Financial Wisdom in Delayed Gratification – Part 2

Investing, Cash

Does choosing between instant or delayed gratification have an impact on our finances? In our previous article, we introduced the definitions and what factors may cause us to lean towards one or the other.

Today, we will be diving deeper into the financial implications of instant versus delayed gratification, and learn more if it directly affects our decisions in the areas of loans and investments. But just before we do that, let’s take a look at the results of the quiz in Part 1. Which category did you fall under?

Delayed Gratification, Instant gratification, Investing
Seems that a good number of us came under the balanced category, and more of us lean towards delayed gratification over instant gratification. The question now would be, would our decisions be similar when applied to finances?
Let’s find out later.

Loans & Debt

Instant gratification can make us want things immediately, even when we can’t afford it. When we decide we cannot wait for the day we can finally afford it, we choose to take on loans and by doing so, enter the world of consumer debt. The Federal Reserve Bank of New York reported a total household debt of $13.29 trillion in the second quarter of 2018. That is a lot of debt. Granted, there are some loans that are legitimate and can be useful and timely when used wisely.

A study loan might enable one to get the correct qualifications and skills to kickstart a career with a higher starting income. But loans also can be a double-edged sword if we are careless with them. We need to understand the effect of interest rates, and should strive to benefit from it with savings plans and investments, rather than struggling to pay back the loans we take (and the interest with it!) When we get into debt, we are taking the money that we earn in the future, to pay for our expenses today. Is that wise in a financial sense? Can we justify with good reason, the purchases we make and the difference it makes to our credit scores? We should take a step back, and reflect on the loans we currently have or are considering to take on. Are they truly necessary?

Most loan providers spend good money on clever marketing, because they know humans are emotional and impulsive, so hence may give in to instant gratification. In order to overcome that, here are 3 areas we need to reflect on when considering loans. 

Business, Finance, Financial Planning, Investment, Savings, stocks

1. Wants vs Needs

Do we really need to make this buying decision? Is it always about getting the bigger house, a nicer car, and more luxurious vacations to top our experiences? Extrapolate, and visualise ourselves having all these things and ask, when is enough, truly enough? How long would these things make us really happy for? A year? Maybe 5? Maybe 20? How certain are we?   

2. The Time Factor

Cognitive psychology tells us that when most people take a narrow view in making decisions, it might be because we tend to give more weight to the situation or problem, when it presents itself as the only problem at that point in time. But if we were to step back a little, and look at the problem in its recurrence and effect over the course of time, our attitude and the way we think about the problem could be fairly different. Ask ourselves, do we really need this now? Could we wait for a better deal and allow our money to continue accruing interest while we wait? Is this the correct time to buy or are we being peer-pressured to follow a hype?   

3. Alternatives and True motives

What alternatives can we have that are less costly? Are there emotional or cognitive alternatives to replace our wants? Learning a new language or picking up a musical instrument might be much more prudent than the lifestyles or hobbies that we want to associate with being wealthy and famous. What are our true motives? Do we really love that $50,000 watch or do we just want others to perceive we are successful? Can we honestly admit to ourselves we are in no way affected by consumerism? 

Delayed Gratification, Instant gratification, Investing


A key factor in mastering delayed gratification is the ability to be patient. Charlie Munger, a key business partner of Warren Buffett, once remarked “It’s waiting that helps you as an investor, and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.” This is indeed true in the world of investing. Most seasoned veterans would advise that the lack of patience causes many an investor to make mistakes. It is needed especially in sticking to the wisely calculated and planned strategy, instead of being over-reactive to market movements and news chatter.

The lure of instant profit is something not easy to deal with. We live in a world where we are conditioned to get things at the snap of our fingers. This is especially so when our society today is one with conveniences never possible a mere decade or two ago. From the food we eat, the services we use, and the multimedia we can command at demand, the norm of getting what we want, when we want it, has changed drastically by the power available at our fingertips today. Every product shouts “Better! Faster! Now!”

We are bombarded with the lure of rare and time-limited discounts, and investment opportunities that try to make you feel privileged and lucky. There are even some robo-advisories that claim they can beat the market. Are they really telling the truth, or could they be traps that take advantage of our impulsive tendencies to instant gratification? If we were to conscientiously take a step back and wisely consider, the math and statistics might tell a very different story. We need to do our research and investigate the facts, especially when some financial products promise returns that are too good to be true.  

Written by

Sha Osman

Last updated on

April 30th 2019, 5:40 am

Skip the daily news.
Subscribe to our Weekly newsletter for relevant market news and global trends.