Learning how to delay gratification is an important part of money management. It not only helps kids to understand bigger money messages, such as financial choices, interest rates, and debt, but it’s also the basis of financial planning.
This helps your child to understand that saying no to something they want today means more time to save – and, therefore, more money for them in the long-term.
Of course, it's not easy to teach this when faced with a child who is 100% sure they need a toy right now, or a teen who wants a new pair of trainers this instant. It's important to know that kids and young people don't have the same impulse control as adults, which means they have trouble waiting. So, to teach delayed gratification, you need to help kids see the benefits of choosing a long-term reward over a short-term one – and how this can transform their financial future.
Start small and start talking early
With small children getting them to understand delaying gratification can start early with simple requests such as waiting to speak when someone else is talking, taking turns in games, and being patient when they ask for something. All these very simple acts start them on the road to understanding that often they have to delay gratification.
Louise Hill, COO of GoHenry agrees, "You should start talking to your children as early as possible about the difference between need and want. Research from Cambridge University shows that children form their attitudes and habits towards money by age seven, so it's never too early to start having these conversations. Remind them that you steal from yourself if you buy what you don't need."
Another good way to get them used to this idea is to explain the differences between need and want when you are out shopping, says Louise. "We need the rice and the chicken, but we don't need - we just want - the chocolate cake, for example. There are many simple ways to do that and bring that to life for children so that it's meaningful, without having to go into complicated details or worry them."
Teach children to prioritise the most important things
It's crucial to start with small goals when teaching financial skills that prioritise delaying gratification. With small children, allow them to make mistakes around gratification. Rather than tell them off, use these mistakes as a way of explaining that sometimes they need to wait.
For example, tell them they can have one treat at the end of the day or after dinner – and if they take one before that, they won’t get another one. The following day, challenge them to wait for longer – and explain that the longer they can last, the more exciting the treat will be.
Give pocket money and encourage your children to earn money with chores and jobs
One of the best ways to teach your kids to delay gratification is with pocket money. If your child asks for sweets or toys whenever you’re in a shop, or requests money to go see a film or have lunch with friends, giving pocket money means that your child has their own source of money to manage. And managing their money means making the money last by learning to delay gratification.
If your child does run out of money, encourage them to supplement their pocket money by earning more from chores and jobs. If you want to reward your children for doing chores with pocket money, GoHenry allows you to set paid tasks. Once your child has finished a paid task, you can tick it off, and the GoHenry app will automatically pay this out on their weekly pocket money day.
Our latest Youth Economy report reveals that more than four in ten kids (41%) felt they weren't earning enough – but rather expecting their parents to hand over extra cash, seven out of ten kids (71%) say that it's important to make their own money. In 2021, GoHenry kids earned a total of £2.9million from completing tasks that had been set in their GoHenry app.
Set savings goals with your children
Children of all ages can also create a savings goal on the GoHenry app. This will help them see how quickly savings grow, and how delaying gratification increases their financial choices. Our Youth Economy Report found that British children saved over £550 million, representing an average individual saving of £62 per year, or £5.15 per month. This means that 13% of children's earnings remain unspent — almost three times higher than the UK Household Saving Rate at 4.8%.
Help them to learn from making their own mistakes
One of the best ways to teach a kid how to make smart decisions is to let them learn by doing. This means encouraging your kid to manage their pocket money on their GoHenry card, and regularly check the app to see what they are spending and saving.
This also means no bank of mum and dad bailouts. A hands-off approach to letting kids manage their own money means letting your kids figure things out on their own. If they know they are due to go out at the weekend with friends but spend all their money online during the week, you can feel bad for them, but bailing them out won't teach them to learn from their mistakes – or delay gratification.
Encourage them to celebrate successes
It’s also important to celebrate successes. Let your kids know that you're aware of how tough it can be to resist everything to get that one thing they want, and how proud you are when they reach their saving goal or can resist instant gratification.
"It's so important to celebrate these achievements," says Louise Hill. "Always celebrate when a goal is met, and help your kids achieve this by setting up savings goals with your children on their GoHenry account."
Explain the dangers of buy now, pay later (BNPL)
The BNPL market is exploding for teenagers, with a range of companies offering kids the chance to buy even when they don't have the money. This makes it easy to and by-pass delaying gratification in favour of instant gratification as BNPL allows consumers to pay for purchases in instalments or in 30 days (read the small print). Users pay no fees or interest unless they default.
Make it clear to your kids that borrowing isn't inherently wrong – but it is vital to delay gratification, read the small print, understand APR and make sure they can meet repayments before they buy anything.