Implementing your most excellent financial plan can be a big challenge. Getting our financial lives in order often calls for delaying gratification…something human beings weren’t designed to do! Through most of our species’ history, the now was the priority. Leaving that mammoth haunch for later instead of consuming it now just meant it was wasted.

Welcome to the 21st century where we struggle mightily to prioritize later—think of dieting, saving, making healthy lifestyle choices. All involve delayed gratification and that delay is hard!

Why is it so hard?

We are hard-wired for instant gratification because it has helped us survive and thrive for most of humanity’s existence. The benefits of delayed gratification are so recent, measured in hundreds vs. thousands of year, that our wiring hasn’t caught up. Our thinking leads us to choose now for several reasons:

• Uncertainty about the future—It feels risky to trade an uncertain future outcome for an immediate sure thing. Will foregoing that Grande Caramel Cocoa Cluster Frappuccino today really mean I can enjoy a financially comfortable retirement in 30 years?

• Delay discounting--We discount future rewards when we compare them with immediate rewards. The future just doesn’t feel as valuable as the present. It would be wonderful to take a nice vacation in two years (save the money) but I can see myself in this pair of shoes today.

• Trust—Past experiences that haven’t panned out make you less likely to risk the delay. When trying to choose the future over the present, don’t be surprised when your brain trots out examples of how that hasn’t worked out in your past. Which makes me think of funnel cake…

What does this have to do with a funnel cake?

I’m motivated to be healthy, so I exercise and watch what I eat. Spending lots of time at baseball games with my dad makes this difficult. I see and smell a constant parade of food that I really shouldn’t eat. If I weren’t at the ballpark, I wouldn’t smell that warm, sweet funnel cake that the guy next to me is clearly enjoying! Instead of just giving in and having a funnel cake, I made a deal with myself last baseball season—I would forego funnel cake the first 69 home games in order to celebrate the last game of the season, which was also my birthday, with said funnel cake.

I’m pleased to tell you that I was able to keep my bargain, though I did drink some beer and eat a few pizzas, corn dogs and bowls of ice cream…but no funnel cake. My partner Ron was even more excited about my birthday funnel cake than I was. He could hardly wait to get to our seats at that final game before he started asking if he should go get my treat. Picture this—when I was ready for the long awaited sweet, he headed off to the concession stand only to be told that they had removed the funnel cake fryer earlier in the week. Ron had a heated (pun intended) conversation with the poor concession guy, first trying to convince him that they couldn’t have removed the fryer. After conceding that the fryer was gone, Ron terrorized the concession guy, saying that he was afraid to return to our seats and telling this unfortunate food service worker to go inform me that I wasn’t going to get my long anticipated birthday funnel cake. He struck out on both counts (it’s baseball season, forgive the baseball analogies).

I was sad not to get my treat, but part of me was telling myself, “I told you to have the funnel cake the first day of the season—if you had, you wouldn’t have missed out. Delaying gratification just leads to disappointment.” I was going to get a lot of mileage out of using that evidence to prioritize now over later. This is that trust, or lack thereof, I mentioned above at work.

Fast forward to the start of this year’s baseball season.  I learned my lesson—this year, I’m getting my funnel cake early, before they start thinking about removing the funnel cake fryer. On opening day, we’ve barely taken our seats when Ron asks if I’m ready for my funnel cake. I make him wait an inning or two, then off he goes to the concession stand. The guy at the stand sees him coming and clearly remembers him, “uh oh, here comes the guy whose wife didn’t get her birthday funnel cake”. He has that fryer cranked up in no time and gives Ron two funnel cakes free of charge. Yes, it tasted great, thanks for asking. But there goes my evidence against delayed gratification—twice the quantity at no cost is a pretty strong case for waiting!

Making the delay easier

Even if you believe funnel cake today is better than funnel cake in a few months, you’ll probably concede that, when it comes to our money, saving some for the future is a good thing. How do we make it easier?

• Imagine your desired future in detail. Flesh out the details of this future you’re prioritizing to make it seem more real and relevant. I didn’t love the experience of scrimping and saving for years to buy and outfit a sailboat, but I loved my vision of the life I would have sailing around the Caribbean. That detailed image of the sights, sounds, smell and feel of the future kept me motivated at a difficult task for years. 

• Set realistic deadlines and goals. If, like many of us, you spend what you earn each month, a goal of saving 20% this month is unrealistic. Make the commitment more palatable by starting small, even if it’s $25 this month. Give yourself a chance to succeed, then build on the success by committing to increase your goal for next month. (This is a time when delay discounting works in your favor—because $100 next month feels like less than $100 today, you’re more likely to be willing to commit to save it next month.)

• Make it automatic. By having money directed automatically to savings as soon as it comes to you, you only have to decide and act once. It’s much easier to make one thoughtful good decision to promote your financial well-being than to rely on making a continuous stream of smaller good decisions as they come up. Pay yourself first!

• Identify a current benefit for the delayed gratification. Is there anything positive about the delay? When I don’t buy shoes and save the money instead, I like to remind myself that I’m making progress right now in my efforts to minimize. One (two, actually) less items to store, take care of, and then downsize.

• Make it specific. When it comes to building better financial habits, the cause and effect are not as clearly linked as they are with that other familiar form of delayed gratification—eating better. I’m reminded of my desire to eat better every time I consider taking a bite. I can quickly reflect on whether this is moving me closer to or farther from my goal. When it comes to money, the link between my action now and my financial goal may not be as clear. When you stop for take-out or supersize your cable TV package, you probably aren’t thinking “I’m spending this now instead of saving it to reach my goals”. It’s worth taking the time to review how you do spend your money now so that you can set realistic, specific, goals. Maybe you’ll see that you’re eating out seven times a week. Would you be just as happy cutting that back to three times? Now you have a specific goal—eat out no more than three times each week and move what you would have spent on the other four meals to savings for the longer term.

Even when we see the need and have the information, change is hard! If you want a thought partner to help you craft an action plan that is tailored just for you, give me a call at (336) 701-2612.

Investment advisor representative of and investment advisory services offered through Garrett Investment Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. Fair Winds Financial Advice may offer investment advisory services in the State of North Carolina and in other jurisdictions where exempted.