Kids and Finance - Teaching Kids About Money: Setting Goals

Parents…..you know this is reality. You are the store with your toddler or young child and suddenly he or she asks for a food, candy, or toy. At first you are so happy for this interaction that you don’t hesitate to buy the item. And then it begins. They ask for candy. They ask for toys. They ask for stuffed animals and bright balloons and drum sets. They ask and ask. Every.single.shopping.trip. Teaching kids about money just got real – especially when it comes to setting goals!

Don’t despair. These challenging situations are also teaching opportunities. It is a great time to teach the adage “You can’t always get what you want” (Yep, we are sooooooo our parents now!). It is also a great time to teach your child about the benefits of saving money. This works better with older kids than toddlers, but you know what is best for your family. I am a firm believer that repeated practice helps establish good habits.

Choose a toy; set a goal.

Your young child is at the toy store with you and decides they want a stuffed animal. They absolutely can not live without it and must have it now. RIGHTHISVERYSECOND. (Sound familiar?). Instead of buying the item for them or saying “no” it is time for a teachable moment. Take a look at the price tag with your child. Is this something that they can reasonably save for? If so, take a photo of the toy. Then take a picture of the price tag. A new game is about to be played. The savings game.

Step 1: Determine how much money your child has. Go home and count the money in their piggy bank(s). If your child doesn’t have a piggy bank then grab a plastic container or envelope and label it for savings. Print out a picture of the toy they want and tape it to the savings receptacle.

You have established a savings goal!

Step 2: It’s time to start saving. Calculate how much money our child needs so the coveted toy can be purchased. If your child gets an allowance then those earnings can be added to the “savings” goal. You can also give them extra ways to earn money for the toy. Depending on the price of the toy you may make a deal that if they save for half, youíll pay the other half. This can help a child learn the power of saving without feeling defeated because the goal is too large for them.

The key to learning how to save is this: Don’t buy the toy for your child. He/She will either stick to their goal and save enough money…or not. Either way, it’s a valuable lesson.

Whenever possible, try to guide your child toward a savings goal that is reasonable and attainable. Check in every couple of days to see how they are doing. This will help them stay focused and motivated.

Learning to save is a valuable lesson and you can begin teaching your child when they are very young. You can start before preschool.