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 were able to 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 in Singapore? 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, the number of affluent consumers in Singapore, India, China, Kenya and Hong Kong who feel confident of reaching their savings goals fell by 10% in 2016 compared to the year before.
But perhaps that is only natural: many of us, after all, have goals (such as buying a property, or retiring at age of 50) that cannot be achieved overnight. Growing enough wealth to achieve these goals takes time and requires years of careful forward planning in order 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:
- Buy time, build savings; Instead of buying something immediately, wait for two days. If you still want that designer bag or just released gadget, then you can go back and buy it — but you may find that after a few days, your immediate hunger for it has passed.
- When you get a raise, save it; Every time you get a salary upgrade, allocate a portion of that raise to a unit trust or fixed deposit.
- Learn from your friends; If you know someone who has successfully saved up and met their financial goals, ask them for tips. It can’t replace the advice of a professional financial adviser, but it can give you inspiration and point you in the right direction.
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.
Want to learn how to maximise your savings? Talk to our financial experts today. Get in touch with us.
Alternatively, log onto Mobile Banking or Online Banking to chat with us and we will help to connect you to a financial advisor, who will help you to identify your investment profile and discover the types of investments available.