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Helping Your Child Understand Money |
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Page 5 of 9 Setting GoalsSaving for long-term goals is a money management lesson older children are ready to learn. Start with the fun part: listing your child’s personal financial goals. You can make the list on a blank sheet, or you and your child can use the Top Priorities Checklist on this pageas a start toward identifying your child’s most important financial goals. TOP PRIORITIES | | [ ] Phone | [ ] Clothes | | [ ] Books | [ ] Charity | | [ ] Music | [ ] Snacks | | [ ] Movies | [ ] School Lunch | | [ ] Games | [ ] Gifts for family | | [ ] Gifts for Friends | [ ] Other________ | | [ ] Videos | [ ] Other________ |
After discussing your child’s general priorities, work with him or her to develop a list of specific needs. This is a good time to introduce the idea that saving is a way to get what you want or need. Explain the difference between planned saving for a short-term goal (e.g., new tennis shoes, birthday gift for Dad), and regular saving for long-term goals (e.g., college), or for unknown items and emergencies.Help your child establish his or her own financial goals and a budget to help meet those goals. The purpose of this exercise is to demonstrate the need to save for future goals. Once your child has identified clear goals, it’s time to set up a budget for meeting the goals. Use the Personal Budget on page 3 as a worksheet. Ideally, you want the difference between income and expenses to be a positive figure representing (as yet) unbudgeted money. It’s more likely, however, that your child will list so many things that his or her income won’t come close to paying for it all. If that happens, and the bottom line is a negative figure, it is a good time to start talking about the concept of trade-offs and the importance of living within one’s income. Help your child decide which expenses to postpone or eliminate in order to have money for higher priorities. For example, your child may decide to wait on a music purchase to have money for a special outfit, or to spend less on snacks to afford a new video game. PERSONAL BUDGET for ____________________________ | MONTHLY SOURCES OF INCOME | Allowance | $ ____________________ | Jobs/Chores | $ ____________________ | Gifts | $ ____________________ | Other | $ ____________________ | Total Income | $ ____________________ | MONTHLY EXPENSES | Savings | $ ____________________ | Clothes | $ ____________________ | Charity | $ ____________________ | Gifts | $ ____________________ | Books | $ ____________________ | Videos | $ ____________________ | Music | $ ____________________ | Phone | $ ____________________ | Movies | $ ____________________ | Snacks | $ ____________________ | Games | $ ____________________ | Other | $ ____________________ | Total Expenses | $ ____________________ | Total Income | $ ____________________ | (Minus) Total Expenses | $ ____________________ | Difference = BALANCE | $ ____________________ |
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