Goal Setting for Teens

Let me illustrate to you a very well known example of the power of goals. In 1952, there was a research study done on the impact of goal setting on the graduating batch of students at Yale University. When asked how many of them had clearly specified and written down goals, only three percent responded. The remaining ninety-seven percent, despite being highly intelligent and hardworking, had no road map where they would be five to ten years after graduation. Twenty years later in 1972, a follow up study was done on the class of 1952. What they discovered was shocking; the combined income of the three percent who had clear goals was greater than the entire income of the ninety seven percent combined! Was it just a coincidence or does having clear goals really have an impact on a person’s personal and financial success?
One classic example is investor Warren Buffet. Does his ability to come about by chance? Absolutely not. From a very early age young Buffett was obsessed with making money and had a very clear dream of becoming the world’s greatest investor. Born during the depression when his father was close to bankruptcy, Warren learnt about the value of money and the importance of being financially secure at an early age.
Even before his teens, Warren knew that he wanted to be rich. As early as elementary school and later on in high school, he would tell his classmates that he wanted to become a millionaire before the age of 35 (when he turned 35, his net worth exceeded $6 million). It was because of his goal that he constantly thought of ways to make money, while most other kids his age would be spending their parents’ money.
He even memorized a book called ‘ A Thousand Ways to Make $1,000′. At the age of six, he started buying coke bottles at 25-cents per six-pack and selling them at 5-cents a bottle, giving him a 16% gross profit, as he would tell himself. At the age of 13, he got a job delivering newspapers and through innovative marketing and distribution strategies, he served five hundred customers a day. At the age of 11, he took all his savings and started investing in the stock market. His first investment was three shares in a company called ‘City Service’. While most kids his age were reading comic books, Warren spent his time reading company annual reports.
By the age of 14, he started a pinball business and was earning $175 a week, as much as the average 25-year old was earning in 1944. Would he have taken all those actions if he never set a goal to be rich in the first place? Of course not. It was clearly because of his focus of energy and actions that allowed him to become the best in what he does.
What if you have no clue as to what business or career path to take? Well, it doesn’t matter! Sometimes, just setting a specific financial goal will get your mind thinking and guiding you towards the right path. Before George Lucas left his hometown for college, he already predicted that he would be a millionaire by the time he was thirty. However at that time, his passion and dream was to make it as a racecar driver. It was after he suffered a terrible crash that he began to change his mind about that career.
It was only after that accident that he decided that he wanted to become a filmmaker. As a result of his focus on pushing himself to be the best in anything he did, he became a millionaire by the age of 28. However, as I mentioned in chapter three, the primary driving motivation of millionaires is not the money they will make, but the passion they have in what they do. The financial goal they set is only a means of measuring their success. However, what drove Lucas to give his all in the face of insurmountable odds to finish Star Wars was not the money he would make, but his dream of seeing his fantasy come to life on the big screen.
Tiger Woods never really set a goal to become a millionaire. However at the age of eight, he gave an interview on TV, after winning an amateur golf tournament. During that interview, he declared that his goal was to become the world’s number one golfer and that he would break all of Jack Nicklaus’ records. It was that obsession that got him to focus a hundred percent of his time, energy and thoughts into his game. Fourteen years later, Woods became the world’s number one at the age of 22, again not by chance, but by design
If you were to study the life stories of the most successful people in history, you will discover that their achievements didn’t happen by chance. At a certain point of time in their lives, they dared to dream about something they wanted to create. They then allowed this dream to guide their actions until they made it a reality.

The population with the largest increase in bankruptcy rates in 2004 was young adults under the age of 24! Teens and young adults must learn about financial skills earlier than most parents think.

Financial literacy includes having a working knowledge about the issues everyone faces regarding money – getting money, spending money, and keeping money. Too often information is only focused on two narrow aspects of these large topics, budgeting and investing in the stock market. The skills that everyone needs to develop in order to be financially literate in today’s world are much more complex than that. Let’s take a look at each of these topics and what they mean to young people.

Getting Money – In the U.S. economy, getting money usually means earning a wage. Young people need to understand that what you earn is generally dependent on the knowledge and skills you possess. The typical American high school curriculum that just gets you a diploma does not usually develop any particular knowledge or skill set that will increase your earnings in any substantial way. There are programs in many schools that may develop some degree of skill specialization, or prepare you for higher education. These are the immediate goals for young people in order to address their future financial needs.

Additionally, the concept of compounding interest and the time value of money is a critical foundation for understanding the benefits of saving and investing and the drawbacks of borrowing. Time is on the side of youth in this country, but they need to know about the opportunity to start saving and the power of compounding to take advantage of the circumstance granted to everyone.

Spending Money – In 2005, Americans spent more than they earned. That might lead one to believe that we know how to spend! We do, we just don’t do it well. In order to spend money well we need to be aware of our goals, short term and long term, and make decisions that support the attainment of those goals. Spending happens on a daily basis for most of us, but are we really thinking about the things we want when we spend our money?

Spending money also means knowing how to take on debt in a manner that is appropriate. Discovering what financial strategies fit well with your personality and temperament will go a long way in making solid, consistent decisions. That in turn allows for credit scores to remain high enough to provide benefits on insurance rates and loan rates.

Consumer protection, identity theft, phishing, risk management, and predatory lending are all topics that everyone needs to be aware of in order to be financially successful today.

Keeping Money – A long time ago, you could put your savings under your mattress and you were set for most financial situations. Today, not only do you need to save, but you need to put your money to work for you. Discovering what investing tools motivate you to stay informed and on top of your investments is vital. That motivation also spurs you to continue to save. This positive spiral allows financial success. Not knowing what to do, investing poorly and loosing money, or putting your money in someone else’s hands are setting yourself up for failure. Investment decisions are yours alone. There is plenty of advice floating around. How do you tell the good advice from the bad? You need a basic financial knowledge. That will eliminate most of the risk of falling for a scam.

You also need to know how to keep the money that you make through your investments. With plenty of tax plans to assist with this, deferring or eliminating much of the tax consequences of making money through investing is available to everyone, not just the very rich.

But if you have developed basic financial literacy and live according what you know, you will be rich.