Billy Banks and Diego Reynoso don’t have much personal experience balancing a budget, managing credit card debt, or stretching their money to make it work for a family of three.
But the Clark High School freshman and junior recently practiced those skills in a real-world simulation by the Center for Financial Empowerment, a nonprofit that aims to break generational poverty by exposing students to financial education. The organization’s Mad City Money event gives teens a taste of the responsibilities they’ll face as adults.
Nevada public schools are required to teach financial literacy to students under a 2017 state law. At Clark High School, students learn basic financial skills as well as more advanced business concepts such as marketing and entrepreneurship as part of its Finance Academy.
The Center for Financial Empowerment also runs financial literacy workshops and classes, but director Abby Ulm said that kind of teaching isn’t as engaging and eye-opening as the Mad City Money activity held at the Clark’s library. Highschool. Ulm said she loves seeing students have “lightbulb moments” as they connect something they learned during the activity to their own family life.
“A lot of them will say, ‘I really appreciate my parents more now that I know what they have to go through to make ends meet for me,'” she said. just not in a classroom environment, so that’s really why we wanted to do this and invest in, you know, expanding and doing it as much as we can.
The Center for Financial Empowerment, founded by the SCE Federal Credit Union, hosts 15 to 25 such events each year at schools in Clark County and Southern California, particularly those catering to students from low-income communities.
“We always want to make our programs for Title I schools for the most disadvantaged students simply because they need more help,” Ulm said. “Students from more affluent families have more resources at their disposal to learn this.”
But organizers said the activity is particularly important right now as students prepare to start life after high school in a world experiencing rapid inflation, making housing, food and other daily costs more expensive. .
“Life is tough and it will get tougher as inflation continues to rise,” Ulm said. “Families are struggling to make ends meet. So the more resources and education we can give them to show them how they can cope and make better choices, the better for them.
So much information that could be useful given the financial constraints that affect many young families. The average American household with student debt owes $57,520, according to a 2020 household debt study by NerdWallet, a personal finance company. Meanwhile, Americans under 35 have an average savings account balance of $11,200, according to a 2019 Federal Reserve consumer finance survey.
The activity began by pairing the students and assigning them a fictional life – with a child, occupations and salaries. In Billy and Diego’s case, they received a combined monthly gross income of $4,880, which was reduced to about $4,000 after deducting their student loan payment, taxes, and medical insurance costs. They also found themselves stuck with nearly $5,500 in credit card debt.
“It’s going to be a problem,” Billy said, while Diego joked that the source of their debt was probably their 9-month-old son, Matthew.
Then, the students visited tables set up around the library. Each painting depicted different necessities of life, such as clothing, housing, childcare, and household supplies. The goal was for the students to buy everything they needed for their imaginary home without running out of money.
The catch: Each table offered products at different price ranges, prompting students to splurge. For example, at the clothing table, students could buy designer brand items and frequent haircuts, or save money by choosing less frequent haircuts and buying clothes from discount stores. or thrift stores. The volunteers running the tables were told to try to persuade students to choose more expensive options to simulate the temptations teenagers might face in the real world.
Marshall Goldsmith, who has volunteered for Mad City Money events in the past, said a team came to his table and wanted to go overboard by splurging on a TV, surround sound system, video game console and a motorcycle, so Goldsmith decided to break out of character to give them some friendly financial advice.
“Basically the way they were going, they wouldn’t have money for the most important things here like housing and food,” Goldsmith said. “They don’t realize it, but I also know they are children. So I was like, ‘You need to think a little better.'”
Over the years, Ulm said he’s discovered that students from low-income communities tend to know how to make smart money choices because their families must already be thrifty, but the activity still helps expose them to realities of high housing costs and other expensive necessities such as diapers and formula.
And no, Ulm joked, students aren’t allowed to have their child adopted to avoid paying for these things.
Pairing students with a partner is an intentional part of the activity, Ulm said, because one day teens may have to live and cooperate with a spouse, domestic partner, co-parent or other family member, and part of the lesson is teaching them how to negotiate, compromise and work together.
During the event, the students also faced unexpected life events or emergency situations. One team has been hit by a medical bill that put them in the red, forcing them to downgrade housing and childcare options so their budget can be balanced again. About halfway through the event, Ulm informed all students who had not made it to the SCE Credit Union table to pay their minimum credit card debt payment that they would have to pay a late fee of $35.
The purpose of Mad City Money’s elaborate scenarios is to expose students to all of these different, and sometimes unfair, life events that could arise so they can be better prepared for them as adults, said Ulm. She’s heard from former students who return to Mad City as volunteers that they regularly save money, put money aside for emergencies and don’t pull out credit cards.
“If you think about it, at that age, just getting that experience gives them a leg up,” Ulm said.
After the event, the students told Ulm that he taught them that being an adult sucks, to pay their fees on time, and to always read the fine print.
But Junior Brandon Bui said he thought the activity was a breeze and gave him the opportunity to think more deeply about some of the lessons he learned in class and will have. probably need in his future. He and his partner ended up with around $70 to spare.
“I learned not to overspend,” Brandon said. “We have an average apartment. We have a child, so we have to take care of him.
For Billy and Diego, the event showed them that they still had more to learn before embarking on the next stage of life and taking on more financial responsibilities.
“I learned that responsibilities come before pleasure, always, and you have to deal with that debt — specifically, deal with that debt,” Billy said.
Correction: 03/28/22 12:01 PM — This story has been updated to correct the name of an event sponsor.