Delayed Gratification and the Secret to Will Power

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Retirement saving, and indeed saving in general, is nothing more than delayed gratification in action. We all want to save something for the future, and even a small amount invested today can make a significant difference in our retirement funds tomorrow. But trying to defeat our desires for instant gratification outright is often a dead-end endeavor. Depriving ourselves of the things we want goes directly against the grain of some very powerful impulses.

As human beings, we are emotional and rational creatures. Reason is what sets us apart from most animals. But we are not always good at separating our emotions from logic. In fact, when an incident occurs that influences our emotions and subsequent decisions, we don't even recognize it. Psychologist Jennifer Lerner told CBS's 48 Hours,

We've never succeeded, never, in having people recognize the irrational influence of incidental emotion.

So our emotions influence our decisions to save or spend, yet we are very bad at recognizing when that happens.

Will Power Has Nothing to Do with It

Enter will power, the strength to hold to your convictions. We often complain that we lack will power. We look at Olympiads and their amazing feats, marveling at the display of strength motivated by the power of their own desires. But most of us don't have that kind of single-minded drive. Most of us have many different competing desires to manage. That's why will power doesn't work for most people. The good news? Will power is a skill that can be learned.

In his article, "The Secret of Self Control," Jonah Lehrer described an experiment done by Walter Mischel, a Stanford professor of psychology, that took place in the 1960s.

A researcher then made Carolyn an offer: she could either eat one marshmallow right away or, if she was willing to wait while he stepped out for a few minutes, she could have two marshmallows when he returned. He said that if she rang a bell on the desk while he was away he would come running back, and she could eat one marshmallow but would forfeit the second. Then he left the room.

Gimme that Marshmallow!

As it turns out, the kids who could wait for two marshmallows grew up to be well-behaved teenagers with good test scores. The ones who rang the bell were more likely to score poorly on tests as teenagers and to have behavioral problems. As these children grew into their 30s, it became obvious that the differences extended much further. Those who could wait for the marshmallow were wealthier and more likely to make good decisions.

When researchers observed the differences in behavior, it seemed that the children who stared directly at the treats, as if to focus intently on the goal, had a harder time resisting. Those who sang songs to distract themselves while they waited were able to hold out for the two-marshmallow treat. It was not a matter of defeating will power or staying focused on the goal. It was all about forgetting the problem and simply waiting for the outcome.

How to Get what You Want without Squirming

Mischel's research also uncovered a shortcut for learning delayed gratification skills. He and colleagues used simple mental tricks to help the children. They pretended the marshmallow in front of them was not real, only a picture. This mental exercise allowed kids who couldn't wait 15 seconds for one marshmallow to wait 15 minutes for two marshmallows. Mischel believes that

Will power is just a matter of learning how to control your attention and thoughts.

Using tricks like this can make it easier to see the big screen TV, but to wait until you can pay cash to buy it. That leaves more money in your savings account because you aren't making interest payments on a loan. Distracting yourself can also help relieve the stress of not having what you want right now. When you learn to let go, if only temporarily, you are more likely to get what you want in the end. It'll be easier to enlist smart strategies for future savings, such as:

• Pay yourself first. In personal finance, the concept of saving by removing the temptation to spend has come to be known as "paying yourself first." In other words, electronically saving or investing directly from your bank account or paycheck before you have a chance to put your hands on the money.
   
• Use your 401k plan. Most mid- to large-size employers offer 401k retirement plans, into which investments are made directly from your paycheck. Your potential returns get an additional boost from tax savings — funds are deducted from your taxable income before tax due is calculated — and matching contributions directly from the employer for a certain percentage of your investment. Furthermore, employers are increasingly taking the concept a step further by "auto-enrolling" employees in their plans once they become eligible.
   
• Enroll in an IRA. Those who don't have access to an employer-sponsored retirement plan can employ the same strategies in an Individual Retirement Account (IRA). Simply provide your bank account information and investment instructions on your application. Most fund companies reduce or waive their initial investment requirements when you establish an automatic investment plan.

Once you've gotten started, strive to increase the percentage of your deductions. Use your new skills to delay purchases and instead put some money into retirement and some into a short-term savings account to buy the things you want. Most people find that, once their automatic investing has started, they forget about the money they would otherwise spend.