For The Parents
Why it's important for your kids to have a savings goal.
Apr 15, 2020
For The Parents
Apr 15, 2020
Setting a savings goal is an incredibly effective tool to motivate your kids to keep earning and saving their money. Think about the goalposts in sport or a due date on a project: they’re clear targets to work towards, making it easier to stay focused and avoid distractions. The longer your kids stay focused on their savings goal, the more often they’re reinforcing successful financial habits.
Simply setting a goal is the most important part of the exercise. Their savings target can be as big as a new bike or as small as a new video game, as long as they have something to work towards. Knowing they will get something to enjoy at the end will really motivate them to save their money instead of spending it all as they get it. As adults, we understand the need to save money with a specific goal in mind, and we know kids have more trouble grasping intangible concepts, so having a concrete goal will keep them focused on why they want to save money long enough to build the behaviour of consistent saving.
When you’re helping your child set up their savings goal, take the time to map out the path to achieving it and break it down into bite-size milestones. You may choose to set it up week by week or month by month, depending on your child’s age. Knowing exactly when they should reach each mini target and their final goal will keep them accountable, and excited to continue. It’s much easier for children to stay motivated if they know exactly when they will reach their target, rather than just waiting for all the money to add up, and they’ll be much more likely to stick with it.
A lot of young adults struggle with consistently saving money because they didn’t learn the skill as a child. Setting and achieving a savings goal when they’re young will give your child the opportunity to learn how to save in a risk-free environment, building the habit of saving before they need to unlearn the compulsion to spend. As they make conscious choices about saving each day, linking the conscious action and instinctual behaviour of saving, they learn how to defer their gratification. With a goal to stick to, your child will think twice about spending their money on lollies or trading cards, instead choosing to save that money, delaying the instant gratification of a $2 treat into their bigger goal later.
Having a savings goal, no matter how large or small, is incredibly important to help a child learn the skills and habits of a financially successful adult. Setting a goal helps them to stay on track as they learn how to defer their gratification, building a behaviour that will help them in all walks of life, not just their finances.
Squeeze the Day, and get them started today!