DON’T EAT THE MARSHMALLOWS!
Yes, that’s our nugget of financial advice for this week.
But what do we mean by that? What do marshmallows have to do with money?
It turns out…a lot.
You may or may not be familiar with the famous Stanford Marshmallow Experiment conducted decades ago where little kids were left in a room with marshmallows. The adult moderator told the kids that if they didn’t eat the marshmallow while they were alone in the room, they would receive an extra marshmallow as a reward. Ten years later, the experiment tracked the kids who ate the marshmallows and the kids who did not eat the marshmallows. The result? The kids who delayed eating the marshmallow in favor of getting the reward were “more successful” than the kids who gobbled up the candy right away. (Here’s a more updated version of the experiment shown here on YouTube.)
As psychologist Joachim de Posada said in his famous TED Talk here, the U.S. has to learn to stop eating the marshmallows so fast because we are eating more marshmallows than we are making. On an individual level, that means that we are not delaying our gratification while getting ourselves into debt hand-over-fist as we shove those marshmallows into our mouths.
If we choose to stay patient and to delay instant gratification when it comes to buying something, we may come to realize we don’t need or want it anyhow, as discussed in last week’s Wealthy Wednesday nugget. Walter Mischel, the Stanford professor of psychology who was in charge of the experiment believes that every kindergartner should be required to learn how NOT to eat the marshmallow. I could not agree more and boy, do I wish I had taught this lesson to my kids when they were young and more impressionable. It’s never too late.