Deferred Gratification: the key to achieving long term financial independence

saving money for something special
Petunia saved her quarters so she would one day have enough money to buy something special

I was recently watching an episode of Baby Looney Tunes with my son and was delighted that the storyline centred around money – working for it, spending it and saving for something special. The episode was called “Petunia the Piggy Bank” which was cute, given the fact that Petunia is a pretty little piggy.

The story unfolds as an ice cream truck drives up to Granny’s house. The Baby Looney Tunes rush out to get ice cream, only to discover that the man in the truck wanted money in return. They then run to Granny to ask for a hand-out but the canny old lady smelled a learning opportunity and offered to give them jobs around the house so they could EARN the money. So over the course of the following week the children were given a number of odd jobs and the next weekend Granny paid them their first wage: a shiny quarter each.

spend your money on ice cream
Each kid bought an ice cream, spending all their pocket money and not saving anything

The next time the ice cream truck came by all the children rushed off to buy a treat, handing over the quarter they had just earned. All, except Petunia, who much to the amazement of her friends decided not to get an ice cream. She tells her friends that she wants to save her pocket money for something special, an idea which her friends thought was hilarious. After all, as Sylvester asked her, what is more special than ice cream?

Week after week the story repeated itself. The children did their chores and got their pocket money. Petunia saved her pocket money while her friends spent it all on ice cream.

ice cream sundai
Forego ice cream today to be able to get a better and tastier ice cream tomorrow

However 4 or 5 weeks later the ice cream truck rolled up and the children were blown away by a new treat on offer. A super ice cream sundae with chocolate sauce, cream and a cherry on top! The sundae cost a dollar, which is made up of 4 quarters, but they only had a quarter each!

 

Suddenly Petunia did not seem silly any more. The children realised that there is indeed value in saving their pennies because giving up on a treat today and saving the money will lead to your having more money to spend on even better treats in future.

This being a cartoon Petunia decided to buy the Sundae and share it with her friends, blowing all her savings, but the moral of the story is a good one.

One of the keys to building your future financial independence is deferred gratification, giving up on something today in order to save for something even better tomorrow.

I guess that you will think that this is obvious and that the concept is childishly simple, however the truth is that when I look around me I can see that many people have not mastered this simple skill.

The only way to save money is to spend less than you earn. To look away when you see something you like in the shop window. To watch your friends buy new clothes, new makeup, new bags and new costume jewellery, and to tell them that they look great, but not to buy any yourself. Or at least to buy less.

Let’s face it, this is not fun. There are times when the temptation is great and the urge to hand over our hard-earned cash is difficult to overcome. Some people will tell you that they want to live for the day because they cannot be sure that they will have a tomorrow. That is all well and good and  I agree that we should not live miserable lives when we are saving. Going to extremes is never good. However tomorrow usually does come, whether we are sure of it or not, and we will reap what we sow when it comes to our financial investments or lack thereof.

After the cartoon I had a little chat with my son. I told him that mummy and daddy were just like Petunia. We had given up on hundreds of ice creams to save to buy our house and that when he grew up he would have to do the same. The little guy did not seem overjoyed at the thought and I understand him. However the truth is that holding back today will enable us to live large tomorrow.

When I started my business I was penniless. I did not take out a salary for the first four years and I had to learn to make do. It was not fun at the time but I do not regret a minute of it because it is how I built the foundation for the financial security my family enjoys today.

The funny thing is that now that I can afford the fripperies that many people get such a thrill owning, I have no urge to go out and spend a storm. I guess that having lived a perfectly happy life without all these consumer items for so long, I now do not associate them with happiness.

This is the really interesting thing about the journey to financial independence. It changes you. Years of watching your spending helps you prioritise and work out what really matters. And trust me, it is not fancy cars, designer clothes or meals in  expensive restaurants.

As far as I am concerned what really matters is the peace of mind that my family is financially secure. Achieving that is well worth all the gratification I deferred over the last 18 years.

Author: Mrs Smelling Freedom

After selling my business my priority is consolidating my family's financial independence. I blog about Entrepreneurship, Financial Independence and living life to the full!

5 thoughts on “Deferred Gratification: the key to achieving long term financial independence”

  1. What a nice post. teaching my kids on finance is on top of my mind. I hope to learn them about saving and investing rather than blowing away money when they have money. In September, our oldest should get a weekly allowance for some extra chores…let’s see how it goes.

    1. It is quite a challenge, I will tell you that. Kids are constantly bombarded with adverts for this and that toy or “must have” accessory. Other parents also do not make it easy, because they think that they have to buy their kids the latest gizmo to hit the market so their children are not “inferior” to other kids. Slowly but surely wins the race is my motto when it comes to teaching my children about money 🙂

  2. I really enjoyed this article and what a great lesson to teach your child!
    It’s all very well and good living (and spending) in the moment but in the long term, you’ll never get that sundae if you don’t have a sustainable strategy for your personal finances.

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