you give into instant gratification, you choose your present desires
over tomorrow’s goals.
what’s the biggest reason you’re always running out of money? If
you said it’s the rising cost of living or limited job prospects in
Singapore, you’re about 50% right. But what accounts for the other
50% is a long-standing need for instant gratification.
is why, no matter how much money you make, you still seem to be
broke. Here’s how it works, and how to fight it:
Eternal Struggle Against Instant Gratification
good personal finance had to be reduced to one concept, it would be
simple: good personal finance – from retirement
planning to saving
money for emergencies –
is about your ability to defer your wants now, in return for your
the 1960s, Professor Walter Mischel devised the now-famous
Marshmallow Test. A group of children had a marshmallow placed in
front of them, and were told they could have a second one if they
just waited for a while.
a quarter of all the children tested were able to resist the instant
gratification of a marshmallow right now, versus waiting for more
experiment followed up on the children later in life, and found that
those able to delay gratification were generally more successful. Not
only did most of them manage their finance better, they were also
less likely to be obese, be alcoholic, or have gambling issues.
call this ability to delay gratification the “executive function”.
problem with instant gratification is that our brains are wired to
prefer it. In the distant past, when we lived in caves and hid from
dangerous animals, instant gratification was a survival trait: we
grabbed food where we saw it, rather than wait till later (it might
no longer be around).
is the same quality that makes it hard not to spend money once we
have it (we have an insatiable urge for stuff, whether we need it or
not). It’s also the same instinct that makes it so difficult to
gratification makes you waste money by:
more for unnecessary speed
more than you can use
on credit when it’s not necessary
Paying More for Unnecessary Speed
gratification means having what you want, right N-O-W. This makes you
willing to a pay a premium on speed, even when there’s no logical
reason for it.
you shop online, for example, you may be familiar with express
shipping options. This is when you can pay a much heftier shipping
fee, sometimes as high as S$40, in order to get “next day
delivery”, or even just a week sooner.
shipping is useful for tight situations (such as when you forget your
friend’s wedding and need his gift to arrive fast). However,
instant gratification can cause you to use it even when it’s not
it really matter whether your purchase arrive in two weeks instead of
tomorrow? Often, the only reason it has to is that you want instant
can also happen in good, old fashioned brick and mortar shopping. Say
a shop is selling an outfit for S$35, but it will only be in stock in
a few days. A shop one floor up is selling the exact same out for
S$50, but they have it in stock right now.
dictates that, barring some sort of urgent need (e.g. you have a big
date tonight), you should wait a few days for the better deal. But
instant gratification can cause you to buy the outfit for more, for
no other reason than not wanting to wait.
Buying More Than You Can Use
gratification makes you horde things for “later”, even when
there’s no reason to. One side-effect is buying more than you can
example, say you’ve just bought a new cookbook and are excited to
try out a few recipes. Instant gratification may cause you to buy
S$300 worth of ingredients at the supermarket, for all of the
recipes. It feels good and “complete”.
you would be buying far more than you can use. You can’t be
preparing every dish in the cookbook all at once; it will take you a
few months to get through all the recipes. That means there’s no
need to spend S$300 at one go; you could better control your cash by
slowly buying ingredients as you need them.
is the same with hobbies like reading or wine; instant gratification
makes you feel good for buying these things right now, even if you
are buying more than you can reasonably go through in two or three
Making Semi-Conscious Purchases
gratification prompts you to act fast. Sometimes your hands move and
your wallet is open before you even realise you’re spending. This
also happens in diet struggles – it’s the phenomenon where you’re
looking at the bottom of the potato chip bag, even though you only
intended to take one or two pieces.
sort of spending tends to happen at the checkout counter of a
supermarket (that’s why the cheaper items, like mints and snack
bars, are placed there). You may also end up making side-purchases,
and not really thinking of the cost, when shopping online. This can
happen when you see the “people who bought this also bought…”
gratification doesn’t just cause bad purchases, it can cause bad
common example of this is selling stock at the wrong time. Say you’ve
invested in the Straits Time Index Fund for seven years, and on one
particularly good year the share values are high. Instant
gratification may tempt you to sell the stock and indulge in the
money right away, even if you’d be better off holding onto it for
your retirement portfolio.
you need money to buy an expensive luxury (e.g. you need to have a
cool looking watch right this instant), it can lead to “hocking”
your stuff (selling it to a pawn shop) or selling things on Carousell
/ Ebay to raise funds. In your rush to make money, you may be selling
more valuable items at steep price cuts, to get the money fast.
makes no sense, as you’d be buying high and selling low. Remember
that surrendering an insurance policy for an early payout, selling
your stock to get a quick buck, or Ebaying your jewellery can all
amount to serious financial losses.
Buying on Credit When It’s Not Necessary
you want to buy a new laptop. You could set aside S$500 a month for
three months, or you could buy it right this instant by taking
a personal instalment loan.
if the laptop were essential for work, that would be understandable.
But if it’s to watch Netflix or surf the net, it’s not worth
paying the interest rate on the personal loan just to have it
are many purchases that can wait, if we see things from a reasoned
perspective. It’s the need for instant gratification that
encourages us to get into debt, by pushing us to buy on the spot.
Can You Control the Need for Instant Gratification?
good news is that self-control can be developed. That’s why you’re
much less impulsive now, compared to when you were a child. Many
disciplined savers did not start out that way; in the Marshmallow
Test, only 25% of the participants could resist instant
you can gradually build your self-control by establishing and
following systems. For example, you can set a rule that you will buy
a new thing only when you have fully used up something related.
could, for instance, create a rule where you can buy a new video game
only after you have completed a previous game.
you implement and follow systems, you will find your self-control
other ways to build your self-control are simply to rest well and
eat well. Your need for instant gratification grows with stress and
exhaustion, as you will lose mental resilience. By ensuring that you
sleep well and remain healthy, you will be in better control of