Kids and Money, Part 3: How to Set Savings Goals
This is part three of an ongoing series we’ve launched on the Insider blog on “Kids and Money.” As you prepare to send your child off to college, you should also be thinking about how to foster in them the skills necessary to build financial independence. In this series, we’re discussing how students can earn, spend, save, borrow, and protect their money in a way that aligns with personal and family values. Type “Kids and Money” into our Search Box to find all installments of the series.
As summer jobs come to an end and the new school year quickly approaches, now is the perfect time to be planning with your kids on how to divvy up any leftover summer job earnings. In our last article on Kids and Money, we looked at three simple steps to lay the groundwork for creating the right work/life balance: dream big, talk about what you see, and prioritize and plan. In that exercise, everything is still theoretical; you’re encouraging your children to simply share their dreams. The next step is to build the action plan around those dreams by setting goals.
Many of us are familiar with the concept of SMART (Specific, Measurable, Achievable, Relevant, and Timely) goals. We know that to set ourselves up for success, goals should:
- be clearly defined: what, specifically, is the dream, who does it involve, which part does the goal-setter control, and why is the goal important?
- have benchmarks that measure progress and allow for mini celebrations along the way;
- be reasonable and realistic; is the specific goal achievable within the measurable parameters set?
- be consistent with your values and relevant to your long term plans; and
- be accomplished within a set time This is key to turning dreams into goals.