By Eric Braun and Sandy Donovan, coauthors of The Survival Guide for Money Smarts: Earn, Save, Spend, Give
It’s not too early to start planning financial-themed classroom activities for April, which is Financial Literacy Month. Luckily, thinking about money—how to spend it, what it can buy, and how happy they’d be to have tons of it—is pretty fun for many kids. (It’s fun for us, too. Ever daydream about retiring on a beach or making a life-changing donation to a favorite cause?) And while spending lots of money may seem like the antithesis of being financially literate, it’s really not: The overarching goal of financial savvy is to have the money we need to live the lives we want.
Setting financial goals can be a fun and inspiring activity for students of any age. And when you keep the focus on the end goal of using money to achieve the lifestyle they want, it can be easier to engage them. We like to ask kids to think about long-term goals as having to do with how they’ll use money, and short-term goals as having to do with how they’ll get money to pay for those long-term goals.
Begin with the Near-Long Term
Long-term financial goals usually reflect how a person wants to use money. In financial literacy this is the spending and donating side of the equation. Young people’s long-term goals can be anything from wanting to buy a pair of shoes to wanting to retire on a beach. For classroom purposes, it can be helpful to ask kids to think about something in the near-long term, such as a purchase they hope to make in the next year.
Ask kids to identify one near-long-term goal. Prompt them with examples appropriate to their age and economic situations. To add nuance to the discussion, talk about the difference between needs and wants. Make a T-chart on the board and brainstorm goals, discussing whether each goal should go on the Need side or the Want side. It’s fine for students to choose a want for their goal in this exercise, but it’s also valuable for them to understand that spending money in one area may mean not having the money to spend in another.
Once students have a goal in mind, ask them to either estimate or do some research to put a dollar value on their goal. But no need to spend too long on this step—the point is to use it as a foundation for setting short-term goals.
Move On to Short-Term SMART Goals
These are the steps your students can plan to take to help them accomplish their identified long-term goal. In financial literacy curriculum, this is the earning and saving side of the equation. You can easily adapt the SMART system to help students think about financial goals.
Specific: Remind students to be specific and concrete when setting their goals. For example, instead of saying, “I’m going to save all my money,” a student can write, “I’ll put any birthday money I get into a savings account,” or, “I’ll put half of my allowance into a savings jar.”
Measurable: It can be simple to make financial goals measurable. Students can measure either in dollar amounts or in percentages—for instance, saving one-half of their income.
Attainable: There’s nothing more frustrating to young money managers than having lofty goals they can’t possibly meet. Help kids make their goals attainable by encouraging them to reflect on their past financial experiences as well as what’s realistic in their world. It’s not helpful for a 10-year-old to set a goal of saving $100 in a month.
Relevant: Help kids think about the relevance of their goals with some prompts. What’s important to you? Is attaining your goal worthwhile? How will you feel if you achieve your short-term goals? How about your long-term goal?
Time-bound: Encourage students to have a defined time period for their goals. When will they begin? When do they want to successfully complete each step?
Make It More Rigorous if Appropriate
If you’re working with more sophisticated students (upper elementary or middle school), you may want to make this activity more robust. An easy way to do this is by having students create a budget. Here’s how that can affect their SMART goals.
Specific: Have students identify specific sources of income or plans for raising money and include these on their budgets. Make sure their budgets show exactly how much they’ll save each month, and have them check that against their spending needs to make sure it’s feasible. You can also have them calculate sales tax on the items they’re saving for or add additional savings goals (perhaps one for spending and one for donating).
Measurable: Using their budgets, students can track their savings over time and compare them to what they planned.
Attainable: Their budgets will provide evidence-backed indications of whether their goal is attainable.
Relevant: By shining a light on their spending and saving decisions, budgets give students more information with which to judge the relevance of their goals. Do I really want to put all my lawn-mowing income into saving up for a drone (for example)? If I give up my streaming music subscription, I can save faster—do I want to make that trade-off? Remind kids of their discussion about needs and wants. Do their answers change when they see the actual numbers? Take the discussion further by talking about personal values.
Bonus! Download a free printable SMART goals worksheet.
Financial education is largely about learning to make smart decisions. Working on SMART goals with students helps them gain experience making decisions about values as well as money smarts—experience that will help them in all areas of life.
Eric Braun writes and edits books for readers of all ages, specializing in academic and social-emotional topics. Books he has worked on have won awards and honors, including the Eugene M. Emme Astronautical Literature Award, a Foreword Book of the Year Gold Award, a Benjamin Franklin Award, and many others. A recent McKnight Artist Fellow and an Aspen Summer Words scholar for his fiction, he earned an M.F.A. in creative writing from Minnesota State University, Mankato. He lives in Minneapolis with his wife and two sons.
Sandy Donovan has written nonfiction books for kids and young adults on topics including economics, history, science, and pop stars. She has worked as a journalist, a workforce policy analyst, and a website developer. She currently works for the US Department of Labor, developing online tools to help people of all ages meet their career, education, and employment goals. She holds a bachelor’s degree in journalism and a master’s degree in labor and public policy. She lives in Minneapolis with her husband and two sons.
Eric and Sandy are coauthors of The Survival Guide for Money Smarts: Earn, Save, Spend, Give.
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