How to Help Teens set Financial Goals

Everyone can benefit from setting financial goals, but the people who get the biggest advantage might just be teenagers. When teenagers learn to set financial goals and reach them, they’re not just learning how to save up for cool things—they’re developing a valuable tool that they’ll be able to use for the rest of their lives.

Teaching a teenager to set their own financial goals isn’t difficult, either. You just need to follow a few simple guidelines.

Here’s how to manage financial goal setting for teens

Start Small

One of the biggest hurdles almost everyone has to overcome when trying something new is their fear of failure. For many people, that fear can even lead them to avoid setting financial goals entirely.

You can help your teenagers avoid this pitfall by giving them some quick wins in the form of smaller financial goals. Some good goals of these types include:

• Opening a youth savings account

• Adding $5.00 to a savings account every month

• Saving for a movie ticket and dinner with their friends

These types of goals might be easy, but they’ll still give a teenager a sense of accomplishment that they can build on to help them tackle bigger goals. You can also use these types of goals to help your teen overcome procrastination, since it’s easier to convince yourself to do a simple task as opposed to starting a large project. As an added benefit, once your teenager has gotten used to setting small goals, you can show them how to break down large long term financial goals into smaller ones in order to make them more manageable.

Help your teen open a youth savings account!

Give Them Freedom

One of the most common mistakes parents make when teaching their teenagers about setting financial goals is trying to do the work for them. While you may want to help your teen out, especially if they’re having a rough time, you need to give teenagers the freedom to set their own goals, create their own plans and make their own mistakes.

This doesn’t mean you can’t provide any help, though. You can provide suggestions about what goals your teen should set for themselves and help them figure out what their priorities are when they’re setting goals. You might also want to show them the benefits of some financial goals that they might not have considered, like how much interest they might earn putting money in a high-yield savings account like a certificate of deposit (CD).

Another way to help your teen reach their financial goals is to teach them about SMART goals. In other words, help them create goals that are:

• Specific

• Measurable

• Attainable

• Realistic

• Time-Bound

When you help your teen make goals SMART, you’re giving them a clear picture of what their goal is and how they’ll reach it. A SMART goal also creates benchmarks on the path to a goal that will help keep teens accountable to themselves.

Help Them Understand the Challenges

It’s easy to set financial goals. Sticking with them, however, is another matter entirely. Most financial goals require patience and determination to reach, which can be discouraging to anyone, let alone teenagers.

Parents can help teens stick to their goals by helping them understand the challenges of meeting their goals when they set it. While a SMART goal will show your teen how much their goal will cost and how long it will take to reach their goal, you might also want to discuss other challenges, like having to get to bed earlier if they take a part-time job or not being able to hang out with their friends as much.

Keep in mind that the point of discussing challenges with your teen shouldn’t be to discourage them from reaching the goal they’ve set. Instead, your objective should be to help your teen balance the costs and benefits of their goal. This will help them figure out if the goals they’ve set are worth the cost, and if so, they won’t be disheartened when those costs arise.

Learn more from our experts!

Sample Financial Goals for Teenagers

• Put $100 in a savings account

• Buy a prom gown with their own money

• Buy concert tickets

• Redecorate their room

• Get a new video game

• Buy a class ring

Got a question about setting financial goals? Ask us!

Help Your Teen Reach Their Goals With First Alliance Credit Union

When you teach your teenager how to set and reach their financial goals, you’re giving them an important skill that will help them for the rest of their lives. You can get your teenager used to setting financial goals by having them start small and building up their confidence. From there, you can show your teenager how to set effective SMART financial goals, give suggestions on the types of financial goals to set and help them weigh the costs and benefits of each financial goal.

You can also help your teenager reach their financial goals when you become a member of First Alliance Credit Union. For only $5, your teen can open a youth savings account, and from there they use our Advisor Supported Kiosks to deposit money at any time, create a separate savings account for a financial goal and keep track of their progress with our online banking platform and mobile app.