What can the Marshmallow Test teach you about saving?
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In the 1960s and ‘70s, researchers at Stanford University gave pre-schoolers a tricky task. The toddlers had to sit in a room with a marshmallow for at least 15 agonising minutes — and resist eating it. If they could manage that, they would be rewarded with not one but two marshmallows.
Predictably, some children gobbled up the snack immediately. Others created crafty ways to ignore the temptation – singing songs, covering their eyes and shuffling away to put as much distance between them and the treat as possible.
Despite seeming frivolous, this experiment reveals much about human nature and our attitudes towards reward and delaying reward.
Following this initial test, researchers charted the children’s progress over the years; and found something telling about the children who could delay the reward. Those who resisted eating the first marshmallow immediately achieved higher exam scores in high school and were emotionally more resilient. Like the Marshmallow test, many studies have come to a similar conclusion: that people who are capable of self-control enjoy more success in life.
So how does this relate to saving? Building up healthy savings is not about denying oneself, but simply in realising, like the children and the marshmallow, that by waiting a little while longer, our reward will be increased.
We know that people today can find saving an increasingly difficult challenge. As our recent survey has shown , that 25% of affluent consumers in UAE feel that they are far and 34% feel that they are very far from achieving their 1st financial goals.
But perhaps that is only natural: many of us, after all, have goals (such as buying a property, or retiring at 50) that cannot be achieved overnight. Growing enough wealth to achieve these goals takes time and requires years of careful forward planning to maximise funds and make your money work for you.
The simple act of keeping your goals in view can help you increase your level of success and long-term happiness. Understanding that long term planning increases your satisfaction can help rewire your savings mindset. That in turn will lead to clearer thinking when it is time for you to consider investing and financial planning.
To that end, start by figuring out why you want to save. We all want to put aside a large sum. But the key is to ask yourself, what are you saving it for? Do you dream about saving up for a three-week vacation in South America so you can scale Machu Picchu? Are you keen on sending your children to university in the UK or the US? Or do you want to buy yourself a limited edition watch for your next birthday? Keep your eye on that prize and you’ll stay motivated.
Want more specific, actionable goals? These money-saving tips can lead to a healthier savings account:
In the end, starting your savings journey isn’t about diving immediately into the complex question of how to save — it’s just deciding to do it. When you pursue your goals whole-heartedly, half the battle is won. And that realisation may be as sweet as a marshmallow.
This article is brought to you by Standard Chartered UAE. This information is neither an offer to sell, purchase or subscribe for any investment nor a solicitation of such an offer. This information is general and does not take into account a person’s individual circumstances, objectives or needs. Investments carry risk and values may go up as well as down. Standard Chartered is not liable for any informational errors, incompleteness, delays, or for any actions taken in reliance on information contained herein.
