One of the keys to financial success is controlling desires for immediate gratification by spending right away whatever financial assets or commodities we get hold of, as opposed to saving for the future.

During the 1960s, a researcher named Walter Mischel at Stanford University illustrated this premise by testing a group of four-year-olds who were given a marshmallow and promised another, thus giving them two to eat, ONLY if they could wait for him to come back before eating the first one. Some children could wait but most of them just could not.

See this hilarious video below that re-enacts the experiment:

The researchers then followed the progress of each kid into adolescence and noted that those who as children could wait for the second marshmallow, were later in life better adjusted and more dependable (determined via surveys of their parents and teachers). Among other results researches found that they scored an average of 210 points higher on the Scholastic Aptitude Test (a standardized test for college admissions in the United States).

Gharad Bryan, Dean Karlan and Scott Nelson of Yale University, reported in the paper Commitment Contracts that children who are better at deferring gratification are more successful later in life, being more able to concentrate, face obstacles, get higher college scores, less likely to be drugs users and perceived to be more competent by parents and peers.

“Children were able to wait longer when their attention was shifted, when they could not see the reward, when they were in a cold state, rather than a hot state and when they were told to be task oriented rather than reward oriented.”

One way of correcting and controlling the unwise “I want it now” behavior, that harms not only children but adults as well, is, according to these authors, by putting in place commitments.

Does it sound familiar? Just think of the differences in savings for retirement …

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Tags: Success