Delayed gratification is a concept that is not always followed by a lot of people. You know the drill, your friend gets a pay rise at work, or maybe inherits some money, (there are many other scenarios as well) and decides to go straight out and buy a new car, or new wardrobe and expensive holiday. This in my opinion is not the best way and delayed gratification is something that should be adhered to for a period of time.
So what is this?
The definition of delayed gratification, or deferred gratification, is the ability to resist the temptation for an immediate reward and wait for a later, much better, reward. Generally, delayed gratification is associated with resisting a smaller but more immediate reward in order to receive a larger or more enduring reward later.
Another way to describe this is to “Have Your Cake and Save it For Later”, and essentially do not get greedy!
It is a shame but time and time again people burn their chances of long-term wealth because of their need for instant gratification.
Sometimes it is not their fault as seminars or success stories can entice you in with the glitzy promise of instant riches and wealth. What you need to remember is a lot of the time these people have used delayed gratification themselves and followed this process. It is often just easier for them to sell their services based on making it sound easy to achieve instant money and success. This can happen in lots of different business arenas, and wealth creation models, not just property.
The key to long term wealth is to utilise the law of compounding.
The key I have found is to definitely let your assets grow by compounding your earnings so that your asset base becomes large enough to pay you for the rest of your life.
I remember having to use this rule and theory an awful lot in my first couple of years in property, and it actually came into effect on the week I was leaving my job to go full time in property. It is an incident I will never forget and actually quite funny now although it wasn’t at the time. I was investing heavily in the property business at the time and any spare money I had was going into the business. I was driving a Rover 200 at the time which let’s just say had a tenancy to be temperamental and not start very well on a cold day. I remember going out to the car park when I finished work for what I thought would be a straightforward drive home, but how wrong I was. Where I worked was a big place with hundreds of employees and it was not a small car park by any means. So as I got closer to my car I was already a tiny bit embarrassed as the driver side lock was already broken so I had to let myself in through the passenger seat. So as I proceeded to do this I then realised that the car would not start after four or five attempts to do so. I have to admit at the time I was embarrassed and the noise the car was making was certainly getting me some attention. After numerous further attempts to start the car it was not getting any better and what followed was me having to ring to be hotwired out of the car park. You can imagine the shame!
Just days earlier, people I had known at work for a long time had been asking me what I was leaving for and what other job I had got. I subsequently said that I was leaving to start my own property investment business, and I can still see the looks on their faces, especially as the car I was driving was probably worth less than the holidays they had just been on.
On a serious note however, it did teach me about delayed gratification and the importance of this. Now I certainly was not flush at the time by any means, but I was in a position to go out and buy a better car than this old Rover. However, I didn’t do that; instead I made sacrifices to follow my goals and dreams and I am very glad that I did. I bought my favourite car 2 years later.
Important note: The truth is that you can have the nice things, but it may just take longer. When you do however, it is not a stretch and you can then afford them comfortably
Avoid taking all of your money out of a deal too early or gearing up too high [borrowing extra cash at the cost of high repayment rates], as it will damage your long term wealth.
• It is very rare that we get something for nothing, and this is certainly the case with borrowed money.
• Borrowed money should be treated with absolute respect, and your long term credit file treated the same way, so that you can maximise leverage for the long term. I am always looking at mid to long term investment strategies: compounding growth and cash to ensure long-term sustainability and security.
• This is a mind-set as much as it is a strategy, and thinking in this way will dramatically increase your chances of being where you want to be for the rest of your life.
Avoid spending all of your profits straight away on the finer things in life. Be patient, delay gratification and you will have long term wealth, freedom and security. The goal in all of this is to hold out until your asset base can pay you for generations to come.
Hopefully you can see the power of that.
Summary: Delayed gratification is key to your success. Be patient, delay gratification and you will have long-term wealth, freedom and security.