The single biggest personal finance lesson that anyone can learn is that of delayed gratification.

Delayed gratification means that you hold off buying that new cell phone for a while so that you can pay cash for your car in a few years.

Delayed gratification means that you spend the evening reading a book or learning a new skill instead of merely watching television.

Delayed gratification means that you immediately save some of your paycheck instead of even giving yourself the possibility of spending it now.

The more often you practice delayed gratification, the sweeter the gratification becomes later and the more possibilities unfold in your life. Delayed gratification brings financial stability and with it, lower stress. It brings the realization of bigger dreams, too.

It’s one of the things that I most want to integrate into the lives of my children.

The question is obvious: how do you possibly teach delayed gratification to a four year old?

Over the last few years, I’ve been saving little tactics I’ve heard about here and there for just this purpose and, lately, I’ve been putting them to work on Joe. Here are some of the tactics – and how a four year old boy has responded to them.

The Treat Test

I often do this with both Joe and his two year old sister at the same time. I sit them both down and say, “Who wants an M&M?” (one of their favorite treats!)

I then say, “You have a choice. You can either have one M&M now – or you can have two M&Ms in three minutes. Which do you want?”

(I’ve altered the delay a few times.)

My daughter always chooses to have one right away, but she’s just two. My son, on the other hand, usually chooses to wait. Sometimes, if the timeframe is too long, he’ll ask for it now, but he’ll usually find something else to do to distract himself until he can have more M&Ms later on.

Mister Noodle

I essentially do a variation on the “Mister Noodle” sketch from Sesame Street, in which the children give “Mister Noodle” step-by-step instructions on how to complete a task.

Together, we come up with some sort of large project that we want to accomplish. For example, we might decide that we want to make a giant birthday card for Mom that includes a rainbow and pictures of all of the family members in it.

From there, we go through all of the steps we have to go through to complete the project. First, we need to get out the supplies, but we need to get all of the supplies out before we move on. Then, we think about what we’re going to draw – and perhaps even sketch it out lightly in pencil first. Once we have the design, we do all of the painting. Then, if we wish, we add collage elements by looking for the elements we want in old magazines and cutting them out. We then glue on the collage elements. We then leave the card out to dry and put all of the supplies away.

If we focused entirely on just our goal, Joe would turn out a lower-quality card than if we focused entirely on each step as we went along. If we spend some time now delaying the “gratification” of slapping paint on the card and instead think about what we want in the end, we wind up with a much better card.

Joe is just now beginning to see the benefits of this type of planning. I’ve seen it pop up in his thinking about other things recently, particularly in terms of buidling projects with the Magna-Tiles.

focus on the individual steps towards a long term goal

Visual Savings

One big thing we’ve done is focus strongly on what we call “visual savings.”

As I’ve mentioned before, we gave our son a

translucent piggy bank for his fourth birthday and instituted a weekly allowance – a small amount of money given to him each week that’s not tied to any specific chore or action. He just receives it as a way of learning money management skills.

A portion of that allowance is “saved” for a known goal. He’ll identify a toy that he wants. Each week, he saves a portion of his allowance for that toy. Recently, for example, he had been saving for a particular Iron Man toy.

We identify how much it costs and tell him how much he’ll have to save up for it. He puts his allowance in each week and also sometimes adds some “found money” to it. He watches the money build up. We talk about the toy he’s saving for and how much it will take to reach that goal.

At first, he was very impatient and would change his goals all the time so that he was saving for a lower-cost toy. In the last few months, though, he’s really started to see the benefits of saving for a better toy. He saved for months for his current Iron Man toy and, for him, the patience really paid off.

Reward Hard Work Instead of Results

My son spent most of an hour picking weeds from our front garden over the weekend. He didn’t do a perfect job by any means – he missed some weeds and picked a few flowers in the process.

But rather than criticizing his results, I just complimented his efforts. “Wow, Joe! You spent a ton of time weeding and now, because of your hard work, the garden looks great!” I then bent down with him to help him finish and simply showed him which ones were flowers and where some of the missed weeds were, not in any sort of a scolding way, but in a “Hey, Joe, check this out!” kind of way.

The focus is on the effort, not on the results. I fully intend to do the same thing when he’s in school. If I see him studying his school materials, thinking about what he’s learning, and asking questions related to them, then I know he’s learning and that earns the praise. The report card? That’s not nearly as important to me.

But don’t we want our children to have great results? Of course we do, but great results are a reward unto themselves. Plus, great results are often the endgame of a lot of hard work. If you’ve worked hard, you will get great results as a matter of course. Our focus is in making sure our children learn the value in working hard, not just chase results.

Working hard builds great things. Chasing results ends up like Wall Street, circa October 2008.