There are few forces more destructive to wealth-building than the lure of instant gratification. We as humans tend to want things now with little foresight towards the future. In fact, we are usually willing to give up something greater down the road for something smaller today.
It’s no surprise then that most American families have little or no retirement savings.
A kid and his ice cream
This point was driven home in a simple, powerful way in my family just the other day. We really like ice cream, and admittedly, we probably splurge on its frozen deliciousness more often than most. With two young boys, evening meals often end with a request for ice cream coming from one of them.
We might drop by Dairy Queen for some mini Blizzards after visiting our favorite sushi place. During warmer months, we might hop on our bikes and head down the street to the nearest Baskin Robins.
Our #1 favorite place, however is in a small town a few miles south of us. The award-winning Peterson’s Ice Cream Depot is only open during the warmer months spring through autumn. I’d put their homemade ice cream, gelato and other treats up against anyone’s.
Peterson’s is a bit of a drive for us, requiring traversing several miles of hilly, windy two-land roads. A trip there generally happens with some sort of advance planning, with the not-near-as-good chain joints satisfying the spur of the moment impulses.
A birthday story
We recently celebrated Benjamins, Jr’s birthday by dining out at his favorite restaurant. The conversation afterwards naturally went to ice cream. With a Dairy Queen right across the parking lot, the red glow of the sign called to us like a siren.
“Let’s go to Peterson’s,” someone suggested, as we had yet to visit this season. With the realization of the lateness of the hour, I suggested we plan to visit Peterson’s the following day. Three of the four of us agreed that was a wonderful idea.
“Let’s go to Dairy Queen,” suggested Benjamin, Jr Jr. “Really?” I asked. “You’d rather go to Dairy Queen now as opposed to Peterson’s tomorrow?”
The lure of instant gratification. Mediocre ice cream today was more appealing than far superior ice cream tomorrow.
Where does the desire for instant gratification come from?
I’ll save you the Google search, but many psychologists trace this back to our prehistoric ancestors who lived in a world with an uncertain food supply, an uncertain future with uncertain survival. Taking what you need when presented with the opportunity allowed the species to survive and grow.
I couldn’t help but question the validity of this argument, using my youngest son as the example. Did he really want to settle on Dairy Queen today over Peterson’s tomorrow because he innately feared for his survival? Does he fear the uncertainty of his own future enough to question if going to Peterson’s tomorrow will even be an option?
Have centuries of a more comfortable living not erased the inherent fear surrounding the uncertainty of what tomorrow brings?
Impulse spending is detrimental to saving
According to a survey in early 2018 by Slickdeals.net, the average US consumer spends $5,400 annually on impulse spending. Do the math – that’s $450 a month; over $100 a week. Nearly one-third of ALL AMERICANS have less than that amount in their retirement nest egg. As a nation, we are spending more per year on instant gratification than we are for a more comfortable life in the future.
The long-term “cost” of these impulse purchases skyrockets exponentially when you factor in the percentage of these purchases that wind up on a credit card, incurring additional interest charges each month.
And that’s not even counting opportunity cost from losing out on watching that $5,400 grow and compound every year!
What can one do?
There is no shortage of “experts” that will tell you how to stop your impulse spending. I’m not going to be one of them (I’m also not an expert by any means).
You have to find what works for you.
Wait a while before a big purchase. Avoid putting yourself in situations where you find yourself spending impulsively the most. Gonna go just walk around the mall and do some window shopping? Try a park instead.
You get the idea.
Every cent adds up, don’t convince yourself it won’t. Don’t settle for Dairy Queen today when you can have Peterson’s tomorrow.