Your ‘time preference’ determines the outcome of your life
This is how you lower it; a practical guide (I've just learnt about it)
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It’s interesting how a major life shift can rewire your brain
It turns out uprooting my entire existence from London to rural Portugal has sparked an intense fascination with finance and investments, topics I previously had zero interest in.
And I really do mean zero interest.
I remember at a wedding a couple of years ago, a friend asked us our current mortgage rate. Neither me nor my husband had a clue; the friend was aghast and did not stop referring to his disbelief for the rest of the night.
I suppose I always found finance — dull. People only ever seemed to talk in tiny percentages or use jargon that bounced off me.
Today, things are quite different
I know the inflation rate for both the UK and Portugal, the difference between an attributing and distributing ETF and I am four weeks into a brilliant 6-week training program for European investors (I’ll be sharing more on this!)
I think the catalyst was being forced to really look at our finances.
Moving to a new country includes navigating new tax laws, opening and closing bank accounts, staying on top of conversion rates, submitting two lots of tax returns, hiring an accountant in each country and more.
It’s been a steep learning curve. But it turns out, one I’m quite enjoying. Because learning a new skill is always empowering.
This shift began about two years ago
It was initially fuelled by reading the potentially life-changing (in the truest sense) Your Money or Your Life by Vicki Robin and Joe Dominguez — hard recommend.
I raved about it to my brother and read chapters aloud to my husband; this book was the match that ignited this journey of financial literacy.
Right now, I’m reading The Bitcoin Standard by Saifedean Ammous.
Which is less about crypto (it does eventually get to that) and more about how ‘sound money’ – characterised by its scarcity and resistance to inflation – is the foundation of human civilisation.
A bit heavy in places. But if you can stay with it, completely enlightening. The history of money (and the meddling of governments) is fascinating.
It’s whilst reading this book that I’ve come across a very interesting concept – something called time preference.
Time preference and delayed gratification
Time preference is the ratio at which we value the present versus the future. Do you want satisfaction right now, or are you willing to wait for a greater reward later?
The idea is very well illustrated by the famous Marshmallow Experiment. A child is alone in a room with a fat and fluffy marshmallow. Their options are eat it now, or wait 15 minutes and get two.
The children who managed to wait, the ones with the lower time preference, were essentially exhibiting delayed gratification1.
Follow-up studies conducted decades later confirmed a powerful link.
Psychologist Walter Mischel found a ‘significant correlation between having a low time preference as measured with the marshmallow test and good academic achievement, high SAT score, low body mass index, and lack of addiction to drugs,’ Ammous writes.
It turns out, one of the most valuable things we possess is the ability to choose our future selves over our current urges.
And the marshmallow experiment is a powerful metaphor for how we approach every choice we face, from what to eat for dinner to how to live.
The concept resonated with me immediately because I strongly believe that investing in our future selves – be it through learning, building, or even just waiting patiently for the right thing – is the path to a more abundant and fulfilling life.
So much so that I even have a whole chapter dedicated to this topic in my book Pathways (called ‘Do it for your future self’).
It’s the constant, subtle trade-off between the now and the later.
The differences between a high and a low time preference person
Financial stress is rarely caused by poverty alone. Research shows it is mostly driven by uncertainty and the fear of not being able to handle future needs or shocks.2
This stress applies universally. And whilst we need to acknowledge that a low time preference doesn’t instantly solve systemic issues faced by someone working three jobs to make ends meet, the pursuit of a lower time preference is a crucial internal strategy for creating stability, regardless of your starting point.
⬆️ A high time preference person = ruled by the present
They prioritise immediate consumption and gratification. Think impulse buying, maxed-out credit cards, skipping the gym because the sofa is right there. The future is too uncertain or too distant to hold significant value.
⬇️ A low time preference person = the architect of their own future
They are the savers, the planners, the ones who invest time and resources into something that won’t yield a payoff for months, years or even decades. These people are proactive, not just reactive, in how they live their lives.
Many cannot even imagine a ‘low time preference’ way of living
I recently had an interesting conversation that clearly exposed these two different mindsets.
Matt and I are embarking on the very low time preference project of building our own house which is a multi-year endeavour that requires a huge amount of forward planning – and waiting (hi, Portugal).
I was talking to two new Portuguese friends, relaying to them the 2.5 year wait we had just to get our planning permission approved.
They both looked at me with wide eyes, genuinely surprised. ‘Two and a half years? I could never imagine planning for something that far in the future,’ they both concluded. The furthest they usually thought was ‘a month, two max.’
My response to their response was also one of surprise.
And it made me realise that our decision to wait, to meticulously plan, save and endure the frustrating bureaucracy for years, is the ultimate expression of our low time preference.
Convenience over quality is a daily affront
This sentiment – the preference for convenience over quality – is the bane of our modern times. It’s bloody everywhere. And it’s an expensive way to live.
Ordering an UberEats instead of cooking – the food arrives cold and bashed about.
Buying a cheap, fast-fashion item instead of saving for a high-quality piece – the clothes pill after two washes.
Relying on a car’s rear-parking alert system rather than taking the time to build spatial judgement.
I was recently talking to someone about my sourdough process, explaining it takes about 48 hours between me deciding to make bread and the baked loaves.
He scoffed, ‘Two days? I could never wait that long for bread!’
This guy’s impatience is the defining characteristic of a high time preference person: the rejection of a superior outcome simply because the immediate, inferior option is available sooner.
Imagine two primitive fishermen
As Ammous points out in his book, the shift to long-term production is the engine of civilisational advance. He offers a very good analogy: imagine two primitive fishermen.
The first is a high time preference individual. He spends all day hunting fish with his bare hands to satisfy his immediate hunger. He gets enough to survive for the day but nothing more.
The second has a low time preference. He chooses to hunt for only part of the day – making do with less food – and spends the remaining time building a fishing rod (a capital good).
‘The only reason that an individual would choose to delay his gratification to engage in risky production over a longer period of time is that these longer processes will generate more output and superior goods.’
— Ammous, The Bitcoin Standard
This initial sacrifice means that from now on, the second fisherman is more productive. He catches superior fish in less time and he can save, build a boat and invest further, compounding his productivity over years.
As Ammous explains, the long production cycle is the hallmark of a low time preference society investing in the future.
And this principle manifests everywhere.
For example, consider my two-day slow-fermented sourdough. It’s highly digestible and nutritious, compared to a mass-produced, ultra-processed supermarket loaf which is made in just a few hours using cheap fillers.
Time preference is deeply affected by the stability of our environment
When you look at societies where the rule of law is weak or where financial uncertainty is rife, people are forced into a higher time preference. Why would you save, invest, or build something that might be taken from you, or simply lose all its value?
We’ve spent a lot of time in Buenos Aires and I’ve heard this directly from friends who live there. Inflation was so insane last year (it’s still horrific, but less so) that the items in shops didn’t even have price tags; the values changed too frequently to bother putting them on a label.
And this high inflation acted like a relentless countdown timer on their money.
My friends told me that as soon as they got paid and the essentials were covered – rent, food, wine (hi, Argentina) – they immediately blew the rest on just enjoying themselves.
They knew there was zero value in saving; whatever pesos they held onto would soon be worthless. This meant the hospitality and entertainment industries were thriving, theatres packed out at 95% capacity every day.
When money fails as a reliable store of value, people are psychologically compelled to consume it now, because the future holds only devaluation.
‘Money is just zeros on a screen, it has no meaning — next week some of the zeros will be gone,’ is what my Argentinian friend would say.
The two faces of time preference
The impacts of this trait ripple through all aspects of a life:
High Time Preference (HTP)
Characterised by immediate satisfaction, impulse and debt. The future is heavily discounted, leading to a neglect of long-term health, financial security and skill development.
It often manifests as chronic procrastination, poor diet and difficulty maintaining lasting relationships because the effort of persistence seems too high compared to the immediate and shallow gratification.
Low Time Preference (LTP)
Characterised by planning, patience and investment. The future is weighted almost equally with the present, leading to savings and health consciousness.
These people tend to build habits and acquire skills that compound (like learning an instrument or a new language) and focus on creating value that sustains over time.
Before we dive into the practical steps, I’d like to be clear:
having a low time preference is not about becoming a frugal ascetic who never enjoys the sun on their face.
(‘frugal hedonism’ however, I fully support)
It’s not about living only for the future. When you manage your future responsibly, the present becomes lower stress which allows for high quality consumption. An evening out or a weekend trip is better enjoyed when it’s saved and paid for, guilt free.3
And in fact, a low time preference person enjoys the present more deeply because it is free from the anxiety of tomorrow’s undone work.
It’s about being intentional with your present choices so they enhance your future joy, rather than stealing from it.
A practical guide to cultivating a lower time preference
So, how do we practically shift from the mindset of immediate gratification from one marshmallow now, to the rewarding investment of two later?
Like all good habits, we need to actively build it and it starts with cognitive tools and environmental design.
As psychologists and behavioural experts have shown, true self-control is less about sheer willpower and more about strategic pre-commitment and smart framing.4
Here are 4 practical ways to cultivate a lower time preference based on psychological principles I’ve spent a load of time researching.