Don’t Eat the Marshmallow!

We all procrastinate.  The Human species is a procrastinator.  Don’t beat yourself up over it, but don’t deny the problem either.  We all would rather put off unpleasant tasks today that we can do tomorrow.  Given a choice between checking your email/Facebook page or finishing off that latest Criminal Investigation Supplement report and most Troopers will choose the former.  We will eventually get to the supplement but it can usually wait.

As a financial planner I meet people in all stages of their lives; some are beginning their work-life; some are finishing; some are already retired; and others are starting their second careers.  Consequently, I get to see firsthand the effects of financial procrastination and it is not a pretty sight.  Often, by the time we meet, some folks are beyond the point where they can correct their past errors.  I think the most serious financial mistake we see is a person’s failure to save enough money for the future and most of the time it is due to their inability to delay instant gratification—which in a way, is simply saying they procrastinated in saving.

As I was pondering what to write about in this edition I thought about what is the biggest problem in today’s financial world—and on the face of it I thought it was too much debt.  Then, thinking through that symptom I changed it to not saving enough money in the first place—thus, causing the debt.  But that’s a symptom too; so taking it a step further I thought: the true problem is a lack of self-control to delay gratification.  Humans are not very good at waiting.  We simply refuse to wait for the time it takes to accumulate enough money to pay for what we want so we take on massive amounts of debt.

This reminded me of a 1960’s experiment I think I heard of in a Psychology 101 course somewhere involving marshmallows of all things.  For kicks run Dr. Walter Mischel and marshmallows through a search engine and you can read all about it—you can even watch a video of the test.  Perhaps the best summary article I found ran in The New Yorker in 2009 titled, “Don’t!<!–[if !supportFootnotes]–>[i]<!–[endif]–>  Take a minute (minimize your Facebook page) and read the article—it just might change you or your child’s life.

To summarize briefly for those who will not check out the link, the article talks about Dr. Mischel’s marshmallow experiments where he took hundreds of 4 and 5 year-old children and offered them a marshmallow, but with a catch.  They could eat one now or if they were to wait 15 minutes they would get two marshmallows.  He recorded the response times of hundreds of children.  The actual videos are hilarious.  Anyway, an overwhelming majority of kids were, of course, unable to wait the 15 minutes.  Some immediately ate it and some were able to wait a few minutes but as a group most ultimately popped the treat into their mouth.  Only a small percentage was able to defer gratification and double their prize.  All the while the Doctor video-taped their actions and recorded their response times.

Dr. Mischel determined that those who were successful at waiting were able to distract their minds from the prize.  Those who could not distract their thinking usually gave in to the temptation.  Most surprising to me from the study was the long-term results that tightly correlated to the initial test results.  Conducted in the 1960’s, the test subjects are now adults.  Children who at the age of four were able to learn and practice delayed gratification techniques and did not eat the treat did not necessarily possess higher intelligence levels, but over the years experienced much greater success in their future lives than those who did not master the techniques.

Children who could wait the full 15 minutes and double their prize were found later to score, on average, 210 points higher on SAT scores than the child who could only wait 15 seconds.  In fact, the successful children (the high delayers) even had lower body-mass index scores (lower body fat) than the low delayers.

To reiterate, the difference was not how smart the child was but how well the child managed self-control and that ability to manage their self-control created a statistically significant difference in their overall success of the future adult.  And here’s best part, those self-control techniques can be taught and they can be learned.

This is one of those rare examples where the intellectuals discover something that we all kind of knew anyway.  We have all observed children who could not delay gratification for even a second—crying at the slightest delay in something desired.  Haven’t we all thought of the monster adult that crying little brat would turn out to be.

By now maybe you’re asking how does this relate to financial wellbeing?  Well, our failure to save for the future is analogous to grabbing the marshmallow at first chance.  To save money for the future requires the ability to forgo immediate pleasure for future gain and many studies have shown that we are not good at that.  After all, 10,000 years ago our ancestors didn’t need to worry about the future, they never thought they would be around to see the grandchildren anyway—more important to them was where their next meal was coming from.  So this behavior comes to us instinctively.

Today however, we don’t need to worry about woolly mammoths or saber tooth tigers having us for their lunch.  No, today just the opposite, longevity risk is the threat.  Statistically, we will live longer than any generation in human history and combine that with our super-high levels of debt (individually and as a nation) and we have a problem.  We have been very, very bad at delaying gratification.  But there is hope since the first step to fix a problem is to recognize that we have a problem.

The marshmallow kids that were able to wait had the advantage over the others because they had a mental tactic that allowed them to not think about the temptation in front of them.  Some looked away or sang a song, thought of other things, some sort of mental calisthenics, etc.  In saving for the future or delaying our gratification we can use similar tactics or devices.

Paying down debt and saving money for the future is easier to do today than ever—all you have to do is create a commitment mechanism.  A commitment mechanism is a tactic or strategy that forces you to do the right thing without consciously making that decision each and every paycheck.  It is some way to redirect our thinking from the emotional desire to spend the money now toward the intellectual desire to save the money for later when we really need it.

The commitment mechanism might be as simple as automatic deposit from your paycheck into your 457 or IRA account.  Or simply increasing your automatic payment on your car loan to the nearest hundred and have the extra go toward the principal.  For example, if your payment is $462 per month, ask the lender to start taking $500 from your checking account and apply the extra to the principal.  Then since you no longer have the money in your checking account to begin with you won’t be tempted to spend it.

There is a war going on inside our heads.  We instinctively want gratification now but intellectually we know there are needs in the future.  The needs and the wants are competing for the limited resources (money) and if you must decide five or ten times a month as to who gets those resources then more often than not you’ll error on the side of wants instead of needs.  But by setting up the commitment mechanism once then you only need to make the correct decision that one time and then you can move on with the quiet realization that you are on your way to achieving long-term positive results instead of short-term sugar-highs of buying whatever makes you happy today.  And the time to do this is today—don’t wait till you have the time or after you check that last email or post some silly video on Facebook.


Mart Knight, MBA, CFP® is a retired Captain from the Maryland State Police and is currently a Financial Advisor with Chesapeake Investment Advisors Inc.  Securities and Advisory services are offered through Geneos Wealth Management, Inc. Member FINRA/SIPC.  He can be reached at 800-994-0221 or emailed at

Published in the Summer 2012 edition of The Trooper.