One More Marshmallow Please …

Once the financial cushion is established the hard graft of saving must commence … Fortunately, Slack Investor has always been a good saver and a lot has to do with the mystical trait of delayed gratification. A famous experiment was conducted at Stanford by Professor Walter Mischel. It is worth expanding on this research as Slack Investor finds this trait to be fundamental to the pursuit of financial independence.

The Stanford study was published in 1972 under the dry academic title of Cognitive and attention mechanisms in delay of gratification. And started with a preschool child sitting in a chair, and placing a marshmallow on the table in front of them. The researcher then told the child that he was going to leave the room and that, if the child did not eat the marshmallow while he was away, then they would be rewarded with a second marshmallow. However, if the child decided to eat the first one before the researcher came back, then they would not get a second marshmallow.

The researcher left the room for 15 minutes and the child would either gobble the treat … or wait patiently for what must have been a very long 15 minutes. In the original experiment, one third of the preschoolers managed to get the second marshmallow.

The really interesting part of the Marshmallow Experiment happened years later where follow up studies tracked each child’s progress in a number of areas.

The children who were willing to delay gratification and waited to receive the second marshmallow ended up having higher university entrance scores, lower levels of substance abuse, lower likelihood of obesity, better responses to stress, better social skills and generally better scores in a range of other life measures.

The children were followed for more than 40 years and the researchers concluded

… that the ability to delay gratification was critical for success in many of life’s challenges.

You might think that this ability might be part of your natural make up,  but Slack investor and a bunch of Behavioural Analysts think that this delayed gratification can be learned (i.e., Older children were better at the task)… And the best way get this delayed gratification going … is to start saving. Some tricks you can use are to get a portion of your pay paid automatically deducted into a separate account … or set aside a review day at the end of the month so that you can slide any money that you don’t need right away to a separate online savings account.

These accounts are easy to set up and are offered by many banks. Slack Investor has a few accounts with ME Bank, but there are many offerings in the Australian Market. In addition to your transaction account, start a “Cushion” online a/c and a separate “Savings” online account. With your regular contributions they will grow and the delayed gratification vibe can warm your heart! … and you will eventually have all the marshmallows that you could possibly eat!