The two-word secret to personal finance success

By Jeffrey Steele

For FiveCentNickel.com

Published: Wednesday, Nov. 13 2013 12:45 p.m. MST

I am convinced the secret of successful money management can be summed up in two words: delayed gratification.

Andrey Popov, Getty Images/iStockphoto

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Editor's note: This article ran originally on FiveCentNickel.com. It has been reprinted here with permission.

It wasn’t long ago I suggested in this space there was a one-word reason for the colossal indebtedness of Americans. That word, I ventured, was “supersize.” By supersizing everything from combo meals to homes and cars, folks nationwide were ensuring they’d suffer supersized debt burdens and super-slender savings, I wrote.

What I didn’t reveal at that time was that I had embarked on a simultaneous quest, one devoted to unearthing a single word or short phrase far more beneficial, offering Zen-like insights into the secrets of effective money management and wealth accumulation.

After exhaustive research, including forays into dim corridors of Swiss banks, days spent poring over the memoirs of self-made millionaires and furtive meetings in shadowy corners of parking garages with trench-coat-wearing economists, I am convinced the secret of successful money management can be summed up in two words. If you promise not to share this with anyone, I’ll forthwith name those words.

Ready? They are “delayed” and “gratification.”

Once well known

The concept of delayed gratification wasn’t always such a hush-hush, closely-guarded secret. Why, the folks of “The Greatest Generation” and those who came before them were well acquainted with this practice, and put it to work daily. They were constantly scrimping and saving, schooling their children that money didn’t grow on trees, fixing up that old car (or buggy), carefully funneling cash into paying down their mortgage and seeking the best savings accounts rates they could find.

These folks habitually delayed big purchases, instead taking every paycheck and paying themselves, rather than others, first. Unlike later generations, they would have avoided the temptation to be the first on the block with the wall-sized flat-screen, this week’s generation of smart phone, or the Sherman Tank-scale SUV. At least, they would have, had those tempting consumer goods been available at the time.

As a result of placing the idea of delayed gratification over instant gratification, they reaped sizable benefits. They didn’t have to wring their hands with worry about credit card debt, toss and turn each night fretting about making their mortgage payments or sup on a steady diet of antacids to bathe an ulcer borne of a precarious income stream.

So what happened to make delayed gratification such a mysterious and obscure concept?

Well, ever since the dawn of TV, when the American Marketing Machine got cranked into hyper-drive, this notion has fallen further and further out of favor, replaced by ads, TV spots and billboards proclaiming, “Don’t Wait! Buy Now!”

Generations exposed to these exhortations scores if not hundreds of times a day obediently went out and did as they were told, until the concept of delayed gratification was about as familiar a household word as bond drives and 78 rpm records.

Today, if you mention delayed gratification to most Americans, particularly those younger than 80, they react as if you have just spoken a few phrases in Venutian. Delay my gratification? But I want it instantly! Why would I do that?

The reason you would do that is that it is a tried-and-true method of building wealth.

Against the grain

Are you ready to become one of the most iconoclastic and free-thinking rebels on your block by putting delayed gratification into practice? According to a coded transcript I managed to uncover in a long-closed tunnel beneath a road near the London School of Economics, and eventually was able to decipher, here’s how you do it.

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