A lot of people are stuck in life because of instant gratification. They choose actions and behaviour that creates short-term stimulation but has negative long-term effects on their finances, health and life.
One of the main causes of instant gratification is the inability to understand the return on investment of one’s actions and behaviours.
Everything in life has an ROI or return on investment.
If you eat sugar, you’ll get a short term boost in serotonin and other neurotransmitters, but the long-term effects of regular sugar consumption might include overweight, diabetes, heart disease, lack of focus, being trapped in addictive patterns and Alzheimer’s.
So what’s the ROI of eating sugar every day?
It’s negative.
But what’s the return on investment of eating sugar every few months or a couple times a year? The ROI might be very high because you can enjoy a great desert and indulge in amazing tastes, but without the detrimental health effects that come from regular consumption.
As you can see ROI is relative. You have to compare the benefits and downsides of all your actions based on your unique situation.
Sometimes doing something a few times a year has a positive return on investment, but doing it daily has a negative return on investment. It all depends on the short-term and long-term effects of what you do.
When it comes to finances, most people spend their money on personal consumption like clothes, cars, watches and gadgets.
What’s the return on investment of personal consumption?
Anything that goes way beyond what you need to live a normal and comfortable life (like housing, clothing, food, recreation) probably has a negative ROI because it doesn’t make you any money and it doesn’t change how you feel long-term. It’s a short-term high.
For example:
I’m about to invest around $4,000 into new video equipment. For me that’s a business investment. In fact, the camera that I use to shoot my daily videos was bought in 2012 and cost me about $1,000.
However, that camera was used in various businesses that I built and has produced hundreds of thousands of dollars in revenue for me.
Guess what’s going to happen with those $4,000?
It’s going to make me millions. (Watch me.)
But if you don’t have a business and are just in consumer mode and you spend $4,000 on camera gear just for the fun of it, then that’s stupid. I know people who buy DJI Phantom Drones for thousands of dollars and can’t even pay their rent at the end of the month.
What’s the ROI of that?
Zero.
It’s just stupid because you are using your money for consumption instead of investing in stuff that has a positive return on investment.
So if you’re completely broke and want to fix your finances you have to cut down your personal spending to a bare minimum, save up as much money as you can at the end of the month and then start investing into stuff that generates a positive return on investment.
At the very beginning, that’s probably YOU.
Start investing in self-education, mentors and masterminds. Or buy a MacBook so you can get work done better and more effectively.
Or start buying healthier food so you have more focus.
No matter what you do – Always remember that everything in life has a return on investment. And your ability to control your life and make decisions largely depends on how well you understand this ROI.
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