When your child enters college, they are close to adulthood and flying the coop. Naturally, this can feel frightening for both you and your child. However, setting reasonable financial goals examples for students can help your child be more than ready for what comes next.
If you aren’t sure how to help your child, keep reading for some great financial goal examples for students and how to help them achieve the goals.
What are financial goals, and how do they apply to college students?
Financial goals are money goals your student sets to achieve both in the short and long term. Your student is never too young to set financial goals. In fact, the earlier they set them, the more prepared they feel transitioning into adulthood.
Setting SMART financial goals can be challenging at first, especially for your child who is likely overwhelmed by college life. It can make managing finances more achievable and even empowering.
Help your college student set SMART goals with these tips:
- S – Be specific about the goals your student sets. For example, don’t say, ‘I will save money this year.’ Instead, say, ‘I will save $1,000 this year.’ Again, be as specific as possible in the goal setting.
- M – Make the goals measurable. Like in our example above, saying your student wants to save $1,000 gives them something to measure how close (or far) they are from the goal.
- A – Goals must be achievable, or it’s easy to get discouraged, especially for busy college students. So make the goals something reachable. Encourage your student to set small, almost basic, goals at first so they can see what it feels like to reach a goal.
- R – Goals must also be realistic. Help your student realize what is and isn’t within their reach. If the goal seems unreasonable, encourage them to bring it down a notch.
- T – Give the goals a timeline. Help your student say more than ‘I’ll save $1,000.’ Instead, say, ‘I’ll save $1,000 in X months.’ This helps to maintain motivation and ensures the goal is measurable and achievable.
Reasons why college students should have financial goals
Everyone needs financial goals. It’s how we set ourselves up for financial success and reach future desires, such as buying a house, a car, or going to graduate school. Your student will also learn the value of money and how to make great choices.
1. Understand money and how it works
Setting financial goals in college helps your child form solid and positive habits. Once they graduate and transition into real life, financial goals will already be a part of your child’s life. It won’t feel like another obstacle or life lesson. It will be easy for them to prepare for whatever comes next.
2. Make smarter choices
Having financial goals helps your college student make smarter spending decisions. Stopping at Starbucks every day is an instant gratification behavior, but it does nothing positive for your student’s future finances. The same is true of impulse buys or even buying textbooks new versus used. Your student will learn to think about the consequences of their money decisions before acting.
3. Brings your student closer to becoming financially secure
It’s easy to feel like a ‘broke college student’ when you live in a dorm or apartment with little furniture and dining on Ramen noodles. But, your child will learn to live a frugal life and save more. The more natural it is for your child to make economic decisions, the quicker they will meet their financial goals.
4. Have more money after graduation
Whether your student wants to move on their own, move back home, or buy a house after college, chances are they will have more money available because of the financial goals set during college.
What are some financial goals that students should have?
No two students will have the same financial goals. However, here are some examples for students you can use or build off of to help your college student create achievable financial goals.
Short term financial goals examples for students
Short-term goals are important because they provide students with what they need and help them realize immediate gains.
Here are some top short term financial goals for students:
- Build an emergency fund – An emergency fund is money set aside for true emergencies (car accidents, unexpected medical bills, or other serious emergencies).
- Budget for wants and needs – Setting a budget for wants and needs keeps things in perspective and helps college students avoid unnecessary spending.
- Live within your means – Learning to live within your means is a life skill all college students need. Instead of keeping up with everyone around them, they should focus on themselves and what they can afford.
- Start a side hustle or part-time job – A side hustle (drive for Uber, freelance writing, etc.) or a part-time job increases your student’s income and helps them achieve other financial goals.
- Learn about healthy money mindsets – Students should set goals to reassess their money mindset, review their ‘money stories’ from childhood, and see what they think and feel about money and how it affects their financial goals.
- Pay for college tuition – Student loans are available, but they aren’t a good use of any college student’s money. Learning to save and pay for college without loans can offer a great start to adulthood.
Mid-term financial goals examples for students
It’s good to have goals that aren’t immediately achievable but can be fulfilled within a few years.
Here are a few examples:
- Pay off debt – Entering adulthood debt-free can be a great way to start. Rather than graduating college with $30,000+ in student loans, car loans, and credit card debt, your student can start life debt-free, creating an easier transition to adulthood.
- Save for a down payment – If your student wants to move out right away, saving for a down payment is a great goal. Instead of renting, your child can buy their own house with 10% – 20% down on a home.
- Own a car without a loan – Cars are depreciating assets. If your student can own a car without financing, they won’t be throwing money ‘out the window.’ Saving money for a down payment or investing for other future goals is a much better investment.
Long term financial goals examples for students
Long-term financial goals can take 5+ years to achieve. Therefore, they can feel more overwhelming or ‘impossible.’ However, if you teach your student to break long-term goals down into smaller pieces, they become much easier to achieve.
Here are some examples of long-term financial goals for students.
- Save for retirement – No one is ever too young to save for retirement. The younger your student saves for retirement, the more time the money has to grow.
- Build credit – It takes time to build credit. If your student starts in college, by the time they graduate, there will be a solid history when your child wants to apply for a mortgage or other financing options. Teach your child to start with a secured credit card or department store credit card. They should use it responsibly to build credit slowly.
- Watch compound interest take effect – Compound interest occurs when your student deposits money that earns interest and then leaves the money, so the interest earns interest. Encourage them to leave the funds for the long-term and see how much they grow.
Tools that students can leverage to achieve their financial goal
We all know talk can be cheap, even with college students. Actions often speak louder than words, so share these tools and lead by example. That way, your student can see how easy it is to reach their financial goals.
No one can reach financial goals without budgeting. If your student has a smartphone or computer, they have access to great budgeting tools such as Mint, You Need a Budget. Many apps are free and offer all the features a college student requires to stay on track.
If your student lives a cash lifestyle or is the type of person that has no idea where their money goes, consider Qube Money. This app is a digital version of the envelope budget or the budget that you create an envelope for each spending category. Once your student spends all the money in one envelope, there’s no more spending in that category until next month.
Investment and budgeting tools in one
If your student is ready to invest or even save money in a money market account, consider Personal Capital. It’s free to download and use, and it combines all your accounts and budget in one place. No more scrambling for spreadsheets or post-it notes – your student can have everything in one place and no excuse not to reach their financial goals.
When your student understands their essential personal finances, including an emergency fund, a workable budget, and money saved for immediate goals, encourage them to use popular investment platforms such as Vanguard, Fidelity, or M1 Finance.
Every student has different investment preferences and apps they are comfortable using. Encourage your student to play around with each of them, do some research, and choose the one they are most comfortable using.
Ways that parents can help students with financial goals
As a parent, the thing you probably want most is to help your student get off on the right foot and achieve their financial goals. As they transition to adulthood, it becomes more difficult, but here are some ways you can help.
Be a good role model
Actions speak louder than words. Show your student how you manage your finances, set and achieve financial goals, and make smart financial decisions. Just watching you do your thing may help your student do the same.
Explore all options
Rather than telling your child to do this or don’t do that, guide them. Help your child understand the pros and cons of each financial decision and how it may affect them today and in the future.
Make your child an authorized user
If your student wants to build credit, make them an authorized user on your credit card. If you pay your bill on time and use your credit responsibly, your child will get ‘credit’ for the good use of your credit card too.
Be an accountability partner
Just like losing weight is hard to do alone, so is setting and achieving financial goals. Be your child’s accountability partner or sounding board. Don’t lecture when they make a decision you wouldn’t have made or make mistakes. Instead, be supportive and help your child figure out how to pick up the pieces.
Final Thougts on Financial Goals for Students
Use the financial goals examples for students provided here to help your student get off on the right foot. You may not be able to hold their hand in every little thing your child does, but you can help them launch into adulthood armed with financial knowledge to make great choices.