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The High Cost of Instant Gratification

Written by Nickel - 27 Comments

This past weekend, I had an interesting interaction with our six year old. For background, we’ve been extremely busy lately and had gotten behind on their allowance. So when we finally sat down to get caught up, he was absolutely thrilled to find that he finally had enough money to buy the Nintendo DS game that he’s been craving — Pokemon Diamond.

The online option

Since I had signed us up for Amazon Prime last fall, I figured we could just order it online and he’d have it in his hot little hands in a few days. After all, they had a great price, free shipping, and no sales tax. But that’s not how a kid views the world.

That wasn’t fast enough. He immediately began lobbying for a trip to the store. Since we had to stop by Wal-Mart to pick up some things for his brother’s birthday, I relented. “We can check it out and see if they have a decent price,” I said, knowing full well what would happen if they had it in stock.

Meanwhile, at Wal-Mart

When we arrived in the electronics section I discovered that the game of his dreams was selling for a dollar more, plus he’d have to pay sales tax. All in all, it would cost an extra $3.33 — roughly 10% more than if he purchased it from Amazon. I tried to explain this to him.

I tried to tell him that the price difference was nearly two weeks worth of spending money. I tried to assure him that it was better to wait two days and save the money, especially since he’d be in school for most of that time. But it was all for naught. He was determined to buy it.

Since the whole point of paying our kids an allowance is to teach them learn to handle money on their own, I relented. He bought the game and has been having a blast with it ever since. Was it worth paying 10% extra to get it two days sooner? In my book, no. After all, good things (like substantial savings) come to those who wait. But if you asked him, I’m sure he’d say yes.

Published on March 13th, 2008
Modified on March 14th, 2008 - 27 Comments
Filed under: Family & Life, Frugality

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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27 Responses to “The High Cost of Instant Gratification”

  1. 1
    Arlene Says:

    I’m not sure this is a huge deal – 6 years old? Their concept of time isn’t quite what ours is. Remember how Christmas felt like 2 years away once you set up the tree? Besides, in his mind, he had waited: he saved up and waited patiently to buy the game.

    The lesson you taught him will be instilled in him later, when he’s had time to reflect on it and make sounder decisions. I remember feeling very undermined by my parents whenever I would buy something with my allowance. They would say “You don’t need that” or “Don’t waste your money.” Now, of course, I have an appreciation for thinking about how I spend my money thanks to them. It’s important for a kid to make the distinction about where the money comes from and goes, and sometimes they need to spend it to realize it.

  2. 2
    nickel Says:

    Arlene: You’re missing the point. I never said that it was a huge deal. I said that I had an interesting interaction. The difference between how kids and adults perceive the world are interesting to me. And your point about kids learning to handle money by spending it is exactly why we’re doing this. I simply made him aware of the consequences of his decision (using up an extra two weeks worth of spending money) and then let him make the choice.

  3. 3
    Scott Says:

    You tried to teach a 6 year-old about comparison shopping while at the store with his toy of choice right in front of him? His choice doesn’t surprise me, but it is an interesting illustration that will show me how silly I am being the next time I want to buy the newest gadget that would cost 30% less if I waited 6 months. I do agree with Arlene that a week or even a few days seems like a very long time to a child and that he will in the end learn the lesson that you were teaching; kids just have to make their own mistakes sometimes. It sounds like he has already learned that he needs not to spend his money each week on small things in order to save for the game that he wanted, so good job on that!

  4. 4
    Ryan S Says:

    On the other hand, you have to look at this developmentally. Your son processes a lot of his emotions through play. You might be buying a bit more than instant gratification with your $3. Allowing your child freedom now will pay ‘dividends’ when he’s an adolescent.

  5. 5
    Fiscal Musings Says:

    Even though it’s a simple story, most people could probably find it applicable to them if they really thought about it.

  6. 6
    Ken Says:

    Teaching delayed gratification early is extremely important.

    Something as simple as “not now, in 5 minutes” and teaching them not to freak out is a start. Works well when they’re 3-5. By 6 I think it’s completely appropriate to make the attempt.

    When my oldest daughter was very young, we used to teach her, “oh it’s not on sale yet” or “it’s not a good deal yet”.

    Eventually, she used to look for a sale sign and if she didn’t see one she’d say something like “oh I like that doll but it’s not on sale so we shouldn’t get it”.

    Of course I want to be the proud parent and say my daughter is different, but in all truth, I believe most children can be taught good spending habits early. You just have to be persistent and consistent in teaching.

  7. 7
    nickel Says:

    Scott: No, I didn’t really try to teach him delayed gratification while we were at the store, or at least not in the sense of really trying to convince him and expecting him to make the “right” decision. Rather, I took this as an opportunity to explain to him his choices, as well as the ramifications of his decision. As I said explicitly in the article, I knew exactly what would happen if we went to the store and they had it in stock. In my view, this was a perfect “teachable moment.”

    With regard to your last point, I’ve been blown away by the ability of our kids to save. Our oldest (currently ten) saved up to buy a Nintendo DS (his younger brother eventually got them as gifts) as well as a lower end Nikon digital camera. Our second oldest (currently eight) likewise saved up for a digital camera, and also regularly saves $30-$40 to buy some sort of “big” item. All of this on an allowance of $0.50 per week per year of age, of which 10% goes toward charity and 30% goes in the bank (though they do get occasional cash gifts from grandparents for b-days and holidays, too).

    Fiscal Musings: You’re exactly right. While this sort of “I want it now and I don’t care how much it costs” thought process is totally understandable in a young child, a great many people never outgrow it.

  8. 8
    Mike Says:

    @ Ken: So you’re really saying you’re good parents ;) I’d have to agree, because I’ve heard very few kids say something like that in a toy store.

  9. 9
    Andy Says:

    While many children can cave in to instant gratification (as do adults), I’ve seen my son slowly understanding that saving more can get him a better toy. It is a valuable lesson.

  10. 10
    nickel Says:

    Andy: Starting at the age of 3, we give our kids $0.50 per week for each year of age. So our 3 year old gets $1.50/week and out 10 year old gets $5/week. Of this, 10% is set aside for charity (they pick), 30% goes into a high yield savings account for the future, and they get to spend 60% on whatever they want (within reason, of course). I also linked to a description of our system in the body of the article (second sentence), above.

  11. 11
    Dividend growth investor Says:

    Maybe if you offered to give your kid something else in addition to the game if they saved 10% ( the $3 savings + the game) he/she would have been more willing to wait.

  12. 12
    nickel Says:

    Yes, I’ve thought of that. However, the point wasn’t to get him to acquiesce. Rather, the point was to help him make an informed decision. If he later regrets it, it won’t be the end of the world, and he’ll have learned something.

  13. 13
    Ken Says:

    Mike: thank you. yep not much I can lay claim to in this life, but that daughter is now 18 years old, has a real estate license, notary license, loan signing certification (goes on top of notary), is taking 18 units in college, headed off to international studies soon, is a “good girl” while still being social, working on her second black belt and active in varsity sports… the other daughter is content with 4.0 in high school but is searching for “her thing” to do (she’s not as out-going as the older daughter. They both still understand the value of money and when they shop, they can go and not feel the need to buy something before they come home. When they buy they still look for better value. I keep them invested in the process. Recently my older daughter wanted to upgrade her phone. I offered to pay half and she did quite a bit of research online and ended up picking not-the-most-expensive-phone-in-the-pile. She picked the model without the built in radio, because “she didn’t need it”. I do like that kind of thinking.

    If there’s one thing I’m proud of it’s my two daughters. Certainly not all me, but I do feel quite blessed to have them as my children.

    Currently at home we’re going through a period of “simplifying” and selling off a bunch of junk that we’ve picked up and had in the garage. The girls are learning through this process, as am I :D

    Anyways sorry to wander off topic here. I’ll stop.

  14. 14
    Huffles Says:

    It seems to me that the most important lesson that Dad gave his child was the fact that there are choices. It’s important to let the kid make her own choice which is exactly what Dad did in the case. I can imagine my nephew (don’t have kids of my own) thinking twice about a similar purchase, appreciating the opportunity cost of “having it now” but buying it in the store anyways… and really enjoying the product once it’s in his gaming machine.

  15. 15
    Ron@TheWisdomJournal Says:

    I think it’s great that you’ve taught (and ARE teaching) your kids about economic choices! My kids would have probably made the same choice, but then again maybe not. Who knows?

    My 8 year old son is pretty thrifty and saves a lot but is willing to give it all away to anyone in need.

    I’ve promised my 14 and 13 year olds that I will match whatever they have saved for a car. I may be in trouble. My oldest already has about $1,000 and her sister has $700. They have 2 to 3 more years to save.

    Yep, I’m in trouble.

  16. 16
    Shadox Says:

    I actually think that he made the right choice. This is a one time purchase and the cost differential is really minimal. There is a premium to be paid for getting something now rather than later (it’s called an interest rate in finance, but it’s true of pretty much everything else), and sometimes that premium is worth paying.

  17. 17
    Danielle Says:

    Your 6 year old gets $3 a week, doing a bit of quick and dirty math this kid waited for 12 weeks to get this one DS game. Kudo’s to you AND him for that accomplishment!

    Any suffering he will feel about not having that $3.33 to spend on something else will be completely erased by the many hours of entertainment he gets from this one purchase. For him it was worth it!

    Something us adults could learn from this interaction is that sometimes it is worth spending a bit of money to get an item that gives us some rest and relaxation or greatly simplifies our life.

    Things in this category that I or someone I know has paid for are TiVo, Housecleaning service, Netflix, rock climbing gear, and a book of your favorite subject or author.

  18. 18
    nickel Says:

    Danielle: It’s actually worse than that… Our kids only get to spend 60% of their allowance, so he’s only making $1.80/week in spending money. That’s why a $3.50 price difference is actually a pretty big deal for him. It’s all a matter of scale, and in this case it equates to two weeks of spending money. HOWEVER… They also get a number of smallish monetary gifts from grandparents for birthdays, holidays, etc., so it doesn’t take quite as long as you’d expect for them to save up for stuff.

  19. 19
    Sam Says:

    It would be interesting if something comes up in the next week or so that he needs money for and since he took the extra hit on the game he wouldn’t have the available cash.

  20. 20
    AJC @ 7million7years Says:

    Some great lessons for your child, which are far more important than the few pennies involved:

    1. teach your children to save AND to spend … both are important, when balanced properly

    2. We pay our children Twice-Their-Age every month, BUT they must save half.

    3. We teach them how to invest, but doing so is their choice: my 13 y.o. son has ‘invested’ his savings in my portfolio AND has his own e-bay business bringing in $30 profit/week. My daughter has chosen the investment-only option.

    This is important stuff … thanks for the post!

  21. 21
    JHS Says:

    Thanks for participating in this week’s Carnival of Family Life: St. Patrick’s Day Edition at Colloquium! The Carnival will be live at midnight (Pacific time) on March 17, 2008, so drop by and check out all of the wonderful submissions included this week! Happy St. Patrick’s Day to you!

  22. 22
    Dave Says:

    I agree with Arlene. I got the feeling that you made more of this little situation than was called for. We learn these things as we grow older and hopepfully gain wisdom. Some people never learn, however, I commend you for teaching your son to think before he buys something and to reason things out. I tried this with my son who is now 30 years old. He is a spender all the way. Good examples and advice on being thrifty went out the window. I think the point you missed is that todays “children” have a sense of entitlement. I want it, I deserve it and I want it now.

  23. 23
    Justin Says:

    You know you’re supposed to pay sales taxes when you file your state income tax on everything bought out of state that wasn’t already taxed, right?

  24. 24
    nickel Says:

    Yes, though I suspect that the rules regarding this vary from state to state. Regardless, I’ll be sure that my son claims this when he fills out his tax return. Oh, wait… He’s six. Hmmm…

  25. 25
    Uncle B Says:

    Sure, get him the game, at all costs. He’ll learn to push the right buttons and flip the right switches to get a reward, then when he is older, he’ll be ready for that push-button, production line job we exported to China a long time ago! Buy the kid a full blown computer and let him learn to build his own games! Just as soon as Microsoft stops monopolizing the software industry, American children will move beyond finding the right button to push, to deciding what a program is to do, then we will be able set an example for the third world instead of fearing them as cheap labor ready to take our jobs.

  26. 26
    sartrewasright Says:

    I could not help but wince when you said you had to stop in at WALMART…

  27. 27
    nickel Says:

    Sadly, Wal-Mart is amongst the only options in our area for certain things. There is still a local hardware store, but most everything else has lost out to the big box retail chains.

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