Most people will agree that we have degenerated into a world of instant gratification. Almost everything we desire can be had in an instant.
If you want to be entertained, simply press your TV remote or play music on your iPod. If you're feeling hungry, just pop a pre-packed food into the microwave or call a fast food delivery.
It's great to have everything on a whim. It makes life easier and more fun. But in the world of finance, this so-called culture of convenience has some downsides.
More often, consumers take the quick and easy route in satisfying themselves. If they want the latest tablet and their bank account is running low, they simply swipe their credit card. So now we see a lot of people who flaunt their house and lot, expensive home appliances and glitzy cars that are technically owned by the bank.
The landmark marshmallow and cookie tests conducted several years ago in the US have imparted some valuable lessons about how instant gratification can affect our finances.
In the late 1960s and early 1970s, Stanford professor Walter Mischel put some pre-school children to a test, using marshmallows and cookies. Each child was left alone in a room with a mouth-watering marshmallow or a delicious cookie.
Struggle to resist
They were told that if they could hold off on the temptation to eat for several minutes, they would get one more. Some of the kids struggled hard to resist, while the others gobbled up the enticing confection even before the time was up.
A follow-up study revealed that the children's ability to delay gratification or lack thereof correlates significantly with their academic performance and success later in life.
Many years after the tests were conducted, Mischel and his colleagues revisited the same children and found that those who patiently waited for the treat fared better than the marshmallow or cookie grabbers. They grew up to be optimistic, self-motivated and had the ability to wait for pleasure in order to pursue long-term goals.
The results of the follow-up study, released only last year, indicated that the impatient ones lacked self-control and suffered low self-esteem. They also often had lower scores in the standardised test for college admission.
Willpower test
This test of willpower clearly shows that people's natural tendencies to either wait or succumb to instant gratification are likely to continue into adulthood. It doesn't mean, however, that if you were impatient when you were small, you're doomed to a bad life.
There are several lessons from the marshmallow and cookie tests that we can apply into the way we manage our finances.
• The children who waited patiently ended up enjoying two marshmallows or cookies, while those who did not exercise self-control forfeited the promised reward. In the age of consumerism, it's very easy to fall into the temptation of buying all the things you want today. Instead of spending your money now, invest it wisely. The longer you wait for it to grow, the more rewards you will reap.
• Resisting the urge to eat the delectable treat was a difficult battle for the kids. Some of them started kicking the table or covering their eyes with their hands. Staring miserably at the marshmallow won't help, so if you don't want to get tempted, stay away. Stop thinking about the gadget your friends have been crazy about or take a distance from your buddies who love to show off their money. Start a new hobby, read a book or learn a new skill to keep yourself busy.
• The impatient kids who got only one treat were obviously not as happy as the ones who earned their reward. Don't grab that pair of designer shoes right away. Wait until you have enough cash to pay for it. You'll appreciate the reward of not having to worry about repaying your credit card bill.
