Student Rules: Delayed Gratification

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Student:Craft - Student Rules 1

Thanks and Appreciations

Wow, so this is Student:Crafts 4th Post, and I have been overwhelmed with the daily page views and amazing feedback from you guys! - It is great to know that the information I'm giving you has helped and is making you rethink your approach to time and money. Thankyou!

That said and done, I've got a great article for you this week on how you can begin to put some money aside and totally change the way you think. What you learn next I hope will be a lesson you take with you for life, (it certainly will be for me!). The first in our New Rules Series; Delayed Gratification. Enjoy:

Introduction

You don't have to be rich to be wealthy. Wealth can be amassed...and one of the ways you can do this is with effective savings! As a student I was convinced it was impossible to save anything...but contrary to popular belief, this is where it all begins.

I've looked into and researched the Very rich, and the following is what you are going to have to master in order to join their prestigious ranks. This weeks post is all about:

Delayed Gratification

From what I've discovered, delayed gratification is one of the biggest factors preventing people from amassing any kind of wealth in their lives. Now I know this is a 'far out' statement to suggest by a student, but think about it;

We live in an age where people have access to money they don't have...and the majority of the time, they use it to buy things they WANT, rather than they NEED (Myself included).

Without the will power to say "NO", our money is being thrown away on material possessions or expensive experiences. Moreover, scientific research suggests that delayed gratification has a direct link to human intelligence! Lets begin by looking at a famous experiment by psychologist Walter Mischel (Modern-ised in this youtube video):

'self-motivated,successful...emotionally intelligent'

The interesting part of his experiment was that he followed up on the children as adults. His findings concluded that those who didn't eat their marshmallows that day were generally more self-motivated, successful in school and considered emotionally intelligent. On the other hand those who simply couldn't wait generally had low self esteem and had suffered in school, branded by both their teachers as being stubborn, envious and easily frustrated. - financialhighway.com

Now, I'm not telling you to NOT buy what you want...but there needs to be some rules involved! BUT, before we get to the rules, lets have a look at the disadvantages to what we are doing (Put best into words by BrianKim.net):

• "It teaches us we don’t need to work hard to get what we want and we fail to appreciate the value of that hard work as a result.

Let me give you a really simple example that most people can relate to.

Gambling.

It’s the epitome of immediate gratification. Throw some dice, pick up some cards and you win a lot of money.

People may win big, but you’ll find that they’ll use those winnings to continue gambling. You know just as well as I do what happens 99.9% of the time. They at best, break even, but most of the time, lose it all. Why? Because there was no hard work associated with getting the money they won, so they didn’t value the money as much. They were willing to risk it by gambling with it again. The value of the money was lost upon them.

Contrast that with someone who’s been saving up money. Do you think he/she would be so careless with that money? No, they would be extremely careful and picky as to where they will spend their money, because they have associated hard work with it from saving it up and delaying impulse purchases.

• People who invest in immediate gratification associate little work with high rewards.

This is the essence that a lot of people seem to miss.

That subtle suggestion will plays itself all over in life.

Eat fast food instead of taking the time to cook healthy meals, so you have a higher chance of a heart attack and diabetes.

Do shoddy work and sacrifice quality so you can just get the paycheck and split.

Watch TV for three hours when you come home instead of spending time with your kids."

-Briankim.net

Now that's all fair and well...but how do you discipline yourself to show restraint when the time comes? Yes it is a personal thing that requires a lot of self control...but is there anything else that can help?

Here are some of the best techniques I found, over SELF CONTROL for you to try out:

• Have a Clear Goal

If you know where you want to be in a few years time, this can help you make the right decisions when it comes down to it! If you've always wanted to be rich then keep reminding yourself about it!

• Differentiate between Needs and Wants

Do you really NEED that new Xbox game the day it comes out? I'll definitely be buying it, but I've learnt from writing this I can afford to wait a few weeks. (Hey, it will probably be cheaper then as well)

• Prioritize

What's the hierarchy of your life? Studies > Going out? Cinema > Overdraft? Have a think about it.

• Do not Procrastinate

"Procrastination is Opportunities Assassin"

My worst trait. From now on I'm going to be making a serious and conscious effort to stop my procrastination and just get on with things! Those that DO prevail. Those that talk...DONT.


Delayed / Immediate Savings
Going back to the beginning of the article, I mentioned how impossible it seems for a student to save money. Lets have a look at some of the most important things you're not taught about money and how you can start making a dedicated commitment to putting something aside.


Lesson 1: Compound Interest
What is it, and how does it work? When you deposit money into a savings account it generates a percentage of interest on a periodic basis. That interest is then 'put back' into the regular pool and the same percentage is generated again. You make interest off your interest! Check this table out for a better explanation:

savespendgrow.org

Marvel in the wonders of Compound Interest! 

Lesson 2: If you sell all your rabbits, then none can breed.
You need to start a money farm. This is one of the best analogies I've heard about money and it compares your finances to a rabbit farm: Lets imagine you breed and sell rabbits.


If you sell all of your rabbits, then you have none left to breed and you no longer have a viable business. 

NO RABBITS = NO BREEDING = NO SALES = BANKRUPT

It works the same with money. If you save nothing, then you have nothing LEFT to breed / grow.

SPEND EVERYTHING YOU EARN = NOTHING LEFT TO GROW = BANKRUPT

A lot of people may wait for a large sum to come in the future, but you can't always rely on this. Many of my friends, £1000's deep in multiple overdrafts say the same ol stuff: 

"Doesn't matter. I'll be earning more than enough once I graduate"

You can't and should never just rely on this! Formulating savings, through commitment and delayed gratification will be worth it in the long run.

Lesson 3: Make a Commitment
This is where I have ALWAYS gone wrong and something I really want you to take advantage of! Just make a commitment to saving money. Create a direct debit from your current account to your savings account every week / month with a fixed sum.


It doesn't matter if it's only £1 a week you can afford...but it's the commitment that will condition you to save more when you can.


When your paycheck comes in, have some money sectioned off to your savings account immediately...even BEFORE you have the opportunity to spend it. Not only will this encourage you to live within your means...but you actually feel good about yourself when you know you have some 'backup' cash stashed away for the future / when you REALLY need it.


Get used to saving now and it will do you well for your future.


ISA's and Savings Accounts
Just like we chose the best Student Account (with our free rail card or great interest free overdraft), find the best ISA's and Savings accounts! 
Checkout: Money Saving Expert for better information.