Financial education also meets the “marshmallow test”

Walter Mischel, a prominent figure in the behavioral school, explored a very current topic: the impulse to choose. His marshmallow test (American soft candy) confirmed the effectiveness of the self-control weapon to achieve a major goal: a large group of preschoolers were left in a room full of temptations (marshmallows to be exact). They could “give up” and eat the dessert before ringing a bell.

They have other games and strategies to distract themselves while they wait, and they know that by procrastinating they can get other satisfactions. Research results show that the time each child waits before giving in to temptation is associated with better grades on college entrance exams, the ability to withstand setbacks and stress in adulthood, stronger self-esteem, and better management of love life and health. In finance, as in business, self-control guides choices and often turns delayed gratification into success. Investing for future goals, sticking to a budget and not compromising long-term financial goals are key. Those who excel in the field of long-term planning and wait for the second “marshmallow” win the challenge in most cases. Financial education teaches us that the key to success is to practice scenarios and make wise spending choices. In companies, “goal setting” involves working to create a solid financial wheel that is not hindered by unexpected situations. An impact index that confirms this reasoning for the reliability of a company is the operating stability assessment, which measures the degree to which assets are related to turnover. Revenue minus total assets in the numerator and revenue in the denominator. Total assets refer to investments after deducting funds from current assets (cash and accounts receivable inventory). Do I know how much turnover is left to pay off current liabilities? How much self-control do I have to focus on my operating stability? Another analytical perspective that many strategic scholars have developed.

Enrico Gaudenzi – CFO of a leading industrial and service company, former professor of financial mathematics at the University of Bologna