Cash Out

Okay, so you’ve found a magic box. It has rules written on it, so you know how it works. Here’s what it says:

If you put exactly one dollar in this box and leave it, then every day the amount of money in the box will increase by 10%. Once this process is started, you may only stop it by opening the box and taking out all the money, and then the box will never work again.”

When do you cash out?

Delayed gratification is good. Delayed gratification is both good for you as a disciplined person in control of your life, and it’s good in the sense that gratification can almost always be increased by delaying it. Working hard today instead of indulging very frequently lets you indulge more tomorrow.

It’s like that famous marshmallow test where they gave kids a single marshmallow, but then told them if they could delay eating it for a certain amount of time they’d get a second one. The kids that delayed and got two marshmallows ended up having better life outcomes along a number of metrics later in their life.

Here’s the thing, though: you’re not immortal. You have a finite number of days upon this Earth, and you don’t even get the luxury of knowing how many. Which means at some point it’s possible to delay your gratification so effectively that you never actually get it at all.

Life isn’t really as “all or nothing” as that magic box. In real life, eventually you can start taking out 8% as your investments grow by 10% and still be gaining and having a nest egg. But the magic box hypothetical is a way of reminding you that there’s a cost to delaying your gratification – every day your investment grows is one day fewer that you can do anything with it.

Now of course, life isn’t Brewster’s Millions. You don’t have to spend everything you’ve earned before you die; you’re allowed to leave some behind to causes you believe in or your children or whatever else. A selfless life where you delay all or most of your own gratification in order to better others is definitely a fine thing. Besides, there’s only a certain level of “gratification” you can absorb before any additional won’t really do anything for you. Bill Gates gives 99% of his money away and still has more than he could ever spend; his lifestyle isn’t negatively impacted at all. Past a certain point that’s true for you, too.

But here’s the real point, the heart of the matter. In most cases, you don’t actually get more gratification just by delaying it. If those kids had waited 15 minutes before eating a marshmallow of their own, with no one around to give them a second one, it wouldn’t have increased their gratification at all. There needs to still be some input, something happening to push that gratification out. If you get $100 and instead of spending it on luxuries you decide to invest it in a used lawnmower and you start mowing lawns and then end up with $300, that’s delayed gratification. If you just take the $100 and put it in a box under your bed for a month before retrieving it to spend on the same luxuries you would have in the first place, that’s not doing anything productive.

And that means that “cashing out” isn’t about finally claiming your reward. It’s about eventually deciding for yourself that you’ve mowed enough lawns. Even if you then take all the money you’ve earned and give it to charity or your children and don’t spend a dime on yourself, you still gain something in that moment – your time, your freedom, your effort returned to you.

Some people never cash out. Not because they don’t intend to or didn’t want to, but because the process of delaying gratification got away from them and became more important than understanding what their real goal was. It can be really hard once you’re on a roll; if things are going well and you’re doing better every year it can be especially difficult to just say “okay, that’s enough.”

But for everything in life, there’s an “enough.” A time when you’ve had your run and it’s time to bask. A time to cash out.

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