The Importance of Delayed Gratification to Bulding Wealth

by Ryan Guina

I am just like everyone else: I like nice things. I prefer to buy high quality items that will last a long time and provide me with a lot of use and value. But, I also realize that I can’t have everything that I want.

They say patience is a virtue, and I agree. Waiting to purchase things that I coveted has been a financial blessing in my life. Delayed gratification has kept me out of debt and allowed me to amass a respectable net worth – while still enjoying my life in the process. Let me give one example out of many. I will use cars, but you can substitute electronics, clothes, frequent nights on the town, etc.

Delayed gratification

I’m willing to wait for this…

I enlisted in the USAF at age 19. Most people I came in with were roughly my age. For most, including myself, this was their first “real” job with a full-time paycheck. I witnessed a lot of friends go out and buy new cars, stereo systems, rims, TVs, video game systems, DVDs, CDs, etc. Many people blew through their paycheck within the week and had to wait until their next paycheck to afford a $6 haircut. I couldn’t, and didn’t, want to live like that.

Fast forward to my first duty station – RAF Lakenheath, England. I bought a $700 Rover Metro. It was a tiny car with a 1.1 liter engine and was about the size of a Mini Cooper. I affectionately named it “the Little Red Demon.” It got 40 mpg, and was incredibly fun to drive. When I left, I sold it for $600.

My next vehicle was an upgrade. I moved to the US and bought a 4 year old pickup. It was a basic model Toyota Tacoma, no frills, but dependable and economical. I paid half down and paid my 3 year loan off in 15 months. On paper, I could have afforded a new car, but I didn’t want to be saddled with large payments. Instead, I used the money to fully fund my Roth IRA, invest in the Thrift Savings Plan, and have a good time traveling and living life.

After 3 years of owning my truck, it was time to upgrade. It had a standard transmission and I was about to have 2 knee surgeries. I lived alone and a vehicle was necessary where I lived as there was no reliable public transportation to get me to and from work. I had the option of dealing with a stiff clutch and a vehicle I didn’t want, or trading it in and buying something I wanted.ย  Time to go shopping! And shop I did! ๐Ÿ™‚

I fell in love with a late model BMW 325. If you have never driven one of these cars, they are incredibly fun and responsive. I was inches away from buying it. The BMW 325 is sleek, fun to drive, comes loaded with premium sound and leather everything… Wow! But they are also very expensive to purchase and maintain.

In the end I bought a new car, which was the right choice for me (I know buying used is often better, but this was right after Hurricane Katrina and there were a lot of flood damaged vehicles on the market, so used cars were not always the best choice).

How is buying a new car exercising delayed gratification? Well, it cost several thousand dollars less than the BMW. I wanted the BMW, but I didn’t need it.

You see, I was in a financial position where I could afford a new car without breaking my bank. My trade-in was about 1/3 the cost of my new car, and my down payment was about 1/3. That left a small monthly payment, which I got at a low rate and paid off in less than 2 years. Not having a car note is a wonderful thing!

Delayed gratification is essential to good financial health. Had I bought a new car as a young Airman, I would have been saddled with crushing debt, probably for the entire length of the loan. It would have also used up the majority of my paycheck every month – leaving me with little else to use for enjoyment and living.

Instead, I bought a junker and enjoyed myself. I traveled throughout England and Europe. I invested in my retirement accounts. I went out with friends and lived. And I have no regrets.

I would still love to have that BMW. Not just as a status symbol – that car is sweet! Smooth, powerful, sexy. But, right now, there are other things that are more important to me – investing for retirement, traveling to see family and friends, and enjoying my life. You see, the freedom of not having a car payment allows me the freedom to allocate those funds however I want. And that is liberating.

One day I may just have that BMW. And I guarantee you this… it will be well worth the delayed gratification.

Image credit: DryHeatPanzer

Published or updated May 1, 2013.
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{ 14 comments… read them below or add one }

1 Emily

Great post!

Hubby and I both drive Bimmers – mine 16 years old and his 17 years old. We plan to drive them into the ground after buying them used for a few thousand dollars cash each in the past few years.

But I get what you’re saying ๐Ÿ™‚


2 glblguy

Good article. I SO want a BMW too, but like you am holding off. I have a 2001 Nissan Sentra that I payed $4000 cash for. It’s fun to drive, gets good gas mileage and runs well. Someday, I’ll get the BMW, but for now it’s just not the right time or choice.

I almost published an article on a similar topic, glad I waited ๐Ÿ™‚ Now I can link to yours!


3 Minimum Wage

Many people blew through their paycheck within the week and had to wait a week or more to afford a $6 haircut. I couldnโ€™t, and didnโ€™t, live like that.

That sounds like me, except without the cars, stereo systems, rims, TVs, DVDs, etc. I regularly wake up on payday with less than $5 in the bank – but I haven’t bounced a single check.

Maybe you couldn’t live like that, but millions of Americans do, every day. Many of us delay gratification daily yet do not enjoy financial health.


4 Ryan

Minimum Wage, I understand what you are saying, and I am not judging those who do not earn much money. The Airmen in my example were not living within their means. They were broke because they were spending too much on momentary wants, not needs. They were not broke because they didnโ€™t earn enough money.

My article is about setting a strong financial foundation and living within your means. If it takes putting off a big purchase or eliminating frivolous expenses, then so be it. In that respect, delaying gratification is essential to financial health. It is much easier for someone to get ahead financially if they do not overspend and fall behind.


5 Mrs. Micah

I want your little British car. It sounds cute, efficient, and well-priced. But we also don’t need a 2nd car, so it would be wasted money.

As a teen, I sometimes delayed gratification for bigger things. I have lots of great memories from my trip to Europe, for instance.


6 fathersez

I have been a total fumbler with cars.

Spoilt rotten by being given company cars, I started with new cars and not much thought.

We now have a Toyota Camry now in its 3rd year, and a Toyota Innova bought just before reading PF blogs.

Well, hopefully these two cars are going to be with us for the next 20 years!


7 plonkee

We used to have a Metro when I was a kid. And of course I have known lots of people with similar cars. If you were 20ish when you were in England then you were almost certainly fitting in with the natives.


8 Kyle

Excellent advice! I wish a had excercised some delayed restraint when A bought a new Chevy truck back in 2003. Cost $40k, all the bells and whistles, could have waited a year and got the same truck for 15k less. You live, you learn. Will finally pay it off this December.


9 deepali

I like a nice mix of instant and delayed gratification. If it’s under $5 and I haven’t done it in a while, I’ll go for it. ๐Ÿ™‚


10 Ryan

Thanks for the kind words, Ron. I’m not 100% sure it was wisdom, or fear of being broke! But it worked out well for me in the end. Links are always appreciated. ๐Ÿ™‚


11 Ron@TheWisdomJournal

Great post Ryan and very powerful. I’m linking to it is my post that’s coming out in the morning. I wish I had developed your maturity when I was 19. It took me quite a while longer. Better late than never, though!:)


12 Grace

For years I was into Chevy Blazers. Leased a new one every 3 years or so. But what I REALLY wanted was a Z3, and then a Z4. Didn’t need it. Just wanted it.

And now? In a Chevy Impala.

Why don’t they make a Z4 with a tag-along trailor, or at least a trunk? ๐Ÿ™‚

Good post! Thanks. G.


13 Ann

I had always wanted a luxury import car. After years of buying Hyundais and other used cars, in 2008 when the car market was plummeting I bought a new Saab 9-3 turbo with a 0% interest financing. This made for an affordable payment for me and since I plan on keeping the car until it dies I have had the pleasure of owning and driving a new luxury car, and also the security of being the original owner and knowing all the proper maintenance has been done on it so it can last a long time… can’t ask for anything more ๐Ÿ™‚ I’m glad I waited for the right opportunity.


14 Adam

I just wanted to mention something that you didn’t. There’s another hidden benefit of delayed gratification: you get to buy something better than what you originally wanted.

For instance, say you bought that new car at 19 instead of years later. Well, it would be several years older by the time you ACTUALLY bought it! Or that late-model Bimmer. Given a few more years, a NEWER Bimmer will cost the same as the one you had been looking at.

Now, I’m a total car nut, so I love about a thousand of them, and an E36 is an E36, and could never be replaced with an E46. But as cars age, the ability to spend a bit more on the right one will net you a much better quality car. Let’s say you have your eye on an E36, but it’s $10k. You save for five years, and now you’ve got $10k in your pocket. The average E36 is only $5k now! But the REALLY NICE E36, with low miles, in perfect condition, is $9995. You’ll get a much nicer car buying the $9995 E36 than buying one that is just average, especially if it’s more than 10 years old.


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