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Purposeful Withholding

There is one study I have seen used across the board in various settings and industries to describe the same basic objective: delayed gratification.  The “marshmallow test” was originally led by psychologist Walter Mischel.  If you do not know the basic experiment that was conducted, it goes as follows:  Walter would give a child two choices.  The child could have one marshmallow now and be done with the experiment or, if he or she waited an extended period of time while Walter left the room, could receive two marshmallows upon his return.  One please! 

Even as adults this concept is extremely difficult to navigate.  And honestly, how do you even decide which is better?  ‘I believe my desire to experience the marshmallow now, receiving only one, is better or more important than receiving two later.’ The opposite could ring true to my neighbor.  Walter originally thought it was simply a personality trait that determined whether someone could withhold for two marshmallows or not.  He had noticed however, there was another factor that helped children withstand the temptation. Strategies. Plans. Blueprints. There were a number of ways to manage and put off the desire for instant gratification.  And as children were able to use these to win over their desire, they were more successful the remainder of their lives.  

When you start a new job, you are given several packets (New Employee Forms perhaps) to fill out.  One of those forms is a W-4 or Employee’s Withholding Certificate ( https://www.irs.gov/pub/irs-pdf/fw4.pdf ).  There are several steps, lines, numbers, instructions and formulas on this form that help determine the employee’s ideal number of withholdings. As a new employee, this form is meant for you to help your employer know what dollar amount they should withhold from your wages each paycheck which they then forward on to the government.  Hopefully, you know how to do this and what it is for so at the end of the year when you file your taxes, the reconciliation that occurs between your choice of withholding and your ending tax liability is as close to $0.00 as possible. Get it?  Most people don’t, so don’t feel bad.

“I thought I was just supposed to put ‘0’ so I get a large refund when I do my taxes?”

“My employer told me to put 0.”

“My spouse told me to put 0.”

“Yea, I put ‘0’ because I get a large refund at the end of the year and I use it as a savings account to buy a car.”

These are some of the responses I have heard from people when discussing what the hell the W-4 form is.  In one sense, the W-4 is a form of delayed gratification.  You get less on your paycheck every 2 weeks to get a large sum of money when you file your taxes.  The only problem is that the government is getting to play with your money while they hold it.  They are benefiting from your money.  For a lot of people, this is a good choice.  If they had the extra $300 a month in their bank accounts it would be spent.  But what if we could shift the mindset and equip employees with a different strategy or blueprint that showed a better option for that $300 then lending it out to the government for 12 months?  Not only would they be choosing delayed gratification on their own, but they could be using that $300 a month to make them more money! Sometimes people just need a new blueprint.

A new blueprint awaits you. Determine what aspects of your life and finances you could adopt a new blueprint for. We are here to help.            

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