The best way to teach kids financial literacy is in the context of their everyday lives. Here's this month's teachable moment:

Young children love putting coins into vending machines. The next time your youngsters ask for money for soda or bag of chips, pull out a variety of coins and walk them through picking out the correct coins:

"We need sixty-five cents. Can you find two quarters...they're the biggest ones. They are twenty-five cents each. That's fifty cents together. Now we're going to need a dime. That's the smallest one and it's worth ten cents. Finally, we need a nickel. It's the one with the smooth edge. This one is worth five cents. Now we have enough for the chips."

Not only are you covering coins and their values, but you're touching a lot of math concepts, biggest...smallest...finally, as well. But don't expect them to get it all the first, second, or third time; it is through repeated exposure in a non-threatening environment where the brain grows best.

Given the choice of $10,000 today or $40,000 in three years, which would you choose?* This is the adult version of Michael Mischel's 1960s experiment with kids and marshmallows. His experiment showed that kids who were able to resist temptation by delaying gratification (passing up on one marshmallow in order to get two marshmallows later) grew up to have higher paying jobs, successful marriages, and better health.

The implications of this study can have a profound impact on the lives of our children. How can we help them develop the skill of delaying gratification so that they have a better chance at being successful and healthy adults? It starts with the little things. Buying a special treat at the store but waiting until after dinner (a long time for a youngster) to eat it. Or resisting the temptation to open Grandma's birthday gift which arrived in the mail until it's actually your birthday. Or waiting to be the proud owner of a cell phone until the ripe age of...13...

Waiting for things is often hard so it's important to give your kids encouragement along the way. "I'm really proud that you are able to wait until your birthday to open the gift." These words mean a lot to kids who often are looking for ways to please you. It also puts focus on the task of waiting and that's important. It's easier to repeat something if you're aware that you've successfully done it before.

And how does this connect to money? Beautifully. There's nothing like setting a personal financial goal to teach delayed gratification! The goal feature in the KidsSave program was designed precisely to do this...with the added bonus of teaching kids to live within their means. KidsSave walks kids through the thinking involved in setting up a goal and then monitors their progress as they work towards achieving it.  And achieving a goal...well that's worth at least two marshmallows!

 

Let us know as your kids accomplish their goals!  We'll highlight them in Celebrating Success.


* Okay you money-savvy thinkers. I know what you're thinking. Hmmm...is there a way I could invest the $10,000 today so that it would make more than a 300% rate of return in three years...in which case, I'll take the $10,000 today. Let's say you weren't allowed to invest the money.  What would you do then?