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When can I stop delaying gratification?

First Published: November 2019 | Available in: Property Articles Your Property Network

By specialist property accountant Stephen Fay ACA

Many landlords and business owners are familiar with the concept of delaying gratification, to fund the start-up and growth of a property business that in later life can produce a meaningful income. However, it’s common for landlords and business owners to understandably focus solely on this without thinking too much about the final stage – when the business has been built, and the day arrives when gratification no longer needs to be delayed (yes, that day does arrive!)

This article looks at what delayed gratification means, why it’s usually an essential part of building any business, and also the longer term aspect.

Remind me, what exactly is ‘delayed gratification’, and why is it an important concept for property investors?

‘Delayed gratification’ refers to the concept of saving money to invest, by spending less on discretionary items such as cars, your own home, eating out, clothes, entertainment etc. The money saved is then accumulated and used to build a business (for the purposes of this article, let’s say a property rental business), which produces an income, and then allows the owner to have more future financial choice in life – whether that’s to exit a day job, retire early, or leave a legacy i.e. less now, for more later.

The challenge of course is that it’s human nature to want to spend all money available on the good things in life! And, the so-called ‘consumerist culture’ is ever-present, with increasingly sophisticated marketing tempting you to spend, and the ‘keeping up with the Jones’s’ aspect of life (not helped by social media these days). In a consumerist world, it can be difficult to buck the trend and actively ‘delay gratification’ to build up a fund to build a business.

But WHY must I delay gratification?

The bottom line for most people when starting a new business is that they haven’t got enough cash to go out and buy all the income-producing assets that they would like to. So, to build up the pot of cash, sacrifices are needed i.e. actively choosing NOT to spend precious, and limited, funds on nice cars, too much eating out, clothes, entertainment etc – instead, choosing to reserve those funds for investment to build up an asset base and the resulting extra income stream.

And, as well as being frugal to generate the investment capital to start a property rental business, discipline also has to be exercised as the portfolio grows not to use the income that the portfolio produces to funds excessive spending – instead, continue to save, invest and grow, and over time convert an ‘acorn’ of initial investment capital into an ‘oak tree’ that throws off a meaningful income. The only issue is this usually takes several years to achieve!

Keeping up with the Jones’s

It’s been well-known for a long time that humans like to show off – the idea that material possessions impresses others, and elevates social status, transcends all cultures, continents and ages.

As well as this, many studies have identified that it is relative wealth inequality which impacts happiness – in other words, how we are doing (or, seem to be doing) financially compared to those we consider our peers, is what drives the desire to show off. Few people resent the Queen, even though she is incredibly wealthy, as she isn’t a peer – but if the neighbour comes home in a Ferrari tonight, the curtains will be twitching along the street!

Delaying gratification, therefore, goes against human instinct – both to want to give yourself and your loved ones the best of everything, and the desire to show people how well you are doing in life … but it’s hard to be the ‘odd one out’ – however, the long term reward for those who are capable of exercising the required discipline is a life of financial freedom …

OK, I’ll delay gratification, but what’s it all for?

The stated goal for a large majority of property investors is to achieve financial freedom – usually meaning, not having to work in an unfulfilling job, and having the money to have a good standard of living.

Property investment has been referred to as ‘the poor man’s private equity’, because one of it’s many advantageous features is that lenders are willing to lend the large majority (75%+) of the purchase price, which allows for ‘financial leverage’ i.e. the ability to invest only a small portion of the total purchase price but receive all of the income from the asset.

So, one of the main benefits of property investing over other types of investing is the ability to ‘stretch’ investment capital further, and so reach the ‘financial freedom’ milestone more quickly.

The Promised Land

Typically, successful property investors focus on spending less, investing capital, re-financing equity, refurbs, new purchases, re-investing surplus income … etc … until one day they actually reach the point where their day-to-day income derived from their investing is sufficient for them to live on! They have achieve their goal …

However, many such successful investors have been so used to delaying gratification that when the time comes for the delay to end, they have forgotten how to spend money on anything that doesn’t produce an investment return!

The next phase of such an investor’s financial life is therefore to ‘plan’ how their new financial position will change their life – by focussing on what is important to them, and how can money help:

1. Financial freedom

1st and foremost, at the most basic level, having sufficient unearned income to cover the basics of life without needing to work in a traditional ‘trade your time for money’ job (or, self-employment). This allows a person to choose how to spend their time, and removes the need to commute, tolerate an awful job, tolerate an awful boss, be a slave to a single paycheck & generally have to be at the ‘beck and call’ of an employer – in my experience this is the Number 1 target for the majority of property investors

2. How to spend your time – ‘ the dizziness of freedom’

Most successful property investors who achieve ‘financial freedom’ then face an issue they may never have had to deal with before – what to do with their spare time? Obviously this sounds like a nice problem to have – but it needs some thinking about.

More time with family & friends, more time for hobbies, fitness, music, culture, travel etc … but exactly HOW to do this can take some getting used to e.g. one of the challenges of having more time is that other family and friends might not have your free time – so there may be a need to plan activities and events with that in mind.

Psychologists call this ‘the dizziness of freedom’ i.e. the potential for anxiety to be produced where a person has so much freedom they can’t cope! Working out what you enjoy doing, what challenges you, what gives you a sense of purpose and fulfilment isn’t always easy when you’ve been focussed on work & investing for as long as you can remember!

3. Which tasks to do yourself, or pay for

It’s sometimes difficult to resist the urge to spend this new spare time by doing routine or menial tasks that could easily be done by tradesmen, cleaners, lettings agents, accountants etc – think, is this a good use of my new spare time?

A good rule of thumb is to outsource tasks that you either dislike doing, or that can be completed to a higher standard by others (cost-effectively, naturally!)

4. “Good spending”!

Just like there is “good debt” (which can produce an income), and “bad debt” (which produces no income), so there is “good spending” and “bad “spending”.

“Good spending” tends to be on things that are clearly beneficial, but which during the years of ‘delayed gratification’ may have had to take a back seat, such as:

  • Good health insurance, and similar (life cover, critical illness etc) – choose a quality provider with a good range (and, tag on extra like dental, optical etc)
  • Education – perhaps on private schools for children, or extra tuition, or on courses or programmes for yourself, to learn new skills, sports, or a musical instrument
  • Higher quality food, vitamins, medicines, illness- prevention measures such as on a new fitness regime, new equipment (gym kit, trainers, bike etc)
  • Consider new medical treatments such as laser eye surgery, or replacing old spectacles or hearing aids (or similar), switching to a better contact lens choice etc
  • Visiting new restaurants for breakfast, lunch and dinner – doesn’t need to be Michelin-starred, but how many of your local eateries have you tried? When was the last time you tried a new cuisine, or foods that you haven’t had for a long time?
  • Update your important ‘end of life’ documents: will, Power of Attorney etc – protect your legacy from HMRC’s clutches (the Government has already got a plan for your wealth if you don’t!)
  • Travel – broadens the mind, and is often very good value for money, especially for people not constrained by certain times etc – European city break? Fortnight on a beach during the UK winter? Road trip across America? Very few people regret the time and money they spend on enjoyable travel
  • “Modest” upgrades in your possessions (new computer?), wardrobe (new Levi’s rather than Asda-George?!), even things like toiletries & cosmetics (Gillette shaving foam vs own-brand cheapo!)
  • Improvements to your own home – perish the thought! Many landlords have neglected their own home as they have built their business. Maybe now is the time to build that extension, or convert the loft (keeping an eye on the added value, naturally!)

Obviously some of the above are mentioned a little ‘tongue in cheek’, but there is a serious point – often spending relatively little on things that will make a noticeable day-to-day difference to our lives, but that were once regarded as a luxury, can give the most spending ‘bang for your buck’

5. “Bad spending”!

Many readers will expect a comment along the lines of “expensive cars (or, new phones, gadgets, watches ect) are bad”.

A lot of people enjoy cars, technology, clothes, jewellery, etc, and who is to say they are wrong? We all have our motivations in life and if a Ferrari is your thing, and you’ve earned the right to buy (or lease!) it, then if that’s your dream, as the saying goes, “if not now, then when?”

A word of caution: shiny things tend to cost a lot (sometimes, shockingly so), and become less shiny over time, generally. Really make sure that you are buying such things for the right reasons i.e. to fulfil a childhood fantasy or ambition, to appreciate the engineering or what the tech can do etc … and not just getting sucked into an ”Affluenza” (great book, worth a read!) trap of wanting to ‘Keep up with the Jones’s’ (or, prove to them that you are now wealthy!)


It’s human nature to want to live a nice life … but for many property investors, financial freedom is the target – no boss, no commute, no uninspiring work. However property can be a very lucrative business for those with business acumen, access to capital and mortgages, a strong work ethic and a willingness to delay gratification.

But, sooner or later if all goes to plan, the delayed gratification can be replaced with a more relaxed spending approach – the trick is to work out what YOU want, and spend in a way that gives YOU the most satisfaction and enjoyment from your hard-earned efforts.

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