As humans, we are hard-wired to think of delayed gratification as withholding or denying pleasure. Enter a generation of people obsessed with immediate gratification, and it could well be that patience and persistence are becoming dying art forms. Search as one might (and it appears that even Siri will agree), there is undoubtedly no app for delayed gratification. In the world of long-term investing where compound interest is magically able to expound its asset base, there is simply no room for the whims of instant gratification.
Fast food, instant messaging, online chat rooms, meals-in-a-bottle, cyber doctors and instant loan approvals are all part of our new vernacular which seems not to include the word “wait”. Results from a recent retail study show that the “close door” buttons in mall lifts are wearing down quicker than any other button. Why? Because waiting for the doors to close automatically is a visceral test of our already-worn-thin patience.
As if BBM, Viagra and Netflix aren’t instant enough, this generation appears intent on its search to find the enigmatic “happy” pill – that secret ingredient that will provide 100% sheer, unadulterated joy in and of the moment. With a new movement of “mindfulness” gaining momentum worldwide, thousands of happiness-seekers are embracing this ancient Buddhist practice to help focus their awareness on the present – which may or may not include learning the fine art of impulse control.
Stanford University’s “marshmallow test” is a well-documented one and is supported by reams of subsequent research into the benefits of learning the art of delaying pleasure. In a nutshell, the “marshmallow test” was conducted by psychologist, Walter Mischel, in the 1960s and 1970s where a group of children were offered one small reward (in the form of one marshmallow) provided immediately, or two small rewards (two marshmallows) if they waited for a period of fifteen minutes. In follow-up studies, the researchers found that those children who were able to wait longer for the two marshmallows tended to have better life outcomes, including fewer behavioural problems, higher academic achievements, higher incomes and a lesser propensity towards addictions than the group of children who could not delay gratification.
In the realm of behavioural finance, it appears that impulse control may be one of the most important skills needed in order to enjoy a long and satisfying life – with impulse control being defined as decreasing or limiting one’s pleasure in the moment in order to achieve an even greater reward at a later stage. Behavioural finance experts agree that there is a strong correlation between economic wealth and one’s ability to manage impulse control – which speaks right to the very heart of retirement funding. The key difference between those people who have adequate retirement funding and those who have failed to invest for their retirement, is that the well-invested are content to deny themselves smaller immediate pleasures in return for a greater, guaranteed reward at a pre-determined time in the future. Ditto for those who are laden with consumer debt versus those who are happily debt-free.
Further insights into the “marshmallow test” revealed that those children who were able to delay gratification did so not by focusing on what they couldn’t have in the moment, but on what they could have later on. And this really is the essence of financial planning. By mentally stimulating and visualising the future (for example, your child’s education, your retirement years, your overseas vacation), one is able to reach a state of contentedly forgoing fleeting semi-pleasures, safe in the knowledge and filled with anticipation of a far greater, more meaningful recompense.
The old adage ‘pleasure delayed is pleasure enhanced’ finds fresh meaning in the context of retirement planning. Funding for retirement is made abundantly easier when one makes the mental shift from being a victim of pleasure denied in the moment to being the victor of a more valuable prize in the future. Simply put, retirement funding means living today like others won’t so you can live tomorrow like others can’t.
Have a blessed day!
Categories: Financial Planning