We live in a world where businesses offer us almost anything we want on a “Buy Now, Pay Later” basis regardless of our income or how much debt we already have. No matter where you turn, you face being bombarded with catchy advertising that sells us anything from clothing to vehicle tires to household furniture with “low monthly payments” or “low interest rates.”
Knowing this, how do we teach our kids to avoid falling into the debt trap that is being so heavily pushed on us as a society? How do we teach them to be patient and save to buy what they want rather than accept the “easy payments” because they see everyone else doing it?
Reaching Your Financial Goals
Learning how to delay gratification as children helps create financially responsible and self-sufficient adults because they know how to make educated financial decisions and decide whether or not buying that gadget or taking that trip will be worth it after they’ve taken time to think about it.
Many of us didn’t learn to delay gratification or set financial goals until we were already grown adults and had made huge financial mistakes already, like getting into massive credit card debt or buying a vehicle with a loan that had a sky-high interest rate with a monthly payment we absolutely couldn’t afford.
Setting realistic goals and priorities is the first step to learning delayed gratification.
Setting Your Priorities and Focusing on Them
Sit down with your children and help them create a plan with some goals that are specific, measurable, attainable, realistic, and time-based. S.M.A.R.T. goals teach kids how to set, work towards, and achieve goals in many areas of life, including: social, physical, financial, mental, academic, spiritual, and musical, by giving them a framework to promote a growth mindset.
For my nieces, we have started implementing a growth mindset by helping them set financial goals for their weekly allowance and then helping them find new ways to earn money, such as starting a lemonade stand or pet sitting for friends and neighbors if they want to make money faster to put towards their goals.
We sat down and wrote out a list of goals they wanted to reach, then took it one step further by prioritizing those goals by order of importance to them based on our family values. This is what we came up with:
- Priority 1: 10% giving to charity
- Priority 2: 30% investments or re-investing back into businesses
- Priority 3: 30% spending
- Priority 4: 30% savings
Waiting on Gratification
My nieces are 5 and 2. It’s tough to convince young kids how to be patient and wait for what they want, especially when it comes to money. One way we encourage them is to celebrate EVERY small win or milestone they achieve towards their goals.
Daily, we go over their individual and family goals and then figure out what steps we took that day to work on our goals. Every day we have done something to move forward, we have a celebratory dance party in the living room and give each other high fives. This helps build momentum and energy, so they are excited about making progress on their goals.
When we were younger, my parents never talked about family finances, so money was always a taboo subject that was a secret and almost felt dirty to mention in polite company or at the dinner table. With our generation raising kids of our own, we have decided to set family goals and discuss them openly.
Each of us takes 30% of our take-home pay, and we buy stocks to increase our portfolios. Monthly, our extended family gathers to discuss what stocks we are interested in owning as we eat a meal together and debate intellectual topics from books we read the previous month. The kids are encouraged to sit down with us and talk about business and money, so it’s never a taboo subject for them.
What other ways can you encourage your kids to work towards their goals and have open conversations?
- High fives
- Sweet treats
- Financial incentives
- Day trips or outings
No matter what you choose, encourage your kids to delay gratification and work towards their goals in fun and celebratory ways because this is a life skill they will carry with them into adulthood.
Changing Your Child’s Life
It is up to us to lead our children and guide them through the examples we set in our daily life, so it’s important to model the behaviors we want to instill in our kids. Delayed gratification is a life skill tested and proven to increase many aspects of young children’s future.
When it comes to personal finance, learning to be patient will help in:
- Financial responsibility: Learning the Share, Save, Spend method that was developed by Nathan Dungan, author of Prodigal Sons and Material Girls: How Not to Be Your Child’s ATM will teach children to be intentional with money and set aside a percentage of earnings, monetary gifts, and allowances into three separate piggy banks or jars. Use see-through containers so kids can see how much money grows in each one. Learning to budget and make financial decisions as a youngster will teach financial discipline later in life when contemplating large purchases such as a car or house.
- Financial planning: The pandemic taught many of us that thinking ahead and planning for the future by saving and investing will help us endure financial hardships. Many experienced job loss, unemployment, medical emergencies, and food insecurity during the height of the pandemic, and many were not able to weather the storm due to a lack of preparedness or planning. Teaching children to save and plan while young will be transferable skills during adulthood.
- Financial consciousness: Being aware of their financial situation rather than burying their head in the sand when it comes to money will help your child learn to deal with life issues head-on and find rational solutions quickly when presented with problems.
Exercises to Teach Delayed Gratification
The “Marshmallow Experiment” was first conducted in the 1960s by Walter Mischel where he presented 4-year-old children with a marshmallow treat and told them that they could choose to eat it now or wait to eat it for 15 minutes, and they would be given a second marshmallow and allowed to eat both then. Most children decided to eat the marshmallow immediately rather than wait.
The children that chose to wait during this experiment were studied throughout their lives and 40 years later were found to have excelled in their academic studies, had higher earnings, and were overall happier and healthier in disposition. They were found to respond to stress in a healthier manner, had lower levels of substance abuse, and were less likely to be obese.
What are the best ways to teach kids when they’re small about delayed gratification?
Using strategy and leading by example allows kids to make their own mistakes in a controlled environment.
- Small wins. Teach your child to self-regulate early in life by intentionally teaching patience by delaying snacks or dinner for a few minutes or discouraging them from interrupting an adult conversation.
- Allow them to spend their own money. Once your kids have an allowance of their own or are earning money, give them some responsibilities like buying their own school clothes or paying their cell phone bill.
- Be mindful of allowances. You may be inclined to give your children a large allowance because you can afford it and want them to have the things you didn’t have as a kid. But, smaller allowances will allow them to make purchases of things they desire while having to learn to make choices between purchases and save up their money to buy larger items.
- Make boundaries and keep them. Once you’ve set the rule that your kids will pay for certain things on their own, like entertainment or their cell phone bill, stick to that. If they overspend and don’t have money to pay for something, tell them they need to save for it.
Teaching delayed gratification requires a certain level of resolve for parents and caregivers because we want to see our children happy, so it’s easy to want to give in or solve their problems for them. Learning to be patient and wait for things that we really want is a valuable lesson, and the sooner we can learn that in life, the happier we become because we value things differently. Happier people can set goals, lay out milestones to achieve them, and fulfill some purpose in life. As humans, we desire to have goals, purpose, and ambition because these are driving factors that create a fire to work towards a common goal with others.