Imagine a scenario where you can take an Uber to work every day for a month, or you can take the bus but go on a nice vacation in Europe at the end of the month. Which one would you choose?

The choice seems obvious, isn’t it? A trip to Europe is more appealing than daily Uber rides. However, in real life, we tend to choose immediate pleasure and convenience over long-term goals in the future. We indulge in late-night snacks even though we want to become healthier. We spend our money on useless things rather than saving and investing it. Willpower is a scarce commodity in today’s society but it can help you achieve more success, especially in your personal finance.

Delayed gratification is good for your life

Delaying gratification is the action to resist the temptation of immediate pleasures and wait for bigger rewards in the future. It turns out our ability to delay gratification can predict our success in life.

In 1972, researchers at Stanford University conducted the famous marshmallow experiment on delayed gratification. In the study, kids were offered a choice. They could either have one marshmallow now or two in fifteen minutes. Of course, two marshmallows are better than one but willpower is required to get the bigger reward. And when you are a kid, fifteen minutes is a long wait for your favorite snack.

The follow-up study from that experiment suggested that kids who waited for two marshmallows were performing better in life. They tend to have higher SAT scores and better health.

Experiment aside, it is easy to see how delaying gratification can be beneficial in real life. Resisting the temptation of a juicy burger can help you stick to your diet and become healthier. Avoiding angry outbursts at work and home can help you win more friends and build better relationships with others. Delaying gratification is also critical to your personal finance.

Delayed gratification and money

Delaying gratification is the key to money success. First, let’s go back to the choice between daily Uber rides and a European holiday. These two things cost about the same but one of them contributes more to your happiness. Although the scenario sounds absurd, we are, in fact, facing these choices every day. When we delay gratification and save the money we spend on small things daily, we can use it to pay for bigger and better things.

For example, by cutting down the money spent on coffee shop coffees, you can save up and buy an awesome espresso machine. It makes amazing coffee at home and can save you money for years to come. If you cook more and eat less takeout, you can then save the money for a trip or put it towards buying your own home. Delayed gratification is helpful because by saying no to small temptations every day, you are preparing yourself for something bigger and better! The best way you can cut down expenses is by making a smart budget. A smart budget doesn’t have to be restrictive but it will definitely help you save more for things you truly want in life.

Secondly, the most important reason that delayed gratification is great for your money is that money grows with time! Your money is a seed with the potential to grow. When you put one dollar into your savings account, it earns interest for you. And the interest you earned will generate even more interest. So on and so forth, money grows faster and faster. This is especially true when you invest the money in diversified portfolios. By delaying gratification, you give your money space to grow and it will make you richer. Conversely, when you spend that dollar instead of investing it, you are missing out on all its future potential.

In fact, each dollar you spend now is worth 3 dollars in 28 years, if we assume that your money can grow at a 4% yearly rate.

How to get better at delaying gratification.

Many good things in life require you to sacrifice immediate satisfaction. But how do we get better at delaying gratification? Here are three tips to improve your willpower!

• Tip No.1 – Put yourself at the optimal state. Research shows that healthy eating, sufficient sleep, and exercise can improve your ability to delay gratification. All these things can put more fuel in your willpower tank.

• Tip No.2 – Focus on your goals. Reminding yourself of the goals you are saving for is a great way to improve your willpower. By visualizing achieving your goals, you will find it easier to stick to saving.

• Tip No.3 – Surround yourself with people with willpower. As social animals, we are heavily affected by others around us. If you hang out with people with poor self-control, you are setting a low bar for yourself. On the other hand, if you surround yourself with people who are also working towards bigger goals, you will find it easier to say no to temptations.

Too much delayed gratification can be bad

While delayed gratification can help you achieve long-term goals, it is important not to overdo it. If you cut all your expenses and live off canned beans, you might save a lot of money but you would also be miserable. After all, the goal of saving money is to live a better life both now and later. Finding the balance between living in the moment and planning for the future is the key to a great life!