Personal Financial Planning

This past weekend some dads from our school took our daughters camping. We of course roasted marshmallows for s’mores. As the girls held their marshmallows over the fire it reminded me of the famous Stanford Marshmallow experiment.It was a study on delayed gratification.
The researchers would offer a child a choice: one marshmallow now or two after a period of time, usually about 15 minutes. When the researcher left, the child was left face to face with the marshmallow for the entire 15 minutes. Some would eat it before they got back, others were able to hold out.The researchers found that the children that were able to hold out had better life outcomes measured by SAT scores, educational achievement, physical fitness, and others.

What does this have to do with financial planning? It might seem obvious.

The better we are at delaying gratification the more likely we are to have enough saved to enjoy our life later.

It’s not that it’s hopeless for those that have tougher time delaying gratification, it just needs to be more purposeful.

But life is a little more complicated that a controlled experiment. We should also consider the trade-offs of delaying gratification.

We might not have the full 15 minutes and the two marshmallows never materialize. Consider the unfortunate story of a person who saves diligently for the future but isn’t there to enjoy it.

Sometimes those that are good a delaying gratification should give themselves permission to eat the marshmallow now.

The art in planning your financial life is finding the balance between enjoying our life now and delaying gratification.

The goal of our planning process is to create financial freedom. Whether that means the person needs confirmation that it’s okay to spend today. Or they’re the person that doesn’t have a problem spending today but needs a clear picture about what is needed to secure their future.

Andrew Eppes, RICP®

Andrew Eppes is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC. www.SIPC.org. Nexus Advisors, LLC is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. 14241 Dallas Parkway Suite 1200 Dallas, TX 75254 972-348-6300. The idea of retirement means different things to different people. CRN202411-1215174

Clear a Bold Path

Toward Total Financial Health