IN today's fast-paced world, instant gratification has become the norm. We crave immediate results — whether it's with food, communication or financial returns. However, when it comes to personal finance, patience is not just a virtue; it's a necessity. Building wealth and securing financial stability requires time, discipline and a long-term perspective. The concept of delayed gratification, though challenging in our instant-everything culture, is crucial for achieving meaningful financial goals.
We live in a society where we want things instantly. Gone are the days when waiting for what we want or need was the norm. The mantra now is: the faster, the better. Time has become so precious that waiting is often seen as wasting it. We have instant noodles, fast food, instant messaging, instant loans, instant money and even instant riches. In short, we are surrounded by things that provide us with instant gratification. We want that gadget, that car, that return on investment — now.
However, one of the major lessons in personal finance is learning to patiently stay the course and build up resources, which takes time. Time is so valuable in personal finance that it's even incorporated into formulas for determining the value of money. Given a certain amount of money, you can calculate its value after a specified period at a prevailing interest rate. This concept, known as the Time Value of Money, underscores the idea that time is, indeed, money.
In a world dominated by instant gratification, disciplining ourselves to resist impulsive purchases is one of the biggest challenges. Everywhere you look, promos, deals and gadgets call out for your attention — and your wallet. The temptation is almost omnipresent, and the urge to spend is compelling. Yet, if we are serious about our financial goals, these temptations are mere potholes and bumps on the road.
Controlling your urge to buy impulsively is a matter of developing a strong financial emotional quotient. It's about delaying present satisfaction for a future goal. The money saved, when properly managed, can bring you more in the long run than the items you put off buying.
Here are four practical tips to help you delay gratification and curb the urge to buy:
Remember the bigger picture: Your life isn't just about the present; it's about the future as well. Not only your life but also the lives of your loved ones — those who depend on you. Always remember your dreams for yourself and your family — the very reason you're managing your finances wisely. Are you saving for your business capital, your dream retirement or your children's education?
Set a budget: Setting a budget means allocating your income for different purposes — living expenses, discretionary expenses, investments and savings. It's a good idea to do this on a monthly basis, further breaking it down into daily allowances. This way, you know how much you can spend each day, helping you control the urge to make impulsive purchases.
If you want to allocate a monthly budget for "impulsive buys," then stick to it. You might also have to forgo some comforts, such as buying a brand-new car or going on fancy vacations, so you can invest or start a business. Remember that Warren Buffett, one of the world's richest men, still lives in the house he bought in 1958 and isn't into having the latest car.
Set a time to buy: Of course, sale periods offer great bargains, and you might want to buy gifts for loved ones. While it's fine to take advantage of discounts, make sure these purchases are planned. Set specific times to buy clothes or gadgets, and stick to your plan. The more you save, the closer you get to achieving your dreams.
Ask yourself if it's necessary: Most impulse purchases are for things we don't really need. The latest gadget, those shoes, the "discounted vacation" — are they truly necessary? In my experience working with wealthy clients, those who achieved success through hard work and frugality rarely indulged in such things on their way up. They knew what they wanted and viewed little comforts along the way as distractions from their true goals. For instance, the P40,000 you might spend on a gadget could instead cover an insurance policy, a down payment for a condominium or a semester's worth of tuition.
Delaying gratification is a key strategy in achieving long-term financial success. It requires a strong will, clear goals and the discipline to stay focused on the bigger picture. By remembering your dreams, setting a budget, planning your purchases and questioning the necessity of your spending, you can resist the temptations of instant gratification and move closer to your financial goals.
Rienzie P. Biolena is a registered financial planner of RFP Philippines. He's president and chief financial planner of WealthArki and Consultancy, a financial planning firm. Learn more about personal financial planning at the 109th RFP program in September 2024. To inquire, email info@rfp.ph.
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