“Are we there yet?”
“Is it my turn now?”
Waiting for anything is so hard for kids. Whether it’s for a swing in the park, a trip to the zoo, or saving for a new pack of Gogo’s (my son loves these plastic figurines—anyone else’s kid obsessed?), our children are learning a powerful life lesson: How to delay gratification.
It all began with a marshmallow. In the late 1960s, Stanford professor, Walter Mischel, gave little kids one marshmallow and told them they could eat it now, or wait and be rewarded with another one later. Then, he left them alone for 15 minutes. Some kids caved and ate it, while others waited, even though it was agonizing.
Mischel tracked these kids throughout their lives and his findings were remarkable: The kids who were able to delay gratification had fewer behavior problems, lower stress, stronger friendships, and even higher SAT scores!
In fact, a recent Wall Street Journal essay argues that French parents are superior because they teach their kids to wait. (First, French women don’t get fat and now they’re better moms? Mais non!)
So, how can you raise one of these marshmallow-waiting, money-saving, super-savvy kids? There are lots of tips on waiting and saving in “Money Milestones,” a project I am working on as a member of the President’s Advisory Council on Financial Capability. Money Milestones are 20 age-appropriate financial lessons that kids need to know as they grow, written in simple, down-to-earth language.
Here are some teachable money moments to try, with options for kids of all ages:
For kids age 3 to 5…
You may have to wait before you can buy something you want.
-When your child is standing in line for a turn on the swings, or looking forward to her favorite holiday, point out that sometimes we have to wait for things we want.
-Find three jars (or cans) and label one for saving, one for spending, and one for sharing.
-Suggest that your child put some of the money she gets into the saving jar, so she can buy a toy or treat when she has saved enough.
For kids age 6 to 10…
It’s good to shop around and compare prices before you buy.
-With your child, compare prices for a particular toy at various online or brick-and-mortar stores.
-Use coupons and discount cards and show your child how much you are saving.
-Consider allowing her to keep part of the savings, but only if she helps clip or print out coupons.
For kids age 11 to 13…
You should always try to save at least a dime for every dollar you receive.
-Encourage your child to always save 10% of the money he gets.
-Have your child set a goal to buy something he wants and have him work toward that amount.
-To reinforce the savings habit, go to the bank two to three times a year with your child to deposit savings into his account and look at how much bigger the balance is on each visit.
-Consider a “matching plan” for your child’s savings: You put in 25 cents for every dollar he saves.
For kids age 14 to 18…
A great place to save and invest money you earn is in a Roth IRA.
-If your child has a job, encourage him to open a Roth IRA (Individual Retirement Account).
-Explain that a Roth IRA allows the interest you earn to grow tax-free for life.
-Experiment with different amounts of savings and interest rates. Use a compound interest calculator at investor.gov.
-Use the “Rule of 72” to estimate how many years it would take to double your money. If you invest in an account that earns 8% interest, you’ll double your money in nine years (72 divided by 8 is 9).
-Explain to your child that once he starts a job, he may be offered a similar account at work called a 401(k). Some employers even provide matching contributions.
For kids age 18+…
You should use a credit card only if you can pay off the money owed in full each month.
-Understand that when a parent cosigns, any late payments you make will also affect their credit history.
-Paying bills late can hurt your credit history and affect your chances of getting a job.
-Get free credit reports once a year at annualcreditreport.com.
-Look for a credit card with a low interest rate and no annual fee.
-There may be an emergency expense that you can’t pay off immediately and need to charge. That’s why it’s important not to charge everyday items.
-To learn more about the credit card rules, go to federalreserve.gov.
How have you encouraged your kids to wait or save money? Share your stories!
Beth Kobliner is a personal finance commentator and journalist, the author of the New York Times bestseller “Get a Financial Life: Personal Finance in Your Twenties and Thirties,” and a member of the President’s Advisory Council on Financial Capability. Visit her at bethkobliner.com, follow her on Twitter, and like her on Facebook.