No matter your age, setting goals is the first step in building a good budget. Knowing your goals helps you have a clear vision of what you’re saving for and can motivate you, too.
While your child’s goals will look very different from yours, it’s just as valuable for them to learn about the importance of setting and tracking goals. Here are five steps you can take to help them along the way.
Set a goal with your child
Help your child choose a goal to work toward. This could be saving spending money for a future family trip or buying a new toy.
Figure out what the goal will cost
Once your child has decided what they want to save for, talk to them about the real costs of the goal.
If saving for spending money, what types of things do they want to buy? How much do those items cost at your vacation spot? There could be a big difference between saving for ice cream cones every day at the beach and paying for game tickets at an amusement park.
If saving for a toy, think about what other costs there may be. For example – sales tax, shipping charges if you order online, and any batteries or accessories they’ll need for the toy to work.
Set up a tracking system
Engage your child’s creativity. Once they know how much money they’ll need, break out the art supplies and have them decorate a poster board with a picture of their goal and a meter to track how much they’ve saved.
Open an account for your child
This is also a good opportunity to talk to them about why we save money in bank accounts to keep it safe. Open an account for your child and every time they earn or receive money, use it as an opportunity to show them the ways in which money is deposited into accounts. Download the mobile app to show them how their money is adding up and introduce the concept of interest.
Help them learn about ways to earn
Decide what ways you’re comfortable having your child earn money toward their goal. Talk to them about the importance of saving money from gifts they may receive and determine if you’d like to give them the opportunity to earn money from an allowance or chores. Giving them ways to work for the money they need to reach their goals will help them understand the importance of earning money for the things they need and want.