Tuesday, April 28, 2015

How Delayed Gratification Can Determine Success or Failure?

The keys to success have finally been revealed by just one experiment done by psychologist Walter Mischel in the late 1960s to early 1970s. Walter Mischel was a professor at Stanford University. In the experiment, a child was offered a choice between one small reward provided immediately or two small rewards if they waited for a short period, approximately 15 minutes, during which the tester left the room and then returned. (The reward was sometimes a marshmallow, but often a cookie or a pretzel)

If you're still confused on how the experiment was done, watch this video and notice the reactions of the kids in the experiment:

See how the kids really struggle very hard to resist the temptation of eating that one marshmallow just to get another one if they wait patiently.

Some parts of the video were really funny looking at the kids faces of how they wait patiently.

The Results of the Experiment

In follow-up studies, the researchers found that children who were able to wait longer for the preferred rewards tended to have better life outcomes, as measured by SAT scores, educational attainment, body mass index (BMI) and other life measures. Those kids who were able to wait patiently were more likely to succeed in life. There is certainly a positive correlation between delayed gratification and success.

Delayed Gratification for Financial Success?

Now comes the point which I want to bring across. Having delayed gratification will result in financial success as well. Think about it, if we really can delay gratification and resist the temptation to spend money, we would have more savings. We would not unnecessary get into debt problems as well.

Also, having delayed gratification may mean we have the patience for investing and not the greed of wanting to get rich quick. We're less likely to burn our fingers in the stock market and less likely to fall into investment scams. It seems like there are so many benefits of delayed gratification.

Does it mean that people who are not able to delay gratification are set for failure? 

Looking at all the benefits of delayed gratification, we may wonder what if we are not able to delay it? Are we set for failure? While there are positive correlations between better life outcomes and delayed gratification, this does not mean those who cannot wait will be forever labelled as a failure. Delayed gratification can be taught and the process can be changed completely. How do we do it?

In a further experiment, the kids who were not able to wait for the second marshmallow were told to imagine that the marshmallow on the plate has a frame surrounding it. They were told that this is just a picture frame and it is not real. After this imagination process, researchers found that those kids were then able to wait patiently for the second marshmallow which they were not able to do so at first.

But you may ask, how do we apply it into our financial life? From the above example of imagining that the marshmallow is fake, we could similarly imagine that our money is fake or is not there. We must also remember that if we do not spend our money now, we will get more money later when we invest. One practical way I can think of is to transfer our money to a separate bank account and invest it prudently. We are doing a real life marshmallow test for ourselves now.

Try the real life marshmallow test on yourself and see what happens.

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1. A generation of instant gratification - The cause of unhappiness
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