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6 Reasons Why You Should Have an Emergency Savings

If you’ve listened to financial podcasts or read personal money management books, you’ve most likely heard about emergency savings. The idea is simple: you stash away money for unexpected expenses, and you don’t touch it unless you absolutely must.   But it’s .....

Wealth - 6 min read

Looking back, do you wish you had started setting financial goals earlier in your life? Many of us had to learn financial lessons the hard way, but if you’re a parent of teenagers, you may be able to help them avoid some of those bumps in the road.

 

Before kids move out on their own, parents have an opportunity to help their teenagers set financial goals. Instead of making money mistakes, teens can develop beneficial habits that will prevent financial catastrophe down the road.

 

Later on in the article, we’ll look at some specific goals that can put teenagers on the path to self-sufficiency and financial success. But first, let’s cover five strategies for encouraging teens to set goals.

 

1. Goal-setting must be on their terms

It’s often difficult for parents to remember that these are their goals, not yours. Yes, you know much more than they do, but if you want your kids to achieve lasting success, they need to believe in their goals. Pushing kids down inauthentic paths won’t do them any favours.

 

2. Connect their goals with a satisfactory end

What we want for our kids is for them to be happy on their terms. What makes them happy? Find out. When goals are highly personalised, they’re more likely to stick.

 

Before diving into the process of setting specific goals, teens should think about what they’d like to do with their lives. As a parent, you can facilitate conversations around this topic and help your teens to start taking a longer view.

 

3. Help broaden teens’ perspective

Most kids are familiar with the question, “What do you want to be when you grow up?” But this question tends to narrow the future down to one factor: an occupation.

 

Help your teens consider other aspects of their lives as well: family, friends, health, education, faith, social impact and career. With a broader perspective, your teens will see how important financial stability is to their future happiness.

 

4. Encourage your children to dream big but play small

Success hardly ever happens in one big leap. Instead, people achieve significant goals by taking hundreds (or thousands) of small steps in the right direction. Teens are already learning this concept in other ways. They might want to achieve high marks in all of their classes. That’s dreaming big. But the best way to achieve that goal is to play small. Start by increasing study time. Then aim to ace the next maths quiz. The same principle applies to their financial lives.

 

Playing small helps to keep large goals in perspective. Without smaller steps, a long-term goal can seem overwhelming and unachievable. Playing small also helps to preserve motivation. Each small triumph serves to increase confidence and view the more substantial goal clearly.

 

5. Teach them to stop and take stock along the way

Life is full of distractions, especially for teens. Help them to stay focused on their goals by stopping to check in and see how they’re doing. Celebrate successes, and help them to redirect if they’ve diverted from their targets. Visual reminders can be beneficial. For instance, if a teen has a goal of saving $1,000, encourage them to create a chart that shows the growing balance each time they make a deposit.

 

Now that we’ve looked at strategies for helping teens set goals, let’s look at some potential goals you might set with your teenager.

 

Manage a Transaction Account

As soon as your teens have an income of their own, it’s wise to help them open a Transaction account. They’re more likely to save money if they have an out-of-the-way place to stash it, and they’ll get to learn valuable skills like balancing their accounts and transferring funds. There are many new online versions with smart ways to make this easier.

 

Set a Savings Goal

Teens are more likely to develop a lifelong habit of saving money if they create short-term and long-term saving goals. Long-term goals might include saving for long term travel, university or a car. Shorter-term goals could be stashing away $10 every month until they have enough for a trip or a new phone.

 

Earn Matching Grants from Mum and Dad

You can further incentivise saving by offering dollar-for-dollar grants for money saved by teens. This is an excellent strategy for helping teens to save for something that seems very far away. They’ll make steadier progress and keep more than they might otherwise.

 

Open an Investment Account

Start your teens on the road to financial freedom by teaching them to invest while you’re still close by to guide them. You could assist your teen in opening a brokerage account and then help them to set goals for investing regularly.

 

Your financial adviser can help you with guiding your teens to set financial goals. Starting your teens off on the right financial foot is a beautiful gift that will help them throughout their lives. To set up a consultation with one of our advisers, reach out to us at Altus.

 

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