Instant Versus Delayed Gratification - The Foundation of Investing?
So much of money management can be boiled down to this: do we want it now or later? Is the instant gratification going to fulfill us down the road? Will we still feel the same about the car, jewelry, clothes, and other material goods 10 years from now? What about 20? 30? Or will we wish we had that money for comfortable living in retirement? For a home? For education? For other financial goals?
I have been to some very elaborate weddings where no expense was spared creating a “wow” factor experience for guests, spurred on perhaps by those wedding planning shows on television. Then the couple is struggling to meet rent and to save toward a home. Was that one day of fireworks and frivolity worth the years of financial challenges to follow? What if a few things were trimmed a bit so that the day was still memorable and you could have some money to save and invest toward the future? What if the reception was a more intimate size and you could apply that money towards an even nicer home? This is a prime example of instant versus delayed money management that happens for many families.
The same thing happens for many people when it comes to retirement investing. The 20/20 hindsight of the retiree says, “I wish I had started earlier” or “I sure am glad I started saving young” whereas the “I want it now” mindset of the young person with their first job might say “Show me the money - I want to spend it now”. If only they could recognize how fast the years fly.
Lots of people don’t need to be led toward temptation, they can find it just fine themselves. That’s why I am such a proponent of automating contributions to investing and saving accounts so that the retirement, education, or other investment portion comes out of the paycheck before the money goes home to be spent. It helps to provide discipline and, over time, assets are accumulated that may not have otherwise been. Using technology in this way may help to contribute toward your future goals and provide some control when temptation comes knocking.
This information is provided for general educational purposes only and is not intended to provide specific advice to any individual.
All investing involves risk including loss of principal.
Seek professional advice before taking any action in regard to your finances.
Todd A. Slingerland, CFP®
6 Tower Place Albany, NY 12203
(518) 867-4000 x105 firstname.lastname@example.org www.capitalfinancialplanning.net