Congrats Grads!

‘Tis the season for celebrations—from pre-school ceremonies to college graduations. Congratulations to all!

‘Tis also a season of expenses and gift checks. You will want to celebrate your graduate’s achievements with a party and your graduate will most likely receive some larger-than-normal money gifts. You can use this time to talk about budgeting, spending wisely and saving strategies.

For example, when planning your festivities, decide on a budget and then talk to your gradate about what types of parties will fit within the family budget. If you are on a tight budget, you could consider hosting a party with another graduating family so you can share the guest list and party expenses. Other ideas are to keep the decorations and food simple and use an on-line invitation services such as www.evite.com to save on stamps.

Before your graduate opens their money-holder graduation cards, discuss with them what to do with their gift money. They can use the same allocation that they use for their allowance but if their checks are on the larger side you can consider:

• Put more into Savings – save for a long-term goal like a car or graduate school.
• Set some aside to use for College – books, computer, dorm room supplies, and/or tuition.
• Go ahead and really Celebrate – spend the money on a “reward” like a trip or even something smaller like a watch or computer.

Whatever you do, remember that the celebration should be about your child’s accomplishment and not necessarily about an expensive party or a big gift check.

Enjoy the moment—they grow up too quickly!

It's a GOAL!

Last week The Wall St Journal had a great article “Making Kids Work on Goals (and not Just in Soccer).” While the article focused on the importance of goal setting skills and its link to higher grades, lower college-dropout rates and greater well-being in adulthood, I started to think about the link of goal setting in a successful allowance program.

The use of “S.M.A.R.T.” goal setting was used in the business world in the 1980s and now has made its way to the classroom. The acronym SMART stands for…setting Specific, Measurable, Attainable goals with clear Results in a set Time frame. You can apply SMART to financial goals and your allowance program.

Here’s how you can use the SMART concept to help your kids and teens set short and/or long term Savings goals:

• Specific – decide on what they want to save for (i.e. a special toy, new computer) and write it down
• Measurable – research the price of the item they want to save for
• Attainable goals – help them pick a reasonable item to save for (i.e. a lower end computer vs the top of line with mega screen)
• Results – show them how to do the math to determine how much to save from their allowance each pay period in order to buy the item and reach their goal (i.e. they will need to know the price and how long they plan to save for the item)
• Time frame - they should pick a reasonable time to be able to buy the item (i.e. teens can’t save to buy a car in a few months)

By using allowance to teach your kids and teens about goal setting, it just may spill over into other areas of their life – like school and sports. You will be helping to teach them financial responsibility, delayed gratification, and goal setting skills which are important traits of successful adults.