Teaching kids how to save money can be challenging. But nurturing this one skill in kids will help.
It’s happened more times than I can count.
We’re in a store and one of my daughters spots something she wants. A beanie-boo, a sticker maker set, or a simple craft. Then comes the question:
“Can I get this?”
“With your allowance.” I say.
She takes a few seconds and stares carefully at the object in question.
Then she’ll look up at me with concern on her face and say: “But I’m saving up for [fill in the blank with most-desired object]!”
Sometimes she’ll put the item back on the shelf but other times she’ll hold onto it as a look of sadness washes over her face, clearly contemplating if she really wants it or not.
At this point, a wave of glee takes over me and all I can think is: “YES! It’s working!”
Call me a mean mother, but I love seeing my kids struggle with these difficult buying decisions.
Grappling with Tough Choices
Delaying gratification – putting off what we want today for more financial security in the future – is no doubt challenging. Not only for kids, but many adults have yet to master it.
Yet, delaying certain purchases (often ones we don’t REALLY need) and saving money instead is essential to achieving financial goals. How else would it be possible to put down a security deposit for rent or later a downpayment on a home?
All too often learning how to delay gratification doesn’t happen until we’re adults. After we’ve made a few mistakes, like gotten into credit card debt or are caught with no emergency fund. Only then do we realize the value of putting off our immediate wants for our future needs.
So what better time to learn this skill than when you’re young and the stakes are low.
Benefits Beyond Money
And what’s more, research shows that parents can not only teach this skill but that learning how to delay gratification has benefits beyond financial matters.
In a now famous study conducted in the 1960s, coined the “marshmallow experiment”, Walter Mischel presented four-year-olds with a marshmallow and told them they could either eat it immediately or wait until the researcher returned 15 minutes later at which point they would receive a second one.
These children were then followed for 40 years to observe any correlation between the ability to delay gratification and other areas of life. Researchers found that the four-year-olds who could demonstrate self-control, performed better academically, earned more money, and were generally healthier and happier. They were also found to have lower levels of substance abuse, lower likelihood of obesity, and better responses to stress.
The other exciting finding from the study is that delayed gratification can be taught. Mischel found that once kids were given strategies to help them demonstrate self-control, they often did.
Help Kids Learn How to Delay Gratification
When it comes to money, the best way to get kids to understand the benefits of self-control is to let them practice. Research shows that learning by doing results in higher learning gains and retention. Once we’ve felt the anguish of having wasted money on an impulse buy instead of holding on to it for something we really want, we probably won’t make that mistake again.
But in order for kids to really grasp what it means to delay gratification, parents need to support their learning, let kids face tough decisions, and grapple first-hand with the impact of their choices.
Here are a few ways parents can help:
- Start Small: Even before kids are ready for an allowance, parents can encourage their kids to self-regulate or delay gratification in small ways. Examples include waiting patiently for dinner rather than have a snack a few minutes before or teaching kids to wait patiently instead of interrupting a conversation.
- Give kids their own money: Once they’re old enough, give kids some of their own money to practice with. Let kids know they are now responsible for certain expenses like toys, crafts, books or when they’re older, car insurance & gas, cell phone data plans, and clothes. For ideas on which purchases your kids can pay for with allowance see: 7 Things You Should Stop Paying for Once Your Kids Have an Allowance.
- Not too little and not too much: The amount of allowance you give kids matters and it might take some tweaking as your kids grow. Make sure your kids have just enough money so they can reasonably reach their savings goals but not too much that they’re flush with cash. This way they will be faced with tough buying decisions such as – should I buy this cheap Matchbox car that’s right in front of me or get closer to my savings goal of a three-speed bike?
- Don’t back down: Once you’ve made it clear which expenses your kids are responsible for, don’t back down. Don’t make an exception and give them a few extra dollars to buy a new Lego set or bail them out if they spent all of their money on new jeans and now don’t have enough money for gas. These lessons may be hard, but they’re easier to learn now than when credit card bills and mortgage payments are due.
It isn’t always easy
Supporting kids on the journey to learn self-control and delayed gratification isn’t easy. Sometimes it can take a lot of resolve on behalf of parents.
For example, one day when my girls and I visited a bookstore, my youngest had a meltdown in the third aisle of the children’s section. She just couldn’t understand why I wouldn’t buy her a book.
I love the idea of my girls buying books – so much so that I’ve offered to subsidize their book purchases by paying for half – and the truth was, my daughter didn’t really need or even want a book. She had seen her older sister purchase a book and couldn’t get it out of her head that she also needed to buy a book.
But at the same time, she was eagerly saving up for a $60 Legos Friends Dolphin Cruiser set and didn’t want to part with her money. So she insisted I pay the entire price of the book for her.
Tears started to flow as I told her I wouldn’t make an exception.
“But I’m saving up my allowance!” she nearly yelled as she sat down on the floor with a look of insult on her face and determination to get her way.
It was tempting to feel embarrassed as other customers began looking in our direction, wondering what was going on.
We sat there for a good 10 minutes, among the Cat in the Hats and Fancy Nancy books, and we talked (or rather, I tried to talk but she refused to listen) about other alternatives like getting a book at the library or purchasing a book just after she’d saved up for the Lego set.
As the high pitched whining increased and her eyes became red from so many tears, I was tempted back down. But I knew I couldn’t. Not on this. Not with a lesson this important.
In the end, with a book in hand, we walked up to the cash register and at the last moment, my daughter grabbed my hand and whispered in my ear that she had decided not to purchase the book.
And as we left the bookstore, she continued to weep and complain about the decision she made (while I gave her multiple hugs and let her know it was OK).
But meanwhile, I couldn’t help feel that what had taken place was simply fantastic.
Being able to pass up the impulse to buy a book at age 6 is tough, but it’s a lot easier than overspending and getting into credit card debt at 26.
So even though it’s challenging, painful, and sometimes embarrassing to see my daughters wrestle with their purchasing decisions, we’ll keep at it again, and again and again. Until the lesson sticks. Until they understand why putting off an impulse today pays rewards in the future.
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