Credit Union Youth Month: Setting Goals

Setting goals is an essential part of any successful savings plan. Without a clear idea of what they're saving for, kids (and adults) may struggle to find the motivation to save. That's why it's important to encourage your child to set savings goals and work toward achieving them.

In our last Youth Month article, we went over the importance of saving for emergencies and how the 10% rule can help your child to save regularly. The remaining 90% of their income should ideally be used to take care of any expenses or obligations they may have. Now, that will vary greatly depending on their age. While young children probably won't have any expenses at all, a teenager may be responsible for paying for part or all of their phone bill, car fuel, and so on. Once they've paid for what they need, they can spend some of their money on whatever they like and save the rest for things they'd like to eventually buy. After all, many people find saving to be easier when they're saving for something specific.

Set Goals and Plan Ahead

Start by talking with your child about what they want to save for. It could be something small, like a toy or a game, or something bigger, like a new bike, family vacation, or education. Once you have an idea of what they're saving for, you can help them break down the cost of the item and create a plan for reaching their goal.

For example, imagine that your child wants to save up for a $50 video game. If they get an allowance of $10 per week, help them to understand that it will take five weeks for them to save up enough to buy the game. Help them set a goal of saving $10 per week for the next five weeks and track their progress along the way.

Get Creative

Encourage your child to get creative with their savings plan. They could start a savings jar and decorate it with pictures of what they're saving for. Or, they could keep a savings log to track their progress and celebrate each milestone they reach.

Delayed Gratification

It's also important to teach your child about the benefits of delayed gratification. Help them to understand that by waiting and saving up for something they want, they'll appreciate it more when they finally get it. This can be a tough lesson to learn, especially in a world where instant gratification is often the norm. But it's an important lesson to learn.

Positive Reinforcement

Finally, be sure to celebrate your child's successes along the way. When they reach a savings goal, take the time to acknowledge their hard work and dedication. This will help to reinforce the importance of saving and motivate them to keep going.