So, let’s find out if the last lesson took. Can we shorten up the timeline to see if saving wins over spending when we apply what we’ve learned? This is a life lesson in the potential value of delayed gratification, as well as teaching kids the opportunity cost – and future benefits of – their actions.
For Elementary ages:
Here’s our choice:
$2 now OR a large candy bar now OR $5 next week
Parents, you can change the amounts or items offered. Make sure you maintain that the initial amount and “yummy item” are about the same price, while the third option is a little more than double the value.
Have them consider and tell you — what’s the opportunity cost of their first choice? Remember that opportunity cost is ONLY the next best option they would have picked if the first option were not available.
Make sure they apply the question out loud: “What’s the wise thing for me to do?” Talk this through with them.
- The candy bar is a “what makes me happy now” choice.
- The $2 is a little better because while it’s still a “happy now” choice, but having it opens other options, i.e. what else could I buy with $2? Could I save some and spend the rest? And so on.
- The $5 next week option is a “delayed gratification” choice. The key is for them to realize that waiting leads to a bigger payoff, in which they can potentially get a large candy bar (or whatever they like) and still have money left over! (I’ve previously referred to this as financial “breathing room.”)
For middle schoolers and teens, the same steps above apply for this lesson, but you may need to tweak the options and prices to make the lesson more appealing for this age group.
The big life lesson here is starting to tie some of these concepts together for creating financial breathing room.
We have a long way to go, but we’re hoping the ol’ light bulb is beginning to flicker!