Teach your kids healthy spending habits and how to save with a goal

Guiding your teenagers toward financial independence is an important step in helping them become responsible adults. Teaching them healthy spending habits and how to save with specific goals in mind is crucial. In this blog, we'll explore how you can provide the right resources and support to make financial education both engaging and effective for your kids. From setting SMART goals to evaluating spending choices, let’s equip our teens with the skills they need to navigate their finances wisely. 

Resources for Teaching Responsible Spending 

The first step in fostering healthy financial habits is to provide your teens with resources that explain the importance of responsible spending and maintaining a positive balance. Financial literacy materials, such as books, websites, or apps designed for teenagers, can make this education relatable and interesting. Discussing the consequences of overspending and the benefits of having savings can help them understand the need to manage their money well. 

Setting Goals with S.M.A.R.T. Criteria 

To help your teen practice setting and achieving financial goals, introduce them to the concept of S.M.A.R.T goals: 

• Specific: Goals should be clear and specific. For instance, instead of saying "save money," say "save $300 for a new smartphone."
• Measurable: There should be a way to measure the goal. If the goal is to save $300, they can track their progress by checking their savings each month. 
• Achievable: The goal should be realistically attainable. Saving $300 over a few months might be feasible if they earn money from a part-time job or allowances. 
• Relevant: The goal should matter to them personally, which increases their motivation to achieve it. 
• Timely: Set a deadline to achieve the goal, like saving $300 in six months. 

Using a worksheet to write down these goals can help teens visualize and commit to them. Identify both short-term goals (like buying a new game) and long-term goals (like saving for college) to show that goal planning is a continuous process. 

Comparing Costs and Benefits 

Teaching teens to compare costs and benefits of different purchase options can be a practical exercise. For example, if your child wants to buy a new skateboard, look at three different skateboards at various price points. Discuss the pros (such as quality or features) and cons (such as cost or lack of certain features) of each. This helps them understand that cheaper items might cost more in the long run if they break easily, while more expensive items might offer better value through greater durability. 

Understanding Payment Methods 

Explain the similarities and differences between paying with cash, checks, and credit cards: 

	Cash Physical money that you hand over when you buy something. It's simple and doesn’t require any extra charges.
	Checks Written orders that tell your bank to pay money from your account. Useful for larger amounts where carrying cash isn’t safe or practical.
	Credit Cards Allow you to borrow money to make a purchase, which you must pay back. If not paid back in time, interest charges accumulate, making things more expensive.

The Impact of Credit Cards 

It's crucial to emphasize that credit cards are a form of borrowing. Explain that the interest charged on unpaid balances can make purchases much more costly. Encourage them to use credit responsibly, if at all, and to consider whether they can pay off the balance each month to avoid extra charges. 

Empowering your teens with the knowledge to make informed financial decisions is a gift that will serve them throughout their lives. By teaching them to set realistic goals, evaluate their spending choices, and understand different payment methods, you are helping them build a strong foundation for financial health. Keep the conversations about money open and positive, and remember, the skills they learn now will help pave the way for a financially secure future.