I came across a very interesting post via the excellent Gather Little By Little blog the other day. It mentions an old study which is very simple yet at the same time a highly crucial aspect to success in many areas, including financially. I never would have guessed an experiment with 4-year olds and marshmallows would be so relevant to my life…

The 1960s Stanford psychology study was essentially a test of self-discipline. Each 4-year old was given a choice; they could have 1 marshmallow immediately or they could wait to receive 2 marshmallows at a later time. The children that deferred on the option of having their marshmallow right away showed abilities to control impulses and delay their gratifications for larger rewards later on.

The researchers tracked the results of the kids for many years afterwards. Their were drastic differences between the children who took the instant satisfaction and those who waited. Basically, the ones who took the 1 marshmallow struggled much more than the 2 marshmallow kids. They were less motivated, disciplined, persistent in their efforts, and even scored lower on their SATs; a lot lower (210 points on average). As Gather Little By Little Guy points out though, it makes sense. The 2 marshmallow group members were more apt to be focused on the long term implications of their current decisions.

This is immensely important when it comes to our personal finances. Being disciplined and able to control our urges goes a long way. An example: A Sprite sounds sooo good right now, but I have access to a healthy and free water fountain. If we can say no to ourselves in situations such as that, our finances will be heavily rewarded. Granted, that example was fairly small. However, those situations come up a lot and they add up fast. That $1.50 can do a lot for you over time if you utilize it wisely, but splurging for the pop is a short one-and-done benefit.

The more I think about this, the more real-life applications I am finding for it. The alarm clock goes off for a 6:00 workout, but the bed is so nice and warm. What do you do? Here’s a common one: I know I should be working on my web sites or homework, but playing NCAA football sounds way more enticing. Which will pay off more in the long-run? It’s pretty obvious. There’s a lot to learn from this simple experiment. I’m going to keep this in mind, and constantly remind myself to be a 2 marshmallow kid.

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