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Writer's pictureInterview with Jane Monica-Jones

Millionaires reveal the money psychology hacks they swear by

Detailing how delayed gratification can make you richer – and more in control of your goals. An interview with Jane in Financial Review



For years, Mike Larcher sat a small replica Audi R8 v10 on his bedside table so he saw it every morning. The little car was a powerful motivational tool that Larcher, 45, says taught him self-control and the power of delayed gratification.


Larcher is the chief executive of Outsourced, which provides offshore staff to international companies. He could have borrowed the money for the car, but he was determined to save so he could buy the real thing in cash.


The model sat by his bedside for six years until he purchased his dream car for $300,000 three years ago. “That toy model helped me manifest what I wanted,” Larcher says. “The visual reminder gave me something specific to work towards – I really wanted that car.”


Larcher says staying committed to a significant vision despite temptations to settle for less is critical to achieving financial freedom.


“Success for me has always been about the long game. It’s about setting your sights on something so significant that it demands your all – every ounce of creativity, persistence and belief you possess. It’s about remaining committed to your vision.”


Delayed gratification


Deakin Business School’s Campbell Heggen, a financial planning academic and behavioural researcher, says saving money requires delayed gratification – a form of behaviour modification to gain something for the future – and Larcher’s behaviour is probably better described as goal visualisation.


“It’s about overcoming present bias – our tendency to want to live in the now and spend our money on things we enjoy for the immediate reward – and instead prioritising larger, future goals,” he says.


“The premise is relatively simple. Small reward now, or big reward if you wait. It sounds easy enough, but evolutionary psychology suggests that our ancestors’ survival depended on taking the certain, small reward now, rather than hope that something bigger would come along later. So it’s no wonder that we struggle to save.”


Spending pause


Barb De Corti might have an estimated wealth of $60 million tucked away, but she is an avid budgeter who always pauses before spending.


The Perth-based founder and owner of the Enjo cleaning product empire, which turns over more than $100 million a year, likes to spend her money on experiences like holidays and philanthropic pursuits.


Every second year, she spends around $100,000 on a skiing holiday with her family, usually in Europe. But she saves where she can, despite it being a luxury break.


“When we’re saving up for a ski trip, I’ll look for frequent flyer business class flights for free because I don’t like flying economy any more. Sometimes the planning and anticipation of a holiday is a lot more enjoyable than the holiday itself.”


De Corti’s caution could stem from a modest upbringing in a small village in Austria or perhaps financial setbacks – including a divorce and the global financial crisis, which affected Enjo sales.


“You might have a lot of eggs in your basket, but don’t spend money before you have it,” she says.


“And I always like to have a bit of money on the side in case there’s a cash flow issue – instead of having to sell something if a crisis hits.”


How to control spending impulses


Technical advancements are another obstacle to delayed spending, as they prime us for short-term gratification. Smartphones, online shopping, two-hour delivery windows, credit cards and buy now, pay later have made it easy to have whatever we want almost instantly.


Like other behaviour modifications to form a new habit, you can integrate delayed gratification into your financial life when you resist using credit cards before payday for non-essential items and instead budget for that item without going into credit, says financial therapist Jane Monica-Jones.


Monitor impulsiveness and be mindful of planning or saving for what you might need, she says.


“Take stock before purchasing. We have more stuff than previous generations, and often buy on trend rather than purchasing when an item is worn, used or broken.”


Reducing cognitive load by minimising stress and resting more can also help, Monica-Jones says. “Less overwhelm and stress can give us better capacity to resist impulsiveness so we can set and stick to financial boundaries and not need to self-soothe through retail therapy.”


For many, the term delayed gratification will bring to mind the famed Stanford University experiment of the 1970s to see if young children could delay gratification by offering them an immediate marshmallow treat or the choice to wait 15 minutes and be rewarded with a second treat.


Some children ate the marshmallow straight away; others tried to resist but eventually gave in; while several managed to resist the urge. Over the next four decades, the researchers monitored the same children and found those who were able to delay gratification were more successful in various areas of their lives.


Wealth-building tool for life

Larcher is adamant that waiting is a wealth-building tool he’ll use for the rest of his life. He’s saving to buy a mansion on a beach somewhere, which he reckons will set him back around $15 million. “I’m waiting for the right moment, which looks like it could be next year,” Larcher says.


“I just realised early on that the dream of houses and cars don’t come unless you think differently and change your mindset.”


Larcher began delaying gratification way back at the start of his career when his earnings were far more modest.


Just as the internet was becoming more widely used in the late 1990s, he emailed anyone with an email address an offer to build them a website for $400. “I was renting a place in Manly at the time and would sit there in my board shorts and build websites all day,” he says.


Larcher had financial setbacks along the way, going into debt and struggling financially during the global financial crisis.


These days, he pays himself a reasonable salary but sets financial goals and prefers to wait before making a purchase, admitting he doesn’t like borrowing to get what he wants.


“Some people might go and overextend themselves by borrowing the money, but I just focused on building my business,” he says.


“When I exited my last business, I bought a house and the [Audi] R8 at the same time.”


Despite qualifying for a loan, delaying gratification proved to be a great motivator. “Delaying gratification means I can enjoy looking forward to a purchase, and forced me to put all my efforts into the business,” he says.


Heggen says goal visualisation can make saving a little easier.


“Saving requires effort, and uncertainty about future rewards makes delaying gratification a challenge. The future is fuzzy, so it can be easy to lose sight of what we are saving for. One of the ways to help overcome this challenge is through goal visualisation,” he says.


“By creating a clear image in our mind of precisely why we are saving, and the future enjoyment that it will bring us, it is easier – but not easy – to remain disciplined as we work towards our goals.”

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