Valuable Lessons in Delayed Gratification

Parents want to teach their children skills that create independence through decision making. But financial literacy in current affluent households has become a more elusive lesson than it was in previous generations. The need for these experiences seems less obvious now and families must consciously create financial learning opportunities for their children. Creating opportunities for your child to learn about their feelings and values about money will help prepare them for financial independence.

One valuable skill that can be taught is delayed gratification and working toward a long term goal. As an affluent parent you can certainly give in to a child’s current material desire, but you will be kinder to them by saying NO sometimes and suggesting ways to save for the larger items that they desire. The well-known study about one marshmallow now or two later concluded that those children who waited became better students, earned more money and were generally healthier and happier.

How do you provide lessons in the value of delayed gratification? The best suggestion is to teach them to save for a longer term goal. Perhaps you can agree on saving for a new computer, a fancy bike, a car or a summer school trip not in your budget. It will help if you let them choose the goal within mutually agreed upon boundaries and keep your emotions, attitudes and values to yourself.

Once the future goal is set, encourage them to save in increments: part of grandparents’ gifts, an allowance or income. A little saved at a time will hardly be missed. They will be surprised at how quickly the amount increases and how soon their goal is achieved.

Often mastering the skill of delayed gratification does not happen until adulthood. If your child’s savings gets derailed, help them get back on track by reminding them of their long term goal. It’s important for them to learn while they are young and the stakes are low. If it takes an extra 6 months to buy that new bike, it’s not the end of the world! Making errors and learning corrections early can save them from bigger mistakes in early adulthood.

By teaching delayed gratification, you will help your child learn about self-discipline and that everyone in life has some financial limits. They will be learning valuable lessons in how to deal with these limits. This exercise will help your child learn to plan ahead for long term goals related to all kinds of life’s experiences. You, as the parent, will learn to gain comfort in delegating decision making to your child, and take joy in seeing them gain confidence as they grow with decision making and with independence.

For more on this topic, read our blog Teaching Kids Financial Responsibility or contact HTG Investment Advisors Inc. for a reading list of books on Financial Literacy and a Financial Check List for Young Adults.

Jeanne Gnuse

Jeanne is a co-founder of HTG Investment Advisors Inc. She oversees the firm’s client communications, marketing, and community relations functions. Jeanne is the mother of three children and grandmother to seven. She loves helping others learn money value lessons.

Jeanne received her BS from the University of Dayton and pursued graduate studies at Ohio State University.