Would you rather receive $100 now or wait a month for $110?
Obviously the amount of the future versus the present "reward" and the length of the wait will affect the decision. But followup research to a study done 50 years ago suggests people who have the self-control to delay gratification are more likely to have a healthier, successful life. And that relates directly to spending money now versus saving/investing to have more to spend later. The Economist recently published a story about researcher Walter Mischel who had offered a group of children aged four and five a treat like a marshmallow or biscuit - but told them if they could wait up to 20 minutes, they would receive two marshmallows or biscuits.
In his book, The Marshmallow Test: Mastering Self-Control, Mischel said he subsequently surveyed many of the 550 children tested between 1968 and 1974 and found the longer the children had waited, the higher they scored on university admission tests 10 years later.
Those who had waited the longest in the experiment also tended to have done well socially and academically."The patient children had a lower body-mass index when they grew up, greater psychological well-being, and were less likely to misuse drugs than those who had quickly gobbled up the treat," reported the news magazine.
Mischel says willpower is something you can develop by shifting from thinking about the "now" to focusing instead on the future, on the benefits of delaying self-gratification.
He believes his research shows "the ability to postpone rewards is closely related to vigorously pursuing goals and to holding positive expectations.
"These traits, in turn, help explain why waiting for marshmallows at the age of five has such a strong relationship to outcomes in adult life."
Bottom line: Aim for the correct balance between spending and saving, depending on your everchanging situation.
Missing out on the present (and then getting sick, dying young or otherwise being unable to enjoy the money saved) can be just as bad as not having enough money in the future.
Mike Grenby is a columnist and independent personal financial advisor; he'll answer questions in this column as space allows but cannot reply personally. Email [email protected].
