial education and self-awareness also play a role in how much or how little a person is willing to delay gratification. In 2012, Merril Lynch introduced a tool called Face Retirement. According to the article, “people who saw age-enhanced images of themselves were more likely to save more for retirement, compared to those who weren’t exposed to their future selves (4)(5).” The Face Retirement tool provided accompanying statistics on how much it may cost to live in the future as well as other helpful financial advice designed to motivate people to save more.
Lastly, your social and economic position in society influence the degree to which you are willing to delay gratification. I grew up in an environment where everyone around me was terrible at delaying gratification. My parents didn’t earn much money, so nearly everything they earned was spent on necessities. And, on the rare occasion when there was extra money to spend, it was spent quickly on things with no real, future material value. While I was never explicitly taught not to save money, I was never encouraged too either. As a result, when I started earning my own money as a teenager, it was difficult to shake the subliminal habit of spend-now-and-save-later-if-you-want-to attitude.
When I graduated from college and got my first real job, the nature of my environment changed such that I was immersed in a society of “adults” who took delaying gratification to heart. On the first day of my first job out of college, I sat in a cubicle next to an elderly man named Robert (not his real name; I changed it for confidentiality). Robert had worked at the company for decades and he told me that the only reason he was still there was because he needed to save money to take care of his family. He never explicitly said so, but I think Robert hated his job. Given his tenure at the firm, he usually sauntered in late, took long lunch breaks, and made up for it by leaving early (LOL). On the other hand, my direct supervisor, was probably 10 years older than I was at the time, and he was one of the best savers I’d ever met. He lived way below his means and took full advantage of the company retirement plan. Another colleague of mine was an avid stock investor. We used to have investment contests to see who could select the best asset allocation mix in the company 401K plan to generate the highest quarterly return. Sometimes I’d win; sometime he’d win. In the end it didn’t matter because we made saving money into a game that was fun.
In the end, what I learned from watching Robert was that I did NOT want to be him when I reached his age, and what I learned from my other colleagues was that delayed gratification was fun and it is a lot easier to do when you surround yourself with people who understand the importance of doing it.
Having grown up in the lower class of society, I feel extremely blessed to be in a situation now where my wife and I can teach our children about the importance of sacrifice and patience, not just as it pertains to financial matters, but other things as well. However, I’m keenly aware that delayed gratification simply doesn’t work when you barely have enough to get by or you’re surrounded by people who may negatively influence you to make bad decisions. Whatever the case, I think this is a topic worth digging into more at some point in the future as I’m curious to learn more about how it applies in other parts of the world.
Cheers – KM