Financial Tips from 5-Year Olds


Walter Mischel, a psychologist and professor at Stanford University, led an experiment in 1970 that offered a choice to small children: eat one marshmallow instantly or wait 15 minutes and receive another.

Follow-up studies of the same children after 15 years showed that 100% of those who could resist temptation were wholly more successful; they had stronger relationships, better grades and SAT scores, healthier habits and higher incomes.

So what, you ask?

This experiment has been widely dissected over the past few decades to extract lessons that can be taught, learned and applied to people of all ages facing situations that challenge self-discipline.

And because all monetary decisions require some temptation control, the marshmallow experiment will now be analyzed with you in mind: which habits can youcultivate to productively steer your financial endeavors?

Don’t Go at It Alone

The first suggested method is all about involving others.

Choose a co-pilot for your cash; think about somebody you know and trust with incredible will power. Appoint them as your accomplice to keep your money and/or hold you accountable.

You can send them money over time and agree only to take it back after achieving your goal of saving a pre-established amount.

If you don’t want to involve your money directly, ask somebody to check in on you instead.

Have a weekly phone call with a friend or routine lunch date with a parent. Request that they make a point of including finances in the conversation.

By forcing yourself to briefly report your recent earning, saving and spending activity, you’ll stay mindfully aware of your choices and consequently be kept on track.

Some variations of the marshmallow experiment were interested in swaying the results. One version of the experiment showed the subjects a video of children who could resist temptation, which caused the subjects to resist the temptation of eating the marshmallow.

This proves that when in doubt, some good ol’ peer pressure might do the trick. Employ the same method for yourself by seeking out people you know to be successful and disciplined.

Find out what they do and how they plan; the ideas don’t need to be your own in order to bring you success.

Get Distracted

Try out something called “strategic allocation of attention.” In other words, opt for the “out of sight, out of mind” coping mechanism when it comes to your money.

Specialists recommend utilizing a 401(k) or similar saving techniques to hold a cut of every paycheck.

Just like the kids who sang, danced, drew and paced around the marshmallow room to occupy their thoughts, forcing your money to be dealt with in a way that doesn’t require constant thought will make it easier to save.


Instead of spending however you feel like it as individual opportunities present themselves, create firm guidelines for the upcoming future.

Give yourself a specified amount to spend and save each week and make concrete goals rather than ballpark ranges or idealistic allocations.

It’s also handy to establish priorities; paying your bills on time is more time-sensitive than reducing debt, which is more relevant at the moment than funding retirement.

Act Now, Enjoy Later

The marshmallow experiment demonstrates how the core of success is establishing a personal promise created with the future in mind and formulated to achieve long-term goals.

Think stock market investments: temporary fluctuations shouldn’t distract you from overall rises.

The same can be said for retirement plans; roughly half of Americans tap into Social Security benefits at 62 when they could almost double their monthly income and increase expected lifetime payout by waiting 8 more years.

This is easier said than done, but the principle is one to consider.

Helping yourself takes knowing yourself. If you know you’re a marshmallow eater, find a technique that will have you waiting 15 minutes for the second one instead of succumbing to destructive habits and gobbling up the first.

Financial Tips from 5-Year Olds” was written by Lisa Schlosberg and provided by QuickenLoans. 



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