Delayed Gratification, What is it? And Why Should We Teach it to Our Children?

I have long thought that if there is one trait I want to help my children develop when it comes to finances, it is the ability and desire to Delay Gratification.

Of course delayed gratification applies to many other things.

Simply put, delayed gratification is the ability to resist an immediate desire, for something better in the future.
Delaying Gratification requires:
Sacrifice.
Self Control.
Persistence.
Patience.
Selflessness.
Planning.
Foresight.


Examples of Delayed Gratification:

Saving/Investing Money (resisting spending money now in order to have/spend that money in the future)

Dieting (resisting food now for weight loss in the future)

Studying (resisting playing now in order to have better grades/opportunities in the future)

I've never been wealthy so I guess in many ways I don't know much about building wealth. However, what I do know what building wealth looks like on our income, our family lives quite comfortably simply because we have delayed gratification.
In our marriage we've chosen inexpensive clothing, meals made from scratch, cheap entertainment, forgone vacations, older vehicles, small/old apartments, in order to pay cash for vehicles, put 20% down on our house, and invest for retirement.



But, for me it started before that.
I've shared my Disneyland necklace story here before.
Over the years I saved for many other things and made choices I was happy with, as well as choices I've deeply regretted.

This story is bigger than that.
In my family we were always expected to pay tithing and put a percentage of our income in savings. We had both short-term and long term savings as well as immediate spending.
I was always pretty good at short-term savings, I would decide on something I wanted and work diligently toward that goal.
But my long-term savings is where I really learned the benefit of saving.

Days after graduating from High School, I moved to St. George, UT to work for the summer and attend Dixie State College in the fall.
My parents and I had an agreement that they would pay for tuition, but I was responsible for books and living expenses. 

I had a job lined up, but when I walked the mile to work that first morning I found an empty office. I called my supervisor and found out that the company had moved to a location about fifteen minutes away, driving time, but the problem was I didn't have a car. It would take me over an hour to walk there in the St. George summer heat. Other events transpired and I decided that I needed to find another source of employment. It took me a month to find a job. I was grateful that my parents had taught me to save, I used up a significant amount of my savings, which I was planning on using to buy books and pay rent for fall semester, but I was ok. I was so grateful that I'd chosen to save a percentage of my high school income, even when that meant turning down activities, opting for the dollar menu, skipping movies, or just the concession stand, etc.
Once I found a job I became determined to have an emergency fund. The few times since then that I haven't had one left me worried, and determined to find a way to replace it.



So how do we teach kids to employ delayed gratification in their financial decisions?

I wish there was a straightforward answer. There isn't, but here are some ideas:

* Buy them less, and provide a way for them to buy things for themselves, through earnings or allowance (you can read my post on allowance here)
* Encourage children to save toward something big. 

    Big is relative to their financial means; for my 3yo who has $0.45/week after tithing/savings, big is a $5 airplane

* Allow them to make mistakes and then DON'T RESCUE THEM.

* Discuss their regrets while withholding criticism.

* Encourage them to set goals.
* Verbally reward them for progress.

* Encourage open-ended saving.
    Saving for things they will want in the future without a particular goal in mind
* Say No.
     Or:   It's not in the budget.   or  Is that how you want to spend your money?   or   That's not something I'm choosing to spend my money on today.   
* Get kids involved in the family budget. Certain categories like clothing and entertainment, even gas or groceries can (and possibly should?) be influenced by older children. 

     Let them figure out how to pay for the vacation or activity they're drooling over
* Put them in charge of planning, shopping, and cooking a family meal, give them a reasonable budget, and let them keep the extra, or go out for ice cream with the remainder

* Match their savings, with a cap 

     ie for every dollar you save toward your first car we'll match $.50 up to $3k, or for every dollar you deposit in your college fund, we'll match $2 up to $15k, whatever works for your family budget.
* Teach them ways to have fun without spending money 

* Give them money to buy their school clothes and let them budget and figure out their priorities, after reminding them that they'll want socks and underwear ;)
     With some kids you might have to stipulate that ALL of the money must get spent on clothes, with others who are accustomed to and enjoy having a nice wardrobe, they may have the opportunity to keep the remainder if they come in under budget
* Let your kids see you practice delayed gratification
     Talk about what you're saving to purchase. Make comments such as I'm cutting this expense, or I'm not buying that so I can put the money toward _________. 
* Don't just wait for things to go on sale, let them know that's what you're doing.
* Share how you feel when you finally pay off your credit card, car, or house.
     Let them know what a blessing/relief it is to not have debt. Talk about what you can use that money for instead of that payment.




If you're interested in reading more about the benefits of delayed gratification interesting articles can be found here, here, and here.

It's May, Have You Pulled Your Credit Report?

Back in January I wrote about Three Easy Ways to Protect Your Identity and Your Finances. In that post I talked about pulling your credit report.

If you pulled all 3 in January you'll have to wait until next January to pull another one, if you pulled only one, it's time to pull a report from another credit bureau.
If you see that post or didn't pull a report at all, here's a quick recap and you can read the full post here.

publicdomainpictures.net

An easy way to monitor your own credit (i.e. you don't have to pay someone to do that for you), is to pull a copy of your credit report every 4 months.
Federal law mandates that each of the credit bureaus provide you with one free credit report per year. There are three credit bureaus, so that means you can pull from one of them every four months. (If it's your first time pulling a credit report, experts recommend pulling all 3 at once, then in a year start rotating through each bureau.)

To do this go to annualcreditreport.com and click on the "request your free credit reports" button.
 

 ***DO NOT go anywhere else, you will probably end up getting charged for a credit monitoring service, your credit score, or something else.

Checking your credit report regularly allows you to watch for unauthorized accounts (Fraud, ID Theft), ensure that accounts which you've closed are actually closed, and see that your payments are being recorded correctly.
Even if you have no debt, and no intentions of borrowing money you should still be checking your credit report.

Charitable Giving, Making Your Gift Count.

I believe in giving, in lifting, in encouraging.
I believe that it's a significant part of the reason we're on earth, that it's important to our learning, spiritual growth, and emotional development.
I believe in being kind we find strength and encouragement for ourselves.
I believe that giving money is only one small way to be charitable, but I do believe that financial giving is important, it helps us prioritize and helps us gain self-control.
I'm grateful for parents who taught me to give of my time, knowledge, love, and other resources, as well as to give financially.

Every time I talk to someone about finances I try to determine their goals and desires, values, attitudes and beliefs. Each of us is different, therefore our financial decisions are different too. Budgeting is about making sure that every financial decision we make aligns with the things that bring us joy.
Even the utility bill, though it seems more a drudgery than a joy, is ultimately inline with my values; I like lights, warm food/cold food, a specific temperature range in my house, etc.

Like every other choice I make, when I give money to a charity, I want that decision to align with my values and goals. I believe this is part of being a good steward over the things God has given to me.

I often feel inundated by requests for charitable contributions. I'm sure I'm not alone. However, I feel that it it is my responsibility to make sure that the money I give goes as far as possible, and that it aligns with my values and beliefs. I often feel that I am not well informed when it comes to many of charities that are soliciting my donations.

There are a few charities that have earned my respect and to whom I always say yes. For others, I tend to say no until I have a chance to do a bit more research.

Along with outright scams, there are also charities that have very high overhead expenses, and some are very politically charged. Some charities do better than others at getting money to the project rather than paying for salaries, and lobbying.

I recently came across a charity that I was very interested in supporting, on the surface it seemed to fit well with my values and beliefs. I was excited, the information on their website seemed wonderful. However, a little digging on other websites revealed that this charity actively promotes legalizing abortion in 3rd world countries. That was heavy.
I do not support abortion. I would have been devastated to learn that I was supporting and promoting a charity that works for something that I morally oppose.


Next time you're thinking of donating to an organization, do a quick internet search, make sure that the goal you are helping achieve aligns with your personal values, beliefs and desires.
Money is not everything, but money IS power. Every dollar you spend has the power to bring you closer to your goals, or push you farther away,

Spend Wisely.

A great resource for finding out how a charity spends their money is Givewell.org
Finding out if they have political or other ties is going to require a bit more research.

I'm currently looking into a project that works with corporate sponsors to help individuals support charitable organizations. It looks promising.
If it works out, I will be sharing more in a couple of weeks so check back!

Easter Basket Finds at Dollar Tree

The thing I love most about filling Easter Baskets at Dollar Tree, is how easy it makes it to stick to my budget, $5 equals 5 items, $10 equals 10 items, no calculator needed and no need to add extra stress to my mom brain :) .

So, I decided to take you guys on a virtual tour and show you some of my Dollar Tree faves to be on the lookout for...

Obviously the usual baskets, eggs, and grass (Yay for paper grass that can be vacuumed up!).

I was excited to find kites. I don't expect them to be sturdy, but I don't want to spend more than $1 on something that's going to be drug around by a 3yo who doesn't care if it flies. 

And, I can't wait to watch my baby's reaction to his hopping baby chick :) .

Pool Noodles, water guns, and water balloons for water play.

Buckets, shovels, and rakes for the sandbox (wishing I'd grabbed more of these).

Along with the regular candy (which is usually cheaper than most discount stores), they also had the unique candy that I loved so much as a kid. Think fewer treats, more impact.

They had lots of puzzles and coloring books to choose from with princesses, superheroes, and many other favorite cartoon characters.

Fairy wings, wands, and crowns as well as plastic balls and bases.

We have one of these little magnetic drawing boards, they're great for on the go.

Jump Ropes

Badminton sets (might even be good for pre-teen and teenage boys???), and everything you need to chase after bugs and butterflies.



They had dozens of varieties of bubbles to choose from. Also look for sidewalk chalk, they didn't have it in the store I was in, but I hear they do have it in other stores 20 pieces for $1.

Nail stickers, nail polish, cute notebooks and pencils (pre-teen and teen girls???)


And just in case you need something for your Easter Basket, I found a good deal on the leather Ked's I got for my birthday. They're marked down to $29.95  on Amazon instead of $50.00, (when you select your size the price will drop). As usual, I have no idea how long this deal will last.

Great Deal on Fisher Price Cradle 'n Swing

Today Only, the Fisher Price Moonlight Meadow Cradle 'n Swing is $95.99 shipped on Amazon.
This is a great deal for this swing, and since Kohl's no longer allows coupon codes to be used on baby products (congratulations if you snagged a deal on my last post), I don't anticipate a better one anytime soon.
Plus with this deal there are no hoops to jump through.

I have a Cradle 'n Swing and LOVE it. The option to have side-to-side or front-to-back movement is so nice. My babies like side-to-side when they're tiny and front-to-back when they're bigger.
The only swing people seem to like as well or better is the Mamaroo, which costs twice as much (that's also the best price Amazon's had on the Mamaroo).

There are also good deals today on the coordinating Bouncer and Rock N Play.

Sorry the Rock N Play already Sold Out. 
There are only 2 Bouncers left.

Price Drop on E-Cloth Window Cleaning Kit

I hate cleaning.
But since I have to do it, one of my favorite products is the E-cloth window cleaning kit.
Right now it's only $7.78 on Amazon.

I try to avoid most chemical cleaners for multiple reasons
Most of them give me headaches.
They're expensive.
I don't like the thought of my children being exposed to the residues they leave behind.
If they're not in my house my kids can't eat them.

I clean most things with Vinegar or Baking Soda.

I stumbled upon e-cloths just before we bought our house.
I purchased the Home Cleaning Set (also a good price on Amazon right now) and have been very happy with it, but my favorite cloths are the polishing cloths. This price drop gives you the window (and mirror) cleaning cloth and the polishing cloth for the price of just the polishing cloth. Ever heard of Norwex? This is a small fraction of their prices.

I love that I can just use water and I NEVER end up with streaks. The money saved on Windex and Paper towels covers the cost of the cloths and they're easier to use.
Check them out here.

Cereal vs. Space Planes

Economics for a Three-Year-Old

Teaching Kids About Opportunity Cost

Today, while grocery shopping, I had the wonderful opportunity to teach my 3 year-old about the economic principle of opportunity cost (every dollar spent is a dollar that can't be spent on something else).

Dictionary.com defines Opportunity Cost as:

the money or other benefits lost when pursuing a particular course of action instead of a mutually-exclusive alternative

Or the British Definition:

the benefit that could have been gained from an alternative use of the same resource.

Basically, if we spend money on one thing, we can not spend that money on something else, the cost is the benefit of making the alternate choice.

A few examples:

If I buy a cheeseburger for lunch, I cannot use that same money to buy ice cream for dessert.

The cost of the cheeseburger is losing the opportunity to enjoy the calming sugar rush I get when I eat ice cream.

If I get a loan for a car, the money paid in interest cannot be used to go on a vacation.

The Opportunity cost of financing the car is not being able to use that money to relax, play and see something new.

Our lesson:

As I was walking down the cereal aisle, unbeknownst to me a little hand stealthily reached out and grabbed a box of cereal, a few minutes and an aisle later, I reached to place something in the cart and glimpsed something that I didn't put there, a box of Reeses' Puffs. 

My initial reaction was to remind him that he can't just grab things and put them in the cart (something he hasn't tried to do in months), but as I was scrambling for an appropriate consequence, I paused and realized there was a much better way to handle this.

Yesterday when I was giving him his allowance he told me he wanted to use his money to buy space airplanes, Echo and Bravo from the movie Planes, which cost about $6-8.

I bent down so I was looking him right in the eye and asked him if he wanted to use his money to buy that box of cereal, he said Yes.

I then asked if he wanted to buy a new airplane, he got really excited, "Yes, a space airplane......."

Next I explained that the box of cereal cost the same amount as a new airplane (not quite accurate, but reasonably close), and asked if he would rather use his money for cereal or an airplane, he firmly replied "A space airplane!" so we walked back to the cereal aisle and he happily put the box back.

In that instant he made the decision that the benefit of a new airplane outweighed the cost of not getting a box of Reeses' Puffs.

It doesn't mean cereal would have been a bad decision, it means he's choosing something he wants more.

He doesn't know it but he just had a lesson in Opportunity Cost, Delayed Gratification, and Budgeting.

Helping children understand the principle of opportunity cost while they are young, can help them make decisions that align with their values and goals when they are older and the decisions carry more weight.

BUT.... 

It seems overwhelming, even to someone who's spent a good amount of time studying this very concept...

I'm going to break it down into 3 steps:

1. Stop (or cut back on) buying things for your kids and instead give them the money to buy those things themselves.

Whether they do chores for they money or you give them an allowance (read my thoughts on Allowance here), kids need to have their own money so they can have opportunity to make decisions with it.

When they want something at a store, event, etc. the empowering response sounds something like:

Did you bring your money?

Do you have enough money?

Is that what you want to spend your money on?

2. Guide them, but let them make their own choices.

You might suggest:

That costs $xx.xx if you wait you could get it for less at _____.

You might want to wait and look at some other things before you decide.

Weren't you saving money for _____? Would you rather have this or _____?

That's XX weeks worth of allowance or XX jobs, is it worth it?

If my 3 year-old had decided to buy cereal, I would have let him.

3. Allow them to Make Mistakes

Nothing helps kids learn financial responsibility better than a toy that breaks after 10 minutes, 

Or a drink that disappears while a brother is still enjoying a toy, 

Or watching a sister enjoy a whole new wardrobe for the price of your one pair of designer jeans,

Or watching your sibling go to a movie on Friday night AND Ice Skating on Saturday night, when you only get to go to the movie because you spent $10 on concessions.

It doesn't mean that any of the decisions were "BAD", though they may be "SAD", OR maybe that buttery popcorn, or those jeans that look great and fit perfectly were worth it.

It's not about making decisions that please mom and dad, it's about teaching children how to make decisions that align with their values and goals. 

It's about making sure that the lost opportunity is a price they're willing to pay. 

If you found this post interesting, you might also enjoy 

Six Things My Parents Did Right When Teaching Me About Money

and

Allowance: Money without Work

I also highly recommend the book Piggybanking for more ideas on how to teach kids about money, it's a quick easy read and quite entertaining.

Three Ways to Protect Your Identity and Your Finances in Less Than an Hour

1. Take a look at what's in your wallet

One time a college professor (you can visit her blog here) told us to pull out a piece of paper and write down EVERYTHING in our wallet. When we were done with our list we were then to pull out our wallet and compare the contents to our list, the point being that if we didn't know it was there it shouldn't be there.
That store credit card you signed up for 3 years ago to get a great deal, but have only used once or twice since? Imagine if your wallet got stolen and you forgot that card was in there because you've forgotten you have it. You responsibly cancel all your other credit cards, but the thief can still max that one out.
If you don't know you have it, perhaps reevaluate whether or not you should have it.

2. Cancel cards you don't need and relocate items you need but don't use regularly 

Place infrequently used items in a safe-deposit box, a safe, a locking drawer, or some sort of safe place.
These might include an HSA or FSA card, a debit card for a second account, a credit card you only use for large purchases, a store card, etc.

AND if you're still carrying your Social Security card in your wallet, STOP IT!

You're making yourself an easy target for identity theft.

3. Pull a copy of your credit report here.

Not your credit score, they're two different things.

A Credit Score is basically a grade of how you use credit that is available to you, it's only important to know your credit score if you're considering borrowing money.

A Credit Report is a record of your financial dealings.
It will show all the lenders who have extended credit or loans to you.
It will show whether you pay on time, the amount of your payments, the total amount of your loan or credit limit.
It may show current or previous employers.
It will show short-sales, foreclosures, bankruptcy and other matters of public record.

Federal law entitles you to one free copy of your credit report from each credit bureau every twelve months.
There are 3 credit bureaus
Experian
Equifax    and
TransUnion
So that's a total of 3 reports per year.

If it's your first time pulling your credit report, the recommendation is to pull all 3 at the same time.
Look over all of them and make sure there are no errors.

If you've looked at your report before then it's a great idea to pull one report every 4 months, start with one credit bureau now and then in 4 months pull the next, and so forth until you're back to the one you started with, this allows you to regularly monitor your credit for errors or signs of identity theft, for FREE.

Many websites will give you access to your "Free" credit report and "Free" credit score, but you end up paying for credit monitoring.
AnnualCreditReport.com is actually free. It is set up by the 3 credit bureaus to provide you with your Federally Mandated FREE access to your credit report.
DO NOT GO ANYWHERE ELSE.

Check Out My Article on FamilyShare.com

I keep forgetting to post this but it's exciting news for me.
A couple of weeks ago a slightly revised version of my blog post Six Things My Parents Did Right When Teaching Me About Money was republished in the Money section of familyshare.com

I've been really excited to see how well it was received, 4,963 views  and  3,072 shares to date.
I thought about blogging for a LONG time before I actually started. I was really worried about how my content would be received, I didn't want to just waste my time. I have received a lot of great feedback and I know I've been able to help some people work on getting their finances in order which is what this project is all about. This article's success is one more confirmation that I'm doing something worth doing. That's a great feeling.
Go check out my article here, share if you'd like and spend a moment looking around, there are some other really great articles on the site. I'd love to hear what your favorites are, leave a comment below so I know which ones to check out.

Saving Money: Birthday Edition (Part Three)

Spend Less, Give More

The gift that keeps on giving

As parents, it can be very tempting to want to give children lots of STUFF. Stuff they need, stuff they want, stuff you want, stuff they don't even know they want. Fulfilling my 3 year-old's wish list this year, would have cost roughly $1,000,000. 

Nope, not a typo. Along with a squirt gun, toy cars, a Buzz Lightyear with wings and a laser, a golf glove, a birthday cake, and plenty of other things I don't remember. 

He also wanted a four-wheeler, a tractor, and a combine, and he didn't mean toys or power wheels. 

I purchased a few of the things that were reasonable, but less than I could have, and far less than he wanted.

He did get the "Red Combine" cake he wanted, thanks to a little spray paint:).

Most of us have financial constraints that limit what, and how much we purchase for our children. 

I'd like to suggest setting a budget of how much you can spend on your child, and then spending less than that. If possible, significantly less.

Before you draw the conclusion that it doesn't seem NICE or FAIR or GENEROUS. Hear me out.

Buy a couple of things that will make your child very happy, but stop before you hit your spending limit, and put the rest into savings for that child.

I started this when my oldest turned One. There aren't many things a one-year-old really wants or needs, but there can be many things a parent wants for their one-year-old. I decided rather than fall into that trap I would buy a few presents and then put the rest of the money I had budgeted into his UESP education fund. It continues to motivate me to shop sales and limit my overall spending, knowing that I am giving him a far more valuable gift than another toy or shirt he doesn't need. We may not be able to pay for much of our kids schooling, I don't know what our financial future will hold, but something is better than nothing.

The type of savings you choose for your child may vary based on your values, goals, abilities, and the age of your child, some people don't want to pay for college or trade school.

Other savings goals may include:

First Car

Down Payment on a Home

Mission

Wedding

Custodial IRA (if your child has earned income. This money could be used for education, retirement or a first home. If you choose to go this route discuss the pros/cons and risks thoroughly with a financial adviser.)

Remember, small amounts add up. Investing just $20 twice a year (Birthday and Christmas), for 18 years at a 6% rate of return, would yield about $1200 upon graduating from high school. Now that's a gift.

More than anything, this gift can teach them the power of sacrifice, self-control, and delayed gratification, and that's a gift that keeps on giving.

View my disclosure here.

Saving Money: Birthday Edition (Part Two)

Yesterday I posted about saving money on birthdays, specifically pictures.
Today I'm moving on to the second item on my list, make the birthday cake yourself.

The first birthday cake I made for my son was one of the most embarrassing failures of my life.

EVERY time I bake a cake we laugh about that cake.

The cake was very moist. 

The frosting was real buttercream.

 It was about 2 feet tall.

 I had no idea what I was doing. 

The cake crumbled. The frosting melted. 

It was definitely an event to remember.

My husband still swears it was the most delicious cake he's ever had.

I've tried repeatedly to re-create it (the flavor, that is, not the beautiful creation itself). I really think it was the Duncan Hines Red Velvet Cake Mix, other brands I've tried since haven't been nearly as good.
Since the above disaster, I've become a bit less ambitious. Single layer cakes only for now:)
However, for only a few dollars I've been able to create cakes for only a few dollars that make my birthday crowd just as happy as one from the grocery store bakery.

I search for decorating ideas on Pinterest and then choose a single layer cake that I'm confident I can make without fondant. I bake the cake the day before and then start decorating it first thing that morning so that I have time to come up with a backup plan if it fails.
Below are the links to the original cakes:
Basketball cake
Golf Cake
Combine Cake using these instructions to make the No. 3.

My other secret, is I use a springform pan (the kind used for cheesecake) to bake thick/tall cakes without having to bake multiples and stack them. I use this set, but any springform pan would work, I use the medium size for a single cake, but for the No. 3 I baked 2 cakes in the smaller sized pan.
I just use a cake mix and use the classic Pinterest hack to make a boxed cake mix taste like one from a bakery.
Add an extra egg.
Use Melted Butter instead of Oil and double the amount
Use Milk instead of Water.
(I can't figure out the original source to link to, if you know, I'd love to give proper credit to the person who came up with this idea)

Happy Baking!