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Marshmallow test for saving

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Posted: Monday, August 6, 2012 12:03 am | Updated: 10:36 am, Mon Jan 21, 2013.

FAIRBANKS — What do marshmallows have to do with saving money?

Saving money is key to financial security. Money in the bank keeps us from using credit cards for an emergency. Much has been made of the savings rate — how much of our disposable income do we save?

In 2005, Americans had a record low 1 percent savings rate. As we hit the recession, people started saving. The rate was about 5 percent for the past two years, but has begun to drop. Last spring, we at 2.5 percent.

The fact that we were spending is good for the economy, but bad for our personal finances. We aren’t alone — one in five British have no savings. The fact that many of us don’t save is a worldwide problem.

It turns out you can get a pretty good idea of how someone will save in the future by understanding their patience early in life.

To save money, you have to delay spending now and gamble on getting more in the future. It is a matter of increasing your future consumption at the expense of now. If you are borrowing money for a house or a car, you are consuming more now and less in the future as you pay the money back.

Our society favors consumption right now. The value of delaying gratification can be conquered as an adult, but according to some landmark psychological research, it is something you learn in your early childhood.

They call it the Stanford Marshmallow Experiment. It involved placing a 4- to 6-year-old in a room with nothing in it — except a marshmallow on a table. They were told they could eat the marshmallow whenever they wanted, but if they waited for 15 minutes, they would get a second marshmallow as a reward. They were left alone in the room to see what happened.

The experiment was designed to test a child’s self-control. Most children ate the marshmallow within 3 minutes (which is a long time for a 4-year-old). Only 30 percent managed to wait the entire 15 minutes. The two most common methods of self-control were to cover their eyes or to turn their back to the marshmallows.

Not much unexpected in this experiment, but they checked on these same children after they had been in school for several years. Those who ate the marshmallow had persistently lower grades on tests and were more often in trouble.

By adulthood, the results were startling. Those who ate the marshmallow quickly were less successful, more likely to smoke or become drug addicts, commit crimes and have financial problems.

Show me the child and I’ll show you the adult. The difficulty they had in controlling the impulse to eat the marshmallow is the same impulse that made it hard for them to save. There was always something out there that was tempting to spend their money on.

This experiment turns out to be a pretty good predictor of the child’s future. All is not lost for those of us who are marshmallow eaters, though. The same researcher found children could be taught the necessary self-control to wait for the 15 minutes. As adults, we can learn self-control over our finances. The first step is to not confuse the necessities with the “I wants.”

Start on your own self-control. Sometimes, being able to walk away from the sale is the hardest part. Practice and you’ll develop your own self-control. Then, if you have the opportunity, teach your children or grandchildren the necessary self-control for their own financial success.

Roxie Rodgers Dinstel is a professor of extension on the Tanana District Extension Faculty. Questions or column requests can be emailed to her at or by calling 474-2426. The Cooperative Extension Service is part of the University of Alaska Fairbanks, working in cooperation with the U.S. Department of Agriculture.

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