Welcome to Issue #023 of The Money Messenger!
The Money Messenger brings you the latest on your kids and money.
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The Money Messenger
In This Issue
October includes both National Financial Planning week and National Kids' Goal Setting week. Both of these happen next week - the week of October 5th. In honor of both of these weeks, this issue focuses on setting financial goals as part of an overall a financial plan for kids, teens and families.
A reader's question on how to start planning for holiday expenses and how those fit into an overall financial plan
Note from Jennifer
As I write this, today is October 1st. It is so hard to believe that...
- Fall is really here. The days are growing shorter and the wind more brisk. Where did summer go?!
- There are less than 100 days left in 2009. Where has the year gone?!
- Halloween - just the first of the fall/winter holiday season - is only 30 days away. Candy is already on sale, the costumes are in full view in Wal-mart and the seasonal Halloween stores are in full swing.
All of these things can make you look at the money skills you are teaching your kids, your family financial plan and ahead to your holiday spending. The key is to not get overwhelmed by any of it. That's where this month's articles on goal setting and financial planning can help.
Goal Setting and Money Skills for Kids
Teaching kids to set goals and teaching them money skills can go hand-in-hand. It might seem odd to think about goal planning with kids - that setting goals is something that applies more to teens and adults. That doesn't have to be the case.
Kids set goals all the time - we just don't think of them the same way we think about adult goals. Here are just a few examples of goals your kids might set and maybe even have already accomplished:
- Learn to ride a bike without training wheels.
- Save money to buy a new CD.
- Get an "A" on history test.
- Learn to water ski.
- Earn extra money to get a new Xbox game.
One thing I've noticed about my kids is that when they set goals like this, they get very focused on achieving them. It is almost all they think about - how to do it, how much they can practice and ingenious things that can help them get to their goals faster. How do you get them to think about money and money goals the same way they think about riding a bike or scoring three baskets? There are a couple of ways. Depending on your child and their money personality, one or some combination of these ideas can help get started on the goal setting path with their money.
- Start small. No matter what age your child is, the first steps in setting goals should be small enough to be achievable. This is about getting some wins under their belt and giving them confidence to keep setting and meeting their goals. Yes, they should have goals that are not overly easy to meet but there are also needs to be a balance so that they can stay focused.
- Make it fun. Not every goal they have - for money or otherwise - is going to be fun by itself. Still, there are ways to make any activity fun. That could be by celebrating smaller accomplishments along the way, having a chart to show progress (especially on a savings goal), or finding new ways to do things that bring the goal closer. Get creative!
- Write it down. There have been countless studies that show that successful people - of any age, in any area - are the ones who write their goals out. Why does this work? Writing something down communicates to your mind that you are serious about this goal. Sure, that's not enough all by itself but it helps to get it down and then to track progress.
- Keep the balance. Don't let your kids get so focused on a goal that it starts to impact other things - including having fun. It is great to set goals - say saving $100 - but it's not fun to think that you can't ever spend any money until you reach that goal. It can be challenging to find that balance for kids who are new to setting goals.
- Be open to change. Some goals just don't end up working out. In those cases, the kids need to let it go and try a new one. The trick is knowing when to quit something that is no longer meaningful vs. just giving up because it seems too hard (insert whining child here). This really depends on what the goal was, what is going on in their lives otherwise and the nature of your kids in general.
What goals can you work with your kids on this week? Do you want to help them learn to save money - or perhaps even just learn to recognize and count it if they are young? It doesn't matter how small the goal may be. Starting to set money goals (and any goals) now will make the next step easier.
Preteen and Teen Goals: Fitting Money Into the Mix
As kids grow into their preteen and teen years, they can start to set bigger and longer term goals than when they were younger. For tweens, this may mean saving for an expensive item
or starting to manage more of their own clothing budget. Teens could be saving for something even larger such as a car or managing most of their own expenses.
No matter where your tween or teen is in age or their money knowledge, there are some key ideas to help with setting goals of any kind, including money ones. Use these ideas in addition to the basic kid tips above to really get things going.
- Let them have a voice. When kids are younger, it is more necessary to help them choose their goals. As they grow into tweens and teens, their own thoughts and ideas should be considered more. This has many benefits including helping them think critically on their own as well as helping to them to own the goal (vs. having it be one that they is just something you want them to do).
- Encourage them to set short, medium and long term goals. Preteens and teens are old enough to delay gratification for some period of time. Older teens will likely have long-term goals that could take at least a year to accomplish (this would be for a really large goal like saving money for a car). Preteens may have long-term goals that are three or six months out. The key is to have more than one goal and to have each goal have different time frames. This will help them learn to balance multiple goals as well as give
them some short-term goal accomplishments.
- Reward them for sticking to their goals - not just completing them. At least weekly, be sure to reward - verbal praise is perfectly fine - your teen for sticking to
their goals. This can be just the incentive they need to keep going!
- Have designated check-in points to make sure the goal is still the right one. Sometimes, we outgrow goals that we set for ourselves. Or we get far enough in to figure
out that this wasn't really the right goal. If it can happen to adults, it can sure happen to tweens and teens.
- Be flexible and open to change. If your teen does discover - really discover - that the goal is not the best fit, it's important that they know they can change it. It doesn't do anyone any good to continue to focus on an outdated or ill-fitting target. Plus, it's frustrating and demotivating. It is also important that they understand the difference between modifying something that's not working and giving up because it might seem too hard. Goals should stretch you at times, so sticking to it can sometimes be the biggest lesson.
Learning to set and achieve goals around money is a skill that tweens and teens will be able to use throughout life. Being able to practice these skills now can make a great difference as they continue to mature. Get even more information on teen money management here.
Family Finances: Setting Goals Together
It can be easy for family finances to become parent-only finances where the money duties fall to Mom and Dad without kids being involved. For some things, such as mortgage payments and the overall household income, that makes sense. Still, finding some areas that everyone can be involved in can help you grow
together as a family.
One way to do this is to set one or two money goals as a family. Try these ideas to get started.
- Choose a goal that is definite and has an end date. This may seem like Goal Setting 101 but it is really important here. First, family finances can lend themselves to
goals like "Spend less on groceries" or "Save money for vacation" that are part of the overall family budget. Both
of these are good ideas but it's hard to know when you are done without being more specific. You might try setting a goal to cut your grocery bill this month by 10 percent. Or, your
family could set a goal to save $1,000 by next April for a vacation.
- Ensure that each family member can be part of the goal. This includes even the youngest kids. They could help color in a tracking sheet that you are using to see how much money have saved for vacation. They could help count money in the family bank that you are using for the vacation fund. They can also help clip coupons and look for sales in stores
as you try to reduce your grocery spending.
- Track your progress. No matter how you do it - fancy spreadsheets or a spiral notebook - tracking your goal and progress towards it helps everyone see how much you are
doing together as a family and how much closer the goal is.
- Reward yourself along the way if the goal is really long-term. Unless you are all unbelievably dedicated, you will need to feel like you get some reward for working towards
your goal even if you haven't quite met it. Nearly everyone needs some motivation for staying on course. Find something that every family member can enjoy that doesn't jeopardize your goal (such as taking half of the vacation fund to treat yourselves).
- Keep trying and be flexible. Not all families can easily settle on a goal or even two or three of them. It can challenging to get everyone agreeing on the same target, so it's no surprise that your family may not find the best goal to start with. That's where you need to be flexible as a family to change your goals. It's equally important that you keep trying even if the first time doesn't work out well.
Setting goals as a family helps everyone by working together as a team and increasing the money knowledge along the way. Some ways to start on your family's goals are by doing a family budget or starting a family bank. You may even choose to do something smaller - just find something that works for your family and give it a shot!
Ask the Editor!
Here's where I answer your questions. Chris writes that her kids are clamoring for new Halloween costumes that aren't cheap while the Christmas spending season will start soon after. She would like to know of ways to keep expenses to a minimum and fit them into the overall family budget. Here's the advice:
Congratulations for thinking ahead! Many people deal with holiday expenses late - after the holidays are over. In fact, I've even heard the term "holiday spending hangover" tossed
around at times. It's amazing what a little planning can do for you. Here are some planning and budgeting ideas that can help.
- Figure out how much you think the holidays will cost. How much are the costumes, candy and extras for Halloween going to cost? Are you hosting Thanksgiving or traveling to relatives that will cost extra money? Are you buying presents for everyone in the family or exchanging names with a set budget? Add at least 10% to whatever total you come up with.
- Look at how much room you have in your family budget over the next three months. You may be able to buy the Halloween basics without much problem from your paycheck. Is that also true of your travel plans for Thanksgiving and the Christmas presents?
- Determine the gap between what you think you will spend and the money you have to cover it. If you have more money than expenses, that is awesome! You are done! If you are like
the rest of us, it's time to ask some more questions.
- What can you cut or scale back on? This could be day-to-day spending or finding costumes on eBay or craigslist.com. This is about decreasing money stress - not running around for hours and hours to save a buck. Be smart and realistic about what it makes sense to trim...and what the trade-offs are.
- Save as you go if you can or consider layaway plans. If you get started now, you may be able to save $5 or $10 each week that you can use in December. That extra $50 or $100 can
come in handy for Christmas. Several discount and department stores are bringing back layaway plans as well. These plans allow you to select merchandise now and pay for it over time so that it is paid for by Christmas. You get the double bonus of not finding the store shelves empty while managing your budget a little better.
Check out even more Halloween savings ideas here and Christmas budget tips at this page.
Coming soon...the next issue of The Money Messenger
November marks the traditional beginning of the winter holiday season with the classic Black Friday shopping kick-off for Christmas. Next month's newsletter will continue on with the theme that Chris' question introduced by focusing on holiday spending and budgeting to help your kids and family enjoy the holidays in spirit as well as financially. If you have questions you'd like to see addressed for that issue, just use the Contact Form or email me at email@example.com.
Talk to you soon!
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