Understanding the Concept of Delayed Gratification
Building a solid wealth does not happen overnight. It takes many years, encompassing our entire productive life. Time is the best ally for investments. Therefore, knowing how to wait is crucial.
The Shift from Delayed Gratification to Immediate Satisfaction
Today’s society is heavily accustomed to immediate gratification, where people have everything now and pay for it later. A clear example of this is the immense success and importance of “interest-free months” promotions for many years. These promotions are essential for the survival of numerous businesses, making special sales like “El Buen Fin” unthinkable without them.
While these promotions have advantages for those who manage their money well, they also come with significant drawbacks. Many end up using the money they earn today to pay for past purchases in monthly installments. This reduces available funds for other potentially more important matters, diminishing savings capacity necessary to build wealth.
The Author’s Personal Experience
The author has, like everyone else, used interest-free months to make purchases. They’ve learned from both successful and unsuccessful experiences. Initially, they realized that part of the money they received was committed to monthly payments. This restriction forced them to limit their spending when earning less, creating a more austere budget and reducing financial freedom.
The author emphasizes that the issue isn’t the tool (credit) but rather the societal culture, mentality, and paradigms that have shaped us.
Lessons from the Past
When growing up, interest-free months did not exist. Grandparents had a different mindset. They built wealth from scratch through careful money management, even during wartime. The four fundamental ingredients for their success were culture, time, perseverance, and discipline. Mentalities also played a crucial role.
The author encourages readers to recognize the essence of saving: it means paying today to buy tomorrow. This mental shift is vital, and many could benefit from adopting it.
Additionally, having saved resources allows for reassignment if goals or needs change, providing greater financial flexibility and a sense of freedom.
Credit as a Tool, Not a Curse
Using credit wisely can be beneficial. For instance, the author purchased their home with a 15-year mortgage but paid it off in just over five years. They achieved this by consistently paying more than the monthly installment and allocating extra funds, such as bonuses and irregular income, towards principal reduction. This strategy saved a significant amount in interest while ensuring retirement savings were not neglected.
Key Takeaways
- Delayed gratification is key: Patience allows for freedom, flexibility, and options in building wealth. The secret lies in consistently saving a fixed percentage of income and investing it in a long-term, efficient, low-cost portfolio throughout one’s productive life (approximately 40 years).
- Initial growth may seem slow: As you start saving and earning interest, the returns compound exponentially. Although there will be cycles, downturns, and market volatility, a well-suited portfolio aligned with your risk tolerance is essential for reaping the rewards of patience.
