Setting a realistic financial goal – and reaching it – can be hard for anyone. But it can be especially challenging if you’ve never set a goal before and don’t know how to set a path to reach it.

According to at least one report, and it’s admittedly a little dated, about 80% of teens are saving for cars, electronics, clothes and college. Of the group surveyed in 2018, about 50% wanted to save $2,500 to reach long-term goals.

Since it’s now a few years later, I’d love to know how many of the teens surveyed were able to save $2,500.
It’s not that teens are particularly bad at saving – it’s something that many, many adults struggle with too. A Federal Reserve System study published in 2019 reported that 40% of U.S. households didn’t have $400 in savings to cover an unexpected expense such as a car repair.

At Wealthy Habits, our mission is to help teach 11- to 19-year-olds to do better. Through classes and camps on financial management skills, we’re teaching the next generation of adults to manage money better.

A good place to start is with setting a financial goal. Here are three tips parents and other adults can use to encourage teens to set and meet a financial goal.

Tip 1: Set a goal that is attainable by summer. It’s February, which means we’ve got about six months until August. That’s not too soon or too far away to reach an attainable goal. Our advice for teens (or anyone else) is to set a goal that is attainable based on their projected and realistic income and expenditures. The goal should not be too or easy, but also not impossible. If they’re saving for a big-ticket item like a car, they can write down the goal they want to reach by summer as part of their long-term effort.

Once your teen has set on a goal, ask them to write it down and put it where they’ll see it every day. That will help them keep the goal in mind when they are tempted to buy non-essential purchases.

Tip 2: Create a financial calendar. A financial calendar will help your teen track their goals and remind them of important dates. It is a great idea to write down a savings goal on a financial calendar and update the weekly savings total. And by “write down,” I mean put it in writing, either with paper or pen or electronically. I personally like putting something on paper and then tack it on a wall because it’s harder to overlook or ignore that way.

Their financial calendar also should include pay days, tax day (if applicable) and dates when any recurring bills are due. There are electronic apps and calendars available for teens who are averse to writing. They can also use their phones to set weekly reminders that prompt them to check their progress toward their goal.

Tip 3: Budget like a pro. Yes, even teens need to learn how to budget. If they learn the habit now, it will help them avoid overspending as an adult when they are likely earning more but also have more living expenses.

To start, teens should write down their monthly income and all of their recurring monthly expenses. Then they can take a look at which expenses are truly essential and which are discretionary. (Maybe they’ll decide those Fortnite purchases aren’t all that important after all.) Anything that isn’t essential has the potential to be saved to help them reach their financial goal. If they subtract expenses from their income, they’ll have an idea of exactly how much money they could be putting away each week, and month, toward their goal.

Some teens may be tempted to count “expected” income if they have a birthday, graduation or other celebration coming up. I’d encourage teens not to count on any income that isn’t earned from either part-time jobs or allowance. After all, gifts aren’t a guarantee.

Here’s another thing to try – tell your teen about the “all-cash” challenge. Have you ever noticed that when you use cash for payments you are more aware of how much you spend? If your teen regularly uses a prepaid card or debit card, encourage them to switch to cash so that they are more aware of their spending.

After this, if your teen or tween is still struggling to meet a financial goal, it might be time to encourage them to take a course through Wealthy Habits. We offer classes on a range of topics, from the Basics of Building Smart Financial Habits to Intermediate Investing. With self-paced and instructor-led online courses and our in-person summer camps, your teen or tween can learn in the way that suits them best.