Young child wearing large glasses and holding a calculator.


Financial Success Begins at Age 3

Professionals trying to improve Americans’ financial literacy pour time and energy into developing school curricula that will help create a generation of financially competent adults.

But something else we can instill in our children may have a greater influence than education on their financial success later in life: self-control.

A recent study, led by researchers at Duke University and King’s College London and published in the Proceedings of the National Academy of Sciences, found that the self-control children develop as early as age 3 – before formal schooling begins – is a powerful predictor of whether they will save more as adults or will be hooked on credit cards.

“Poor self-control in childhood was a stronger predictor of these financial difficulties than study members’ social class origins and IQ,” the authors concluded.

Children who lacked self-control were also more likely to make mistakes, such as teen pregnancy, which contributes to financial problems.

The study followed 1,000 children born in the early 1970s in Dunedin, New Zealand, throughout their lives.  The researchers measured self-control in the children based on assessments by their teachers, parents, and other trained observers.  Behaviors examined included difficulty sticking to a task or waiting their turn, restlessness, and perseverance. Levels of self-control were then tested as predictors of three sets of outcomes in the research subjects as they aged and became adults: health, criminal behavior, and wealth.

The study puts a financial twist on earlier research at Stanford University, which became so well-known that it is now referred to simply as “The Marshmallow Study.”  Researchers there found that children who delayed gratification – they were able to wait to eat a marshmallow – coped better with stress and were verbally fluent, and more resilient, reasonable, and attentive than children who ate the marshmallow immediately.  Delayed gratification, a form of self-control, predicted coping skills later in life.

The new study underscores something financial advisers have known for quite some time: how people control their behavior can be far more important than how they calculate sums.

Comments are closed.