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Make Better Money Decisions

(Throw Out Your Clock)

You may have heard of the famous “marshmallow experiment” in the 1960s. Stanford University researchers gave preschoolers a choice between having one marshmallow (or similar treat) right away or, if they resisted temptation for 20 minutes, a bigger prize of two marshmallows. Two-thirds gave in to the temptation.

You might think, of course, 4-year-olds have no self-control. No major surprise there. But the interesting part came years later when researchers found that the kids who resisted longer had higher SAT scores, fewer behavioral problems and lower body mass index (BMI) as adults than those who devoured the marshmallow within 30 seconds.

These findings sparked an entire industry of tips and tools to improve self-control. But what if resisting instant gratification is less about willpower and more about where you choose to put your attention?


Many of our daily decisions come down to the question of now or later. Do I go on that trip now or stay home and pay off my student loans? Do I buy a $5 daily latte or save for my own espresso machine? Do I spend my paycheck now or contribute to my retirement account?

Most of us have felt the squeeze of trying to pay today’s bills while saving for the future. Sacrificing in the moment can be painful. But here’s the thing: The choices you make today determine the options you have tomorrow. If you continuously live for the moment, the future you likely will have no more than you have now.


Soon to be released research funded by the National Endowment for Financial Education studied people’s eye movements while they made simulated money decisions on a computer. By tracking where they looked first and what held their gaze, the study found that people who make better long-term choices — the ones who would have waited for the second marshmallow — focused almost exclusively on amounts of money. Those who made less patient choices (the marshmallow fiends) focused more on time.

Surprisingly, the more patient people made their choices quickly, while the less patient people took longer to compare not only amounts, but how long it would take to get them, which often is perceived as a penalty or cost.

Focusing on the bigger reward was like a shortcut. Not only did the more patient people make a better long-term choice, but they did it quickly, without much stress. Two marshmallows are better than one. Done.

Young adult takes photo of coffee but wonders how to make better money decisions and improve self-control.


Of course, real-life choices are more complex. Sometimes it’s not clear which insurance plan or loan option has the bigger payoff in the long run. But the main point is: If you want to make better money decisions, do something that is hard for you today, but better for you tomorrow. Pay off more debt. Save more. Increase your 401(k) contribution. Learn about a financial topic that will help you later, like insurance or investing. Do something you’ve been putting off. Don’t stress about it. Just do it. Your future self will thank you.

As always, we’ve got your back. — The On Your Own Team End of article insignia

[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by On Your Own, the National Endowment for Financial Education or any of its affiliate programs.]