How to Practice Delayed Gratification as a High-Income Earner

Sure, you have the money. But is it the best use of your money?

There’s a popular Internet challenge—you might have seen it. A parent gives their child a marshmallow. They tell the child, “I’m going to the restroom. Don’t eat the marshmallow. When I get back, if the marshmallow is still there, I’ll give you another one.”

The kid is excited. She wants two marshmallows. As soon as her parent leaves, though, the marshmallow becomes a temptation.

The videos are hilarious. Some kids wait a few seconds and then eat the marshmallow. Other kids chew the marshmallow slowly, waiting for their parent to return. And then there are the disciplined kids. The kids who don’t eat the marshmallow and are rewarded with two.

Regardless the outcome, there was a constant temptation to eat the marshmallow.

Many of us feel we are immune to temptation, particularly when we have a high income. That’s because many associate a high income with moral discipline and self-sufficiency. But no one is immune to temptation. The temptations just look different when you make hundreds of thousands of dollars a year.

We want a fancier car, a new vacation home, or a new designer suit, and we want it now. And because extra cash is often available, we often don’t delay gratification.

Persistently succumbing to the “I wants,” though, can jeopardize a high-income earner’s future.

Delayed gratification is the ability to delay the impulsive desire for an immediate reward in order to receive a more favorable reward at a later date. Adults who practice delayed gratification have a better chance to invest in their future (their retirement) and reach their financial goals quicker.

Here are a few tips to help you practice delayed gratification as a high-income earner.

1. Sleep and then Strategize

I have two friends, married and older, who live a comfortable lifestyle. The husband makes six figures a year, and after living in this lifestyle for more than a decade, he and his wife value convenience. Whenever a problem emerges, their first solution is to throw at it whatever money is necessary for an immediate fix.

For example, as this couple grew older, they decided they wanted a one-story house. (Stairs were too hard on their knees.) They sold their current house and bought a new house. They thought the problem was fixed.

But when they moved in, they realized they needed to redo the landscaping. So, they spent thousands of dollars to improve it. And then they wanted to upgrade the kitchen. They spent another chunk of money on that. And so forth.

The couple sold their house for a good price, but the money spent on 1) purchasing their new house and then 2) upgrading and improving the new house was a major loss for what could have allowed them a more financially secure retirement.

It may be convenient to throw your money at a problem for an immediate solution. But it can also be financially shortsighted.

When you encounter a problem—whether it’s complex like the need for a new house, or simple like the need for a new dishwasher—sleep on the problem.

Allow yourself a few days or weeks to assess your financials. Can you wait a few months before purchasing this expense? Can you strategize a plan to get to the point of affording this new expense without wasting money? Is it something you can do without? Is it something you can do yourself?

2. How Many Hours Worked Does This Purchase Equal?

Another common financial issue I see amongst high-income earners is a lack of regard for “splurge” items. For example, they might think they need a new suit or dress for a social event and will spend thousands of dollars for a one-time wear.

I want you to think of money spent in terms of “time worked.” More specifically, how many hours do you need to work to make the money you want to spend?

If you want to buy a new dress and it costs $3000 and you make $100/hour, that dress is the equivalent of 30 hours. Almost a full-time work week.

Ask yourself, Do I think the dress, worn once, is worth 30 hours of my work?

More often than not, we realize a one-time wear isn’t worth all those hours. The “dress” obviously is a symbol for those splurge items that in the moment would be really nice to have, but in the end might not prove their worth in use.

3. Honesty Is Still the Best Policy

The other day I was shopping for new shoes when I came across a sleek pair of basketball shoes. Black and white. Claiming to be the best. I tried them on and they looked good. They felt good. I wanted them. And I was going to buy them, until I thought, “When am I going to play basketball?”

It’s been more than a year since I last visited the court. And even though the basketball shoes looked good, I didn’t need them. They would be an impulsive purchase. So, I put them back.

The hardest part of delaying gratification to save financially is being honest with yourself. Do you need that pair of new shoes? Do you need a new bespoke fridge with that fancy built-in television? Do you need new custom drapes for the dining room? Do you need a new car?

Only you can decide if the purchase is worth its perceived value. But it requires being honest with yourself and recognizing when you want something out of impulsive desire vs. when there is an actual need for something.

On the flip side, if you want a new pair of shoes, have slept on the decision, and decided the perceived value is still worth it, then go ahead and make the purchase! Just be honest with yourself—whether that’s admitting you don’t need the purchase, or recognizing the purchase will bring you enjoyment in life.

4. The ‘Fun Money’ Account

My wife and I have an account through Fidelity titled “Fun Money.” Every month $200 automatically drops into this account, and when the account reaches our monetary goal, we take a guilt-free vacation.

By automatically transferring $200 into our “Fun Money” account, my wife and I delay our gratification for vacation. We don’t get to use the $200 for something impulsive and immediate, but it’s going toward something better. I’d rather save my money for our next two-week cruise to the Mediterranean rather than spend it on new basketball shoes I don’t need.

Whether you’re saving for a vacation or a retirement home, create a separate account for it. And, if possible, automate monthly deposits into this account so that you won’t compromise saving for it.

5. Reward Yourself

As important as it is to save your money and spend it wisely, it’s equally important to reward yourself for your progress. Rewarding yourself for progress helps you create your own motivation to keep practicing smart financial decisions.

When you’re halfway to your goal, celebrate. Go out to dinner or a movie. Treat yourself to something nice to celebrate the progress you’ve made.

Practicing delayed gratification as a high-income earner can significantly impact your financial well-being. Invest in your future wisely and practice these strategies to improve your financial success.