Saturday, March 2, 2024

This is how you can help your child set financial goals

We can all agree that 2020 has been anything but an ordinary year. We have navigated through 2020 with many of us feeling exhausted physically and emotionally. For some, 2021 couldn’t have come sooner. The New Year gives many of us an opportunity to reset and come up with new strategies. Resolutions have been made and vision boards neatly and clearly laid out for the New Year. All of us have a common mind-set and that is to succeed and as Earl Nightingale puts it, “People with goals succeed because they know where they’re going.”

Research has shown that goal-setting can be effective in helping people to maintain focus, motivation, and ultimately achieve what they want. This is something that can also be passed onto kids. They can also be taught the power of goal-setting from an early age. Going through the process of visualising their wishes and deigning a roadmap to achieve them will help them develop a growth mindset. 

Now that kids are back in school, this is an opportune time to encourage them to set financial goals. Often when we talk about goal-setting for kids, parents and teachers think of academic and school-related goals. Little attention is given to financial goals. In simple terms, financial goals involve money and what it costs to achieve your goals. 

Once kids have access to money, either through pocket money, commission or allowance, setting financial goals should be a priority. Having financial goals would help them effectively allocate money according to their needs and wants. The process also affords them a fundamental lesson in personal finance which will last them a lifetime. 

The first step in the process of setting financial goals is to allow your kids to choose a big financial goal they would want to achieve. It could be to start a small business or buy the latest play station game. Once that is set, discuss with your child the purpose of the goal in terms of how it will benefit them or others. Purpose oriented or meaningful financial goals are likely to be achieved. Remember not to push your child to set a goal that you want her to reach. Allow your child to set a goal that she has a genuine desire to achieve.

The big goal should then be broken down into small bite-sized goals. The big and small goals should all be SMART (Specific, Measurable, Attainable, Realistic and Timely). The SMART goal-setting approach was first introduced in the 1980s by George T. Doran to help businesses plan and achieve results. The approach has been widely used by companies and families around the world to accomplish dreams. This approach can also be taught to kids from an early age.  

The small goals can be viewed as a step ladder to achieving the big goal. They could be incremental as your child moves toward their big goal. To make it fun, you can encourage your child to draw a ladder on a paper and write down the goals with the big one on top. 

Finally, help your child brainstorm potential obstacles that could hinder her success. Unforeseen stumbling blocks could derail your child’s motivation. It could be distractions from friends or just bad habits. Once they have a plan of how to deal with them, it will give them the motivation to achieve their goal.

Above all, writing down their financial goals makes them real and achievable. Psychology Professor Gail Matthews conducted research that showed that writing down goals increases the chance of achieving them by 42%. Interestingly, talking to your child about their goals and encouraging them increases the chance of success to 72%. While at it, remember to celebrate your child’s efforts, determination and persistence. This will boost her confidence.

Happy New Year! 

*Otisitswe K. Tawana-Madziba is the founder of Fin-Edu, a social enterprise that empowers young people with social and financial education. Email: [email protected] 

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