Delay Gratification – the key to financial literacy

Every now and then, one can find an article that says, ‘should we teach financial literacy in schools?’, where the authors talk about the importance of power of compounding, investing in equity and all that sort of thing.  Stuff like math and biology seem unimportant and dispensable to these authors compared to financial literacy. I think such articles stem from a combination of recency bias and selective amnesia!

Recency bias because they would have just woken up to the power of compounding, productive assets etc. and think they should have learnt it earlier.

Selective amnesia, because these guys seem to have forgotten that most kids hate school, because it is school, and most teachers find it hard enough to cover stuff that they have been doing for decades. Presenting concepts in an engaging if not novel manner  is a rarity in our education system (including the IITs etc.) and not the norm. So even if financial literacy was taken up in school, it would rapidly transform to ‘boring drivel’.

There is a time and place for everything. Including knowledge. When I wasted food, did not switch off the TV when I am not watching etc., my father would instruct me to and say, ‘when you earn, you will understand’. How true is that!

All this power of compounding, beating inflation drivel can wait.  The primary aspect of financial literacy a parent must teach a child is delay gratification.

Defined wrt to a child, it is the maturity to wait before making a purchase.

The maturity to recognise that even ‘wants’ must be researched.  We may want something badly, but is it the best? Can we get the same quality at a slightly lower price or can we get the same product from a different seller for a lower price?

Buy it we must, but after a bit  of research. The Earth is not going to end if we wait a day or two.

Even for purchases made due to peer pressure, ‘research’ would help  to ‘show-off’ better!

If a parent can instil this idea of researching products before purchasing it, the kid will learn purpose and patience.

I am fairly confident that such a kid will not grow to ask, ‘which is the best life insurance policy or mutual fund to buy?’ They would rather be researching for it themselves, than ask in forums.

Patience is the first and primary requirement for long-term investing.

Just because someone has been ‘duped’ into buying an insurance policy, does not mean we can teach about mis-selling in schools. All we can do is to try and eliminate mis-buying.

Other things that parents can do can be found here: How to get kids interested in money management


I write this post, feeling fortunate and thankful.  Yesterday my son completed age 5. I hate parties. So we have never had one for him. We do cut a cake in private.  If my son had asked for one, we would have had a party, but despite attending several of his friends parties, he does not want one – not that way anyway  (unfortunately he take after his dad in this aspect).

His idea of a birthday is not to go to school that day (request denied!). His idea of a birthday is to open gifts.  So we get him several (nothing expensive, no toys, just books and puzzles – he is a nerd) gifts.

This time, he wanted his age times 2 = 10 gifts. Thanks to flipkarts prompt service, they arrived a good two weeks ago.  I would have ripped apart the packages the moment they arrived. My son had the maturity to wait. He lined them up in a shelf and waited until today to open them.

Packing material is strewn all over my chair as I write this, fortunate and thankful that my son did not take after me.  He has intrinsic delay-gratification traits. He either got it from his moms side of the family or it is our sheer dumb luck.  Now our challenge is to nurture it.


Speaking of financial literacy, just learnt about an awesome educational initiative by the Centre for Investment Education and Learning Pvt Ltd (CIEL)  headed by Dr. Uma Shashikant (interview here). Dr. Shashikant is a well-known trainer and will speaking on direct equities at the Mumbai investor workshop on Feb 1st.


Extract from the about page:

Money Kraft aims to empower investors and intermediaries to make better personal finance decisions.The objective is to provide unbiased, simple, conceptually correct, practical and useful educational content. Moneykraft is not a producer or seller of financial products, nor does it undertake financial advisory or distributional services for a fee or commission.

Explore the site, register today, spread the word around.


Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media

Do check out my books

You Can Be Rich Too with Goal-Based InvestingYou can be rich too with goal based investing

My first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create customg solutions for your lifestye!Get it now.  It is also available in Kindle format.

Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want

Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you want My second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a youngearner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Create a "from start to finish" financial plan with this free robo advisory software template

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

About Freefincal

Freefincal has open-source, comprehensive Excel spreadsheets, tools, analysis and unbiased, conflict of interest-free commentary on different aspects of personal finance and investing. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. We do not accept sponsored posts, links or guest posts request from content writers and agencies.

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

12 thoughts on “Delay Gratification – the key to financial literacy

Comments are closed.