Who likes waiting for something they really want? Not me! But thanks to my parents I can handle delayed gratification. Learning to save and invest are among the best things my parents have taught me: my mom is thrifty and is good at stretching a dollar, especially at the grocery store (all Nigerian women must be born with this ability!), while my dad is into investing. Because of my mom I love sales and find it nearly impossible to buy things at full price. I also inherited from her the inability to resist a really good deal, leading us to buy something that we may not necessarily need (I’m nearly cured of this).
Teaching me about delayed gratification was a process: my dad was concerned that I was spending my part-time job earnings too quickly—when I started officially working at age 14 I spent most of my money on treats and occasionally on brand name clothing and accessories to be cool (it didn’t work)—so he encouraged me to start saving for retirement when I was in my late teens. When I got a job at a clothing store, my spending got worse: I spent most of my paycheque on clothing because I got a 50% discount and in the 10 years that I worked there I managed to waste a lot of money. So my dad connected me with an investor and I started investing a modest sum, something like $25 per month, in my late teens. Whenever the investor would ask if I wanted to increase the amount, even years later I’d say no because I wanted to have money to spend, or waste as was often the case.
In my mid-20s I realized that my future husband might not show up when romance novels and movies had led me to expect him. I decided that I didn’t want to be living in my parents’ house at the age of 30—I felt there were lessons that I could only learn if I lived on my own. Rather than moving out to rent an apartment, I decided to enter into a long-term relationship with a mortgage, and when I told the investor what I wanted to do, he put me on an aggressive savings plan so I could take advantage of the Registered Retirement Savings Plan, Canada’s tax shelter retirement savings program that allows first time home owners to withdraw some of the money they’ve saved without being taxed on it. The money has to be repaid within 15 years, following a two-year grace period. If you’re interested in knowing more, read all about RRSPs here—several countries have a similar program. During this time I had very little money for anything else.
Needless to say, buying a car at that time was out of the question and I took the bus everywhere, (though generous friends would often pick me up for events like weddings, and my parents let me use their car too). Two people, a friend and a colleague, asked me so many times why I didn’t have a car, after all I had a full-time job and should be able to buy a car, but it’s all about priorities.
After I became a mortgage-owner, I was scared of not being able to handle all the house-related expenses, so I stopped making some contributions to my retirement savings. It was just last year that I decided (with the encouragement of my dad) to try something that can work if done right: you take out a loan in order to “max out” your retirement savings, and then you get a tax refund for this which you can use to pay off about 1/3 of the loan immediately. It was only by the grace of God and that I survived the bi-weekly payments which ended up being more than my mortgage, but it worked out.
Maybe home or car ownership isn’t a priority for you right now but an area where it can be hard to delay gratification is with electronic gadgets. I’m sure a new smart phone is released by one brand or the other every two months, one that has more features and a better camera than your own phone which was considered top of the line a week ago. One of my brother’s closest friends buys every new phone that Apple makes, and I know he’s not alone. When the screen of my iPhone 3GS broke after I had had it for about two years, I didn’t switch it, even though newer versions had been released since I purchased mine. Did I want a new phone? Yes, but I made myself wait until I could renew my three-year contract to maximize my savings. The phone still worked, it was just unsightly, and I was the butt of a few jokes. I always want the latest and greatest in phones (see #5 here) but I’m disciplining myself to keep my phone for at least three years because to me it doesn’t make economical sense to get rid of a phone that is still functional.
It’s not fun denying yourself things, especially when you see people upgrading various aspects of their life or taking lavish vacations, but the end result will be worth it. Having a mortgage and car payments helped me prioritize taking care of my needs before looking after my wants. There’s plenty of room for improvement though: my next money post will talk about practical elements of stretching your money—I’m sure you’ll have lots of great tips for being thrifty.
How do you handle delayed gratification? What’s the longest you’ve had to save or wait for something you really wanted?