How to Set and Achieve Financial Goals for Teens

Saving money for a purchase is a tale as old as time. Whether you’re an eight-year old wanting a new bike or an adult seeking your first house, we all have experience trying to save up for something that right now, is financially out of reach.

First you need to set a specific financial goal. What is you want to achieve? How long will it take? What are the steps to achieving it? Once you’ve identified what’s important to you, you need to figure out what is achievable in the short, mid-range and long term; develop a SMART (Specific, Measurable, Achievable, Relevant and Timely) strategy and a tight budget to achieve it; start saving and constantly monitor your success.

Teaching Teens About Money is very important so consider sticking to these 11 financial goals which will surely help them in future :

1. Make a budget and live by it – Some are skeptical of the budgeting process. “Budgets are focused on debts and expenses and nobody got rich by focusing on their debts,’’ said Ric Edelman. You get wealthy by focusing on your assets and your income.’’ But most experts agree that budgets are useful, if only to clearly define the amount of income and fixed expenses in someone’s household. Creating a budget is a great way to know your financial limits.

2. Pay off credit card debt – Wohlwend said this quality should head the list for anyone serious about establishing financial standards. “The interest charges (on credit card accounts) eat up so much of the cash flow that could be used for other objectives,’’ Wohlwend said. “Once you pay them off, you should be conscious about not using the credit card as much. The whole system enables people to make poor decisions. Once you get caught up in that culture, you don’t even know what’s happening until you add it all up. It’s like, ‘My gosh, I’m $150,000 in debt!’ If you have trouble doing it yourself, try credit consolidation with a reputable nonprofit credit counseling agency.

3. Saving an emergency fund should be a top priority – Three months of liquidity is a minimum standard. Six months (or more) is better. In a fragile job market, emergency funds are essential. Emergency funds are commonly used to fix a surprise car repair, pay for a hospital stay, the mortgage, and a variety of other unforeseen issues.

4. Save for retirement – Delayed gratification remains an elusive concept for some Americans. “Everything around us is a push to buy, a push to consume,’’ Annamaria Lusardi, a distinguished professor at George Washington University School of Business said. “We need to make saving — particularly retirement saving — as exciting as consumption. And it is exciting when you consider it gives us the capacity to reach our long-term dreams. People just need to see it that way.’’ Set aside cash each month to grow your retirement portfolio. You’ll thank yourself later.

5. Live below your means – It’s a simple math equation. If you spend more than you make,  there’s debt. If you spend less than your income, there are savings. Don’t try to maintain a lifestyle you can’t afford.

6. Develop skills to improve your income – It doesn’t necessarily mean a return to college for an additional degree. It might mean taking on additional training or responsibility at your current job. It might mean finding a mentor, who can provide tips and feedback, or working a part-time job. It could also mean attending conferences and workshops, networking in your profession, taking a class at the public library, anything to acquire more contacts and knowledge. Small steps can lead to large payoffs in the future.

7. Save money for college – A college education that cost $20,000 in 1977, would cost $302,434 in 2020, but a degree stills pays off. According to the U.S. Department of Education, college graduates with a bachelor’s degree typically earn 66% more than those with only a high-school diploma. Over the course of a lifetime, the difference in earnings is $1 million or more. In 2020, an estimated 35% of all job openings will require at least a bachelor’s degree with 30% of job openings requiring an associate degree or some form of college according to the Georgetown study.

8. Save a down payment for a home – For most people, it’s the most significant purchase and investment. The greater the down payment, the more freedom and flexibility provided for the life of the loan. A 20% down payment is the standard for a good mortgage. Remember having a mortgage is a far more savvy investment than paying rent.

9. Improve your credit score – In order to get that home — or any other transaction that requires a loan — it’s always helpful to qualify for a lower interest rate. In simple terms, an improved credit score saves you money by qualifying you for lower interest rates.

10. Paying off your student loans – Debilitating student loan debt is a constant burden for millions of Americans. The average debt for the 44.7 million Americans with student loan debt is $32,731. Consider refinancing at a better interest rate as a way to pay off your student loans faster. However, if you have governmental loans and choose this option be careful of using private lenders to refinance. Federal loans have certain safeguards like income-based repayment, deferment, and forbearance that are no longer applicable after you refinance with a private lender.

11. Starting a business – Starting a business is a tough, but ultimately fulfilling endeavor. Who doesn’t want to be the boss? When starting a business, you will need to create a business plan, find seed money, and stick to a monthly budget within your means. Starting a business is meant to make money not hemorrhage your own. Stay resilient!