Prospering? Time Will Tell; Literally

In studying economic prosperity, researchers have found there are certain cultural and personal characteristics that can either hinder economic freedom or foster it. One of the little discussed qualities is a future orientation toward time. How a person or a culture views themselves in relation toward time will often determine how well economically they will fare.

People and cultures that live for the moment will not invest or pass on wealth generationally. Without investment, wealth cannot compound. All the seeds are eaten with none planted for the future beyond today. I know this attitude well. It marks my younger years. I ate all my seeds every summer and had none for college or investing. I had to go into debt for school and lost a decade of compounding for my future investments.

The prospect of resisting short run temptations for the long run gains has been the subject of a few studies. One of the experiments started with four-year-old children at Stanford University’s pre-school.

Researchers took each child into a room and gave to them one marshmallow. They told each child, “You can eat this marshmallow as soon as you want, but if you wait and don’t eat it until I return in a little while, then I will give you a second marshmallow.” When the researcher left, they observed the children through a one-way window. Several of the children ate their marshmallows immediately, others tried to resist temptation but soon devoured theirs as well. Others stayed determined to wait, and soon received a second marshmallow.

The result of each child’s experiment was recorded, and then researchers followed their academic performance through their later school years. Those children who had saved their first marshmallow until they received the second were later found to be, according to researchers, better adapted and more popular, and they exhibited more confidence and responsibility than those children who could not delay gratification. Also, those who had resisted temptation scored an average of 20 to 25 percent higher on the Scholastic Aptitude Test (SAT), the test most widely used by colleges and universities to help predict academic success. The inability to delay your gratification will cost you in two realms: financial and relational.

Those who have a future orientation toward time don’t just assess the price of goods but they look at the total cost of buying an item; which includes the important concept of opportunity cost.

Think of every dollar you spend as an investment. What you buy with that dollar can go up in value or down.  The moment you buy a stereo or a video game system, clothes or a pair of shoes, you start losing money because you can never sell the used item for the price you paid for it. That’s called depreciation. That’s bad.

But wait, it gets worse! When an item depreciates, you not only lose money in the value of the thing, you also lose the money you would have gained had you invested it instead of spent it. That’s called opportunity cost. You lost an opportunity to plant your seeds for a future harvest.

Why don’t people make better decisions? Why don’t we have the discipline to delay our gratification? “The costs of what we do are incurred in the near term while the rewards are realized only in the distant future. The pain of self-denial is immediate; the gain in the form of a larger net-worth and higher income at retirement is way off in the future.”[1]

Assuming you invested the extra in a high-quality stock mutual fund like you could through Fidelity or Vanguard or even in your own small business or a form of real estate that could net you a 10% return.

  • If a smoker quit smoking and invested the amount they spent on cigarettes, over 15 years they would have nearly $76,000. After 30 years, they could have $390,924 and two pink lungs!
  • If you bought an $8,000 used car as opposed to a $15,000 one and you invested the difference over 15 years you could earn nearly $26,000 and $122,000 in 30 years. New cars depreciate 20-25% the instant you drive them off the lot. In two years, they depreciate 35-45% depending on the make and model.

When looking to build wealth, don’t eat all your seeds, plant some in good investment soil. You will never regret trading less now for more later.  The Christian’s Guide to Wealth Creation is designed to help you understand the rules of the financial sandbox. We build bridges of knowledge with 27 downloadable, audio lessons and corresponding 100 page e-book that includes everything you need to begin learning about investing in all three investment classes. Click here for more information.


[1] Getting Rich in America, 53

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