July 3, 2015
Recently I had the pleasure of spending time with some pretty awesome and inspirational people. Those people are my 2- and 4-year-old nieces and 8-year-old nephew, all of whom I was able to spend time with during my annual summer trip home to the D.C. area.
During the course of my visit I sat down to write this article but couldn’t quite wrap my head around a topic. To add to my writing challenges, I had to manage kid interruptions, as my niece wanted to show off her “princess shooter” gun constructed entirely of Legos, while my nephew jumped around doing things that I assume boys do. Since I was feeling stuck writing, and they clearly weren’t down with my requests to work on my “homework,” I decided to find out their opinions about money.
When asked if he liked money, my nephew responded that he did because he wanted to buy all of the Ninjago Legos he wanted. My older niece also stated that she liked money, and more specifically putting money in her cash box and saving up to buy a toy. I appreciated both of their responses, and then started to think about the different perspectives they shared.
While they both clearly expressed a desire for money, there was a distinction between the immediate desire to spend rather than save. My nephew instantly mentioned spending, while my niece suggested saving as her preferred method for obtaining what she wanted. Aside from being impressed that a 4-year-old understood the concept of saving, I began to think about how I would’ve responded? Do I view money as something that I don’t need to accumulate but rather to spend to gratify my need for shiny new things? Or can I demonstrate discipline, practice the art of saving, and wait for things that I really want or need?
There’s a classic instant gratification study that is commonly shared in introductory psychology classes called the marshmallow test. This test entailed offering a kid the choice of receiving a small reward (typically one marshmallow) immediately or two small rewards (two marshmallows) if they waited for a short period of time. Follow-up studies found that the kids who were able to wait longer for greater rewards tended to have better life outcomes overall than those kids who preferred an immediate and smaller reward.
As it relates to financial independence, the ability to delay the shiny and new is indicative of greater long-term financial gain. A new car may be desired, but would it be more financially advantageous to keep pushing the fully functional beater until other goals are met and enough cash is secured to comfortably purchase a replacement vehicle? Or have you been eyeing an iPhone 6 to replace your trusty 4s? Would it be more fiscally responsible to hold onto the older model until you’ve fully padded your savings account for a rainy day?
Rather than the questions posed being ‘yes’ or ‘no’ questions, are those actions that you could realistically see yourself taking? If the answer is ‘no,’ then you may belong in the category of the instant rewarders, or those who are willing to forgo future greater gain in exchange for something temporal and smaller. This mentality has implications for other areas of life as well, and not just financially. For those of you who can honestly say that you could take the delayed gratification route, then you are setting yourself up for a potentially great financial future.
I hope that my nieces and nephew are given sound financial teaching such that they grow up to make smart decisions when it comes to their money. But currently I can see that my niece is on the right track. And while there is nothing wrong with rewards, I urge you to consider whether you could’ve held out for two marshmallows and whether your desire and pursuit for instant rewards may be costing you more than you realize.
Angela is a researcher/program evaluator by day, and crime fighter by night. And by “crime”, she means the perceived inability to turn dreams into reality. She can be reached at firstname.lastname@example.org if you’d like to share your money story, chop it over life goals, or all things Shonda Rhimes. Also, check out Brown Girl, Green Money on the book of faces at www.facebook.com/browngirlgreenmoney.