September 05, 2014
On October 1, 1932, in the top of the fifth inning in Game 3 of the World Series, Babe Ruth went to bat against the Chicago Cubs at Wrigley Field. According to legend, Ruth pointed to the center-field bleachers as if to predict a home run. Sure enough, when the next ball raced over home plate, his bat hit it with a loud crack, launching it over the center-field wall.
Regardless of whether he truly called his shot, the story demonstrates the power of goal setting. Whether you’re aiming for the center-field bleachers or an early retirement, a time when you pass the business on to the next generation or spend more time on your philanthropic activities than your business, you know that your chances of getting there are greater if you know in advance where you’re going and when you want to arrive.
The trouble is, many young adults don’t have articulated goals — especially when it comes to money. According to the Financial IndustryRegulatory Authority (FINRA) Investor Education Foundation’s 2013 study, Financial Capability in the United States, measures of financial capability are markedly low among 18- to 34-year-old Americans. They are more likely than Americans aged 35 and older to declarebankruptcy, withdraw money prematurely from retirement accounts, overdraw checking accounts, utilize costly credit card borrowing methods and struggle with managing short-term unexpected expenses.
As parents, you may help ensure your teenaged and young adult children don’t follow this pattern. It’s all about financial education, intervention and goal setting — teaching your kids to aim and hit a home run with money like The Bambino did with his bat.
The Goal of Financial Goals
Teaching children to set and pursue their own financial goals allows them to learn money management by actually managing money. Whether they eventually take the reins of the family business, go out on their own or sit on a board, the basics of money management, revenues and expenses can be learned early on for potentially greater success.