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This is the fifth and last part of a five-part series called "Learn to Earn"

The first step in helping your youngsters to reach their financial goals is to explain what a goal is. A child’s definition of a money goal is gathering enough money to buy something they want in the future. Ask your children to think about something they want that they don’t have now. They could want an iPod® or they could want to buy a car. It’s not important that one is a short-term financial goal and one is a longer-term goal. What’s really important is that they are thinking about the future.

The next step is for your kids to separate short and long-term goals. Ask them to make a list of some short-term goals. You’ll have to help them with this process. For a child, a short-term goal time period should be about six months. They should think about how much they could realistically save within that period.

Then help them figure out how much they earn in allowance, get from you or can expect as gifts. Let’s say, on average, they make \$10.00 per week. And, in our example, they could save about 40% of this for something they want in the future. Let’s say that they set their goal to buy an iPod® that costs about \$100.00. Help them with the math. In this case, if they make \$10.00 per week, 40% of that is \$4.00. Now they can calculate that they could reach their goal in about six months of saving.

This is also a great time to have them consider some variations. Let them see how long it would take to save for that iPod if they saved 10% of their income each week. Or how long it would take if they saved 50% of their allowance or earned extra money. This subtly starts to teach them the benefits of earning extra money.

Another interesting exercise is to let your children interview you about your own short-term and long-term goals. Why? This will open up a dialogue with your children about how you think about the future. Begin by telling them what it was like when you were young: Did you have a long-term goal you were saving for; like college or a car? Back then, my goal was saving for college.

Tell them how much your goal cost you at that time. When I went to college, tuition cost \$1,500 per semester. Be sure to tell them how much you earned at that time, too. For me, the minimum wage had not yet hit one dollar an hour! Back then, I earned fifty cents an hour for babysitting.

The next thing to talk to your kids about is how you saved money. Did you open a bank savings account? I did. In fact, my elementary school had a representative from our local bank that came in once a week to collect our savings for deposit. At that time, I opened a Passbook Savings Account.

Tell your kids if you were able to save enough to reach your goal at that time. By keeping my eye on my goal and saving regularly, I managed to save enough for college. In fact, I graduated from high school with \$7,000 in my Passbook Savings Account. By the way, a new Porsche sports car cost about the same amount at that time. It was very tempting to use my savings to buy one but, alas, I went to college and was able to pay my own way.

Talk to your children about how long it can take to save enough money to buy what they want. This is a good time to give advice about how and where to save money, too. The best place to start saving money is in a bank. The best way to save is to do it on a regular basis.

The first step to making sure your children start to set goals and save for what they want is to help them create a simple budget. A budget is simply a written plan for how to earn, save, spend and share money. A basic budget shows “Money In” (from allowances, gifts or extra earnings) and “Money Out,” (spending and expenses). Money that will be saved for your child’s short- and long-term goals will be built into expenses.

Remember the great feeling you had when you saved for and got something you really wanted? Help your child set a goal, save for it and celebrate their achievement. Those feelings of empowerment can last a lifetime.

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## CONSULT AN AGENT NEAR YOU

Please complete and send the form below and we'll have a New York Life agent in your area contact you at your convenience.

• *
• *
• *
• *
• *
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• Phone*
- -
• Home or work?
Home Work
• Best time to call
• Birth Date
- -
Why?