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The two-word secret to personal finance success

Written by Jeffrey Steele - 3 Comments

It wasn’t long ago I suggested in this space there was a one-word reason for the colossal indebtedness of Americans. That word, I ventured, was “supersize.” By supersizing everything from combo meals to homes and cars, folks nationwide were ensuring they’d suffer supersized debt burdens and super-slender savings, I wrote.

What I didn’t reveal at that time was that I had embarked on a simultaneous quest, one devoted to unearthing a single word or short phrase far more beneficial, offering Zen-like insights into the secrets of effective money management and wealth accumulation.

After exhaustive research, including forays into dim corridors of Swiss banks, days spent poring over the memoirs of self-made millionaires and furtive meetings in shadowy corners of parking garages with trench-coat-wearing economists, I am convinced the secret of successful money management can be summed up in two words. If you promise not to share this with anyone, I’ll forthwith name those words.

Ready? They are “delayed” and “gratification.”

Once well known

The concept of delayed gratification wasn’t always such a hush-hush, closely-guarded secret. Why, the folks of “The Greatest Generation” and those who came before them were well acquainted with this practice, and put it to work daily. They were constantly scrimping and saving, schooling their children that money didn’t grow on trees, fixing up that old car (or buggy), carefully funneling cash into paying down their mortgage and seeking the best savings accounts rates they could find.

These folks habitually delayed big purchases, instead taking every paycheck and paying themselves, rather than others, first. Unlike later generations, they would have avoided the temptation to be the first on the block with the wall-sized flat-screen, this week’s generation of smart phone, or the Sherman Tank-scale SUV. At least, they would have, had those tempting consumer goods been available at the time.

As a result of placing the idea of delayed gratification over instant gratification, they reaped sizable benefits. They didn’t have to wring their hands with worry about credit card debt, toss and turn each night fretting about making their mortgage payments or sup on a steady diet of antacids to bathe an ulcer borne of a precarious income stream.

So what happened to make delayed gratification such a mysterious and obscure concept?

Well, ever since the dawn of TV, when the American Marketing Machine got cranked into hyper-drive, this notion has fallen further and further out of favor, replaced by ads, TV spots and billboards proclaiming, “Don’t Wait! Buy Now!”

Generations exposed to these exhortations scores if not hundreds of times a day obediently went out and did as they were told, until the concept of delayed gratification was about as familiar a household word as bond drives and 78 rpm records.

Today, if you mention delayed gratification to most Americans, particularly those younger than 80, they react as if you have just spoken a few phrases in Venutian. Delay my gratification? But I want it instantly! Why would I do that?

The reason you would do that is that it is a tried-and-true method of building wealth.

Against the grain

Are you ready to become one of the most iconoclastic and free-thinking rebels on your block by putting delayed gratification into practice? According to a coded transcript I managed to uncover in a long-closed tunnel beneath a road near the London School of Economics, and eventually was able to decipher, here’s how you do it.

Set savings goals. If you have objectives in mind for your savings, you are far less likely to spend now and (try to) save later. Keeping your eye on savings objectives is a way to train yourself to delay gratification and trim your impulse buys.

Gain a support group. As more than one financial guru has advised, if you want to feel rich, surround yourself with people, rather than things. Get yourself a terrific network of friends and family to help you feel fulfilled, and you’re less likely to rely on purchases to achieve that goal. And here’s a bonus: If you let a few of those friends, co-workers, neighbors and cousins know you’re trying to get a handle on your spending, their informal oversight can help you stick to the straight and narrow.

Don’t get stuck in the present. Use your imagination to envision yourself at some future point, taking the vacations and enjoying the lifestyle made possible because you were able to hold off spending today. Develop an ability to visualize your future self at each moment you want to indulge in a $7 latte or a $33,000 entry-level luxury coupe.

Highly-placed sources have whispered to me that delayed gratification can become a habit. Instead of blowing cash at every turn, you hone the custom of asking yourself if you shouldn’t postpone the purchase of those shiny new trinkets. Before long you’ve become a regular money master, going the extra mile and researching zero percent APR credit cards, and how to save on car insurance and life insurance.

What’s clear is that when it comes to gratification, it is those who wait that prosper.

Hurry up and wait!

Published on November 6th, 2013 - 3 Comments
Filed under: Family & Life, Frugality, Saving & Investing

About the author: is an independent writer in Chicago who has written over 2,000 articles appearing in publications such as Barron's, Boston Globe, Chicago Sun-Times, LA Times, and more.

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3 Responses to “The two-word secret to personal finance success”

  1. 1
    dojo Says:

    If we thought like our parents/grandparents and placed delayed gratification on its place (the top of our mindset), we’d all be clearly doing way better. Sure, the banks would suffer, but we don’t care about the banks :D

  2. 2
    Nick | Millionaires Giving Money Says:

    This is a great post, I can remember the good old days when my father got his toolbox out whenever there was a problem, nowadays we seem to replace something as soon as a lowly fault develops. I really think we need to start adopting delayed gratification as opposed to instant gratification, our lives would be so much better. Great post, thanks for sharing.

  3. 3
    Shobir | Find Some Money Says:

    I can definitely relate to this post and all of the comments on this page. I remember a time when we saved up for something when we needed it, now that things are available on credit our impulses get the better of us and we enjoy instant gratification. Delayed gratification is something we need to revert to especially in this day and age.

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