For Kids, Finances Need to Go Beyond Lemonade … to Marshmallows
The summer lemonade stand is a rite of passage for all kids. It is usually the first time a child gets to create their own business. They learn about the hard work it involves but also learn of its rewards, monetary and other. For my two girls, it was a lemonade and Oreo cookie stand so that they could broaden their potential “target audience.” It was quite the learning experience for them. They quickly learned that the 11-year-old was best at drawing in the customers, while the 14-year-old had better serving and counting skills. I watched as my girls learned how to market themselves and the product, how to make their customers happy and then how to manage their earnings.As a mom to two young girls, I believe that one way we as parents can prepare our kids for a better financial future is to teach them the fundamentals of finance. That is why I love Liz Frazier’s new book “Beyond Piggy Banks and Lemonade Stands.” It takes off from the basics of financial literacy we as parents impart to our kids and goes beyond that summer lemonade stand. What happens after your kids have made that $10 in coins and dollar bills? How do they budget? How much should be spent now, what should be saved for later and what is given to charity?The Importance of Delayed GratificationOne consistent theme throughout Liz’s book is the idea of delayed gratification. In a time when everything we could want is just a click away, it is something we as parents should be teaching our kids. They are being bombarded with the idea that the newest trendy shoes or that new video game is just a drone’s delivery away. There doesn’t seem to be a reason to postpone buying it NOW. But that mentality is setting our kids up to fail financially.In her book, Liz mentions a study Stanford University conducted with children. It was called the Marshmallow Test. The kids in the test were offered the choice between one marshmallow now or two marshmallows after waiting 15 minutes. Stanford then followed up with these same kids over the next 40 years and found that those children who were able to delay their gratification for bigger rewards (those two marshmallows), had attained greater success and better lives overall.Anyone with kids knows they are impulsive by nature and the always-connected world they live in makes them even more prone to act on those impulses. The immediate gratification of the one-click purchase is making it harder for our kids to learn how to ‘pay themselves first.’That is why I love Liz’s suggestions on how we can conduct our own Marshmallow Tests at home to teach our children to reward their future selves by giving them goals to save towards and model the same behavior as parents. Liz reminds us that we as parents have the most influence in making sure our kids get those two marshmallows in the future.