For those who have not read or heard of this book, it is one of those books that can profoundly impact the way you think. From it, there are some really good lessons for everyday life and your finances.

Researchers briefly left a child with a marshmallow and left the room. Before leaving, they told the child if they did not eat the marshmallow, they could have two marshmallows later. Obvious some ate them immediately, others waited before eating the marshmallow, and others were able to wait until the researcher returned. They often did this by distracting themselves.

When they returned to these participants over time, the children who waited longest did better at school and developed more metrics of success, which carried on into adulthood.

Our ability to resist comes down to 2 parts of our brains and how they function. A cool brain deals with logic, and a hot brain deals with needs, wants, and emotions. This is very similar to the Chimp and the Computer described by Steve Peters in his excellent book the chimp paradox.

This has profound implications for our finances and building wealth as we journey into adulthood when you think about this in-depth. Do you want the flash car now, or are you willing to put money in savings and investments for later? Do you live life to the full and spend everything you have now as the future may be uncertain? How we react to temptation in the short term compared to our long-term view has a really deep impact on our ability to generate wealth.

Several key lessons come from this book to improve your financial situation.

Firstly that the environment has more control over our impulses than our genes. They use the example of a parent who distracts a child from something difficult by distracting them vs a parent who does not. So what things in your environment increase the chances of making impulsive or poor financial decisions? I know one for me is the automated emails and links to the amazon shopping app on my phone. How much difference would it make every year if they were not there? That’s not to say that the way Amazon has innovated one-click shopping is bad, but rather is it your hot, chimp-like brain making the spending decision rather than the logical, cool computer?

The second key lesson from this book is how this experiment affected adulthood. When I first read that the child’s earlier decisions correlated with success in adulthood, it was easy to think that’s it. If our destiny is determined, then why bother? But there is an important lesson here. If you are the sort of impulsive spender, rather than make calm, logical decisions, there are things you can do. If I really want something and my impulsive brain is telling me I have to have it, I always try and put space between the decision and the buy. They will always try and get you with a scarcity (last few remaining) or timeframe (offer ends today) approach, but this is not often the case. Another important approach if you are impulsive is to automate elements of your financial plan. Money paid into a pension before you are paid cannot be spent. Over time this makes a huge difference.

The third and final important point in this book was about concentrating on our future to reduce impulsivity. Concentrating on our future self, where we will live, how much money we will need and what type of life we want all trigger the cool computer logic that distracts us from being impulsive. Therefore, how well we can see ourselves in the future is an important skill to develop.

Actionable steps:

  1. Think about how impulsive you are. What was the last impulse item you bought? Clothes? Car? House? Holiday?
  2. When was the last time you put space between wanting something and buying it? Is this something you could practice?
  3. What triggers you to be impulsive? Emails? Apps? Social media? Are there things you could do you reduce these impulsive triggers
  4. What plans do you have for your future? Are they written down anywhere? Could you easily access them if your impulse to spend pops up?

I hope you found this useful. More on