The start of a new school year is the perfect time for families to discuss financial goals and personal values — and to turn those conversations into an annual ritual.
The start of school marks the beginning of a new year for most children, a time to start fresh and enjoy feelings of greater maturity and responsibility. This makes back-to-school an ideal time to talk to your children about their goals: academic, personal and financial.
These conversations don’t have to be heavy. Making a list of goals is actually a great way to get kids excited about being a grade older and accomplishing things that might not have been attainable for them last year. Parents can ask: What are you hoping to achieve in school? What karate belt would you like to earn? What would you like to save money for this year?
For most parents, the financial part of the conversation is the hardest, but it doesn’t have to be. Here are some tips based on my experience running my company, Goalsetter, which helps families set up savings accounts that get children excited about saving for specific goals:
- You don’t have to have an M.B.A. to give your children good financial advice. One of the biggest misconceptions I’ve encountered among parents is that they have to have a financial background to talk to their kids about saving and budgeting. Real life is full of financial lessons! Share with them a goal you had and how you achieved it–through hard work, savings, sacrifice or all three.
- Give your child his or her own savings account – and direct access to it. Research shows[1] that children who have savings accounts in their own name are much more likely to develop the habit of saving money as young adults. Having your own bank account is also a huge ego boost for a child and an incentive to get interested in financial matters.
- Pick a goal, any goal. What would your child like to save money to buy? It doesn’t have to be something educational or uplifting — maybe it’s a new iPhone, the latest video game console or a trip to the amusement park. Like adults, children find it easier to save when there’s an exciting goal at the finish line.
- Play a game that explores your spending priorities. Ask your child: If you had $100 to spend, would you want a new scooter, a trip to the arcade your friends, or a horseback lesson? What about if you had $1,000? This game can both help children to understand how much things cost and also get them thinking about their own values.
- Have them share their goals with family and friends. While “giving money” may be a loaded term in some families, supporting a child’s dreams and goals is not. Some relatives may be relieved to learn that a child whose birthday is coming up would prefer a savings-account deposit instead of a new toy.
The most surprising thing that we’ve found at Goalsetter is that many children who save for a particular goal decide not to spend their money on that goal after all — the thrill of seeing their money grow is bigger than buying yet another pair of sneakers or some fancy headphones. When we, as parents, get to the point where we have to suggest to our children that they spend their money, I think it’s an indication that they’ve pretty much mastered the savings lesson.
[1] Friedline, Terri. "The Independent Effects of Savings Accounts in Children's Names on Their Savings Outcomes in Young Adulthood." Journal of Financial Counseling and Planning. Volume 25, Issue 1 (2014): Pages 69-89.
