Teaching Kids to Set Financial Goals

Long story short, kids who know how to delay gratification tend to grow up to be adults with higher paying jobs, have happier relationships, are physically healthy, and are persistent in their pursuits. Let me know if you want the details to this longitudinal research.

Using money, we have an unbelievable way to help our kids learn to delay gratification. It’s all about setting personal financial goals.

There are three types of goals kids can set:

~to purchase a specific item
~to save a certain amount of money
~to reach a certain account balance

Giving kids a reason to set a financial goal is important. This gives them an incentive and a concrete reason to save. Goals, like saving for a coveted toy, are more tangible to young kids. Tweens and teens can begin to work towards saving a certain amount of money which is can then be used as their investing money. Kids LOVE the idea of doing something as grown-up as investing. And if they see how much money can grow over time due to compound interest, they’re usually quite excited to get saving.

Goal duration should be short for young 5-6 year olds, maybe a week or two. These kids need to be successful in reaching their first goal because it will encourage them to set another one. As they get older, increase the time. You may even want to consider matching them dollar for dollar. Not only is this a good motivator, but it allows them to reach “pricier” goals faster.

Another strategy for getting your kids to reach their goal is to introduce them to some Above-and-Beyond jobs. These are jobs that your kids can do around the house to earn extra money. This has the added benefit of teaching kids the value of a dollar as when they work for money, it tends to have greater meaning.

Having kids set financial goals is the foundation needed for them to be ready to set goals such as saving for a car, or for college, or (it’s baaack) saving for a down-payment on a house. That’s a lot of delayed gratification! But it’s so worth it. You’re teaching your child life skills so necessary in today’s society!

And achieving a financial goal that they set out to do gives kids such a sense of personal satisfaction. It’s a joy to watch as a parent. Let’s not deny our kids (and us!) this opportunity.

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Selling on Ebay, A Teenager’s Message

I asked my son, Ryan, to write about his experiences earning some additional money by selling things on ebay. Here is what he wrote, unedited by his mother!

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Ebay can be a great tool to making money, anyone can do it, too. Kids, adults, it doesn’t matter! I’m Ryan, 15 years old, and I have used ebay since I was 12 to make money, mainly because I was too young to get a job.

Ebay is extremely easy to use and can be used to make yourself a small fortune. For example, I have bought and sold items that I’ve gotten from my friends and garage sales and sold them for much more than what I paid for. I recently bought an Ipod Touch for $100 from one of my friends, and sold it on ebay for $150. That’s a 50% gain! I have also sold items I’ve purchased from garage sales for almost 4 times what I paid for them. In all, I have probably MADE about $300 from ebay, and plan to make much more in the future.

It’s really quite simple to make an ebay account and get started on the road to success. Just click “register” on the ebay homepage and punch in all the info. That’s required. Then, you’re ready to sell! To sell your first item, on the homepage, go to “sell”, “sell an item”, and then find, and describe your item in a way to try to sell it, list features, accessories, etc. I strongly recommend setting a reserve price, the amount of money you’re least willing to sell the item for. To do this, you must be in the advanced settings of the description process. It’s considered an upgrade so you will have to pay a little to do this, but it’s not much.

Also, I highly recommend having a “buy it now” price, a price that you’re willing to sell it instantly, without the auction process. It is always good to have both.

After you’re done, you’re ready to list your item and make some money!

When you earn money from ebay, it is always great to save your money, you do not have to just spend it. I have already invested in mutual funds and the stock market, plus I have a savings account. Save away!

BTW, if you purchase something from someone on ebay, it is always good to leave feedback, good or bad. People rely on having positive feedback, so make sure you leave them feedback about what you thought about buying from them.

Teaching Money Values

We impart our values to our kids through our words and our actions. Mostly our actions. Take a moment to reflect on the things you value. Integrity, compassion, honesty, persistence, courage, patience… Now think about an action that can be associated with each one. For example, returning the unpaid can of tuna you discovered in the shopping cart ~ honesty. Or volunteering to speak at the board meeting even though the thought of speaking in front of people makes you mildly ill ~ courage. 🙂

Now think about the kind of values you want your kids to live by when they grow up. Since kids do most of their learning through observation (they’re quite good at it!), it’s important to think about the messages your behavior is sending. Are you living the values that you want to help define your kids as adults?

The Money Connection: Our values are also imparted to our kids through the way we handle our money. We teach generosity when we share with those less fortunate than us. We teach responsibility and delayed gratification when we put a little of our money aside for the future. And when we splurge on a fancy dinner out we teach that it’s good to enjoy, as well.

Conversely, shopping impulsively teaches kids that the value of a dollar is not important. Not to mention the messages sent about lack of self-discipline. And holding too tightly onto money teaches kids that experiencing life is not important.

So take time every now and then to reflect on the choices you make on a daily basis. Because how you live life is how you live your values.