Module 9: Financial Planning and Goal Setting for Kids

FINANCIAL LITERACY LEARNING RESOURCES 

Financial Planning and Goal Setting for Kids

What is Financial Planning?

Financial planning is like creating a treasure map for your money! It helps you figure out where you want to go with your money and how to get there. One of the key parts of financial planning is setting financial goals. This means deciding what you want to achieve with your money and making a plan to reach those goals.

Why Set Financial Goals?

Setting financial goals is important because it gives you direction and motivation. Just like an athlete trains for a competition or a student studies for an exam, having financial goals helps you focus your efforts on saving and spending wisely. When you set clear goals, it’s easier to make smart choices with your money.

Types of Financial Goals

1. Short-Term Goals: These are goals you want to achieve in the near future, usually within a year or two. Short-term goals are great for getting you started on your savings journey!

• Examples of Short-Term Goals:

• Saving for a new video game or toy.

• Collecting money for a fun outing with friends, like going to an amusement park.

• Buying a new book or a movie ticket.

2. Long-Term Goals: These are goals you want to achieve over a longer period, usually more than two years. Long-term goals often require more planning and saving, but they can be very rewarding!

• Examples of Long-Term Goals:

• Saving for a bicycle or skateboard.

• Planning for college or a special trip, like going to Disneyland.

• Starting a savings account for a future car.

How to Set Realistic Financial Goals

Setting realistic goals is essential to your success. Here’s a step-by-step guide on how to do it:

Step 1: Think About What You Want

Start by making a list of things you want to save for. Think about both short-term and long-term goals. Ask yourself:

• What do I want to buy or experience?

• What is important to me?

Step 2: Make Your Goals Specific

Instead of saying, “I want to save money,” be specific. Write down exactly what you want and how much money you need. For example:

• Instead of: “I want a new bike,” say, “I want to buy a red bicycle that costs $200.”

Step 3: Create a Timeline

Decide when you want to achieve each goal. Is it something you want in a few months, or is it something you’re saving for years down the road?

• Short-Term Example: “I want to save $50 in the next 3 months for a new video game.”

• Long-Term Example: “I want to save $1,000 in 5 years for a car.”

Step 4: Figure Out How to Save

Now that you know what you want and when you want it, think about how you can save for it. Here are some ideas:

• Set Up a Savings Plan: Decide how much money you can save each week or month. If you earn an allowance or do chores for money, set aside a portion for your goals.

• Cut Unnecessary Expenses: Look at your spending. Are there things you can skip? For example, maybe you can choose to make your lunch instead of buying it every day.

• Find Extra Ways to Earn Money: You could offer to help neighbors with chores, babysitting, or dog walking to earn extra cash.

Step 5: Track Your Progress

Keep track of how much you’re saving. You can use a savings jar, a notebook, or even a simple app on your phone. Seeing how much you have saved can motivate you to keep going!

Step 6: Celebrate Your Achievements

When you reach a goal, celebrate! Whether it’s buying that new game or going on a special trip, enjoy the moment. Recognizing your achievements will encourage you to set and reach new goals.

Example of Setting a Financial Goal

Let’s say you want to buy a new skateboard that costs $120. Here’s how you can set a financial goal for it:

1. Goal: Buy a new skateboard that costs $120.

2. Timeframe: I want to buy it in 4 months.

3. Monthly Savings Needed: To figure out how much to save, divide the total cost by the number of months:

• $120 ÷ 4 months = $30 per month.

4. Saving Plan: I will save $15 from my allowance and try to earn an extra $15 from doing chores each month.

5. Progress Tracking: I will keep a chart on my wall to mark off each time I save $30.

Conclusion

Setting financial goals is an exciting way to plan for your future! By thinking about what you want, making your goals specific, and creating a plan to save, you can achieve your dreams. Remember, every small step counts, and with determination, you can reach your financial goals. Happy saving!