My local middle school recently hosted a “reality town” for all of it’s eighth grade students. Reality town is an exercise where each student is given a career, an income and required expenditures, broken down into one month. Each student has to decide how to budget, save and spend their money.
A few days before the event, each eighth grader is given a career and a salary (based on their current GPA) for reality town.
The day arrived for my eighth grader to be assigned a career and income. She assumed she would get a high paying career, due to her good grades. Instead, she came home crushed that she had been assigned the job of a college administrator with an annual salary of $42,000. She loathed the job title, stating that it sounded like “the worst job ever.” She was completely shocked at her salary, especially when compared to other students’ income of $100,000. When I tried to explain that it was just a game, and not a true indicator of her future profession or income, she just shrugged her shoulders and exclaimed that there was no point in doing homework or getting good grades anymore.
Fortunately, she still does her homework.
I decided to join her at reality town, to see how her career as a college administrator worked out.
The students met in the gym where they were each given a booklet with the details of their life. These booklets listed their family status (married or single), the number of kids they had (zero to three) and annual salary; with taxes and benefits taken out. Each student started at the bank with one month’s salary. After that, it was up to each individual to decide where to spend their money.
Most of the booths were mandatory, with the exception of home improvement, military service, life insurance, entertainment, personal care, investments and a pet store. Each student had to make a lot of choices, including what kind of home they wanted. When some students realized how much housing cost, I heard several kids choose to live in their parents basement (it was a listed option). I hope they went home and told their parents!
They students had to pay for transportation, car/home/health insurance, groceries, phone, clothing and child care, all based on their family’s needs. The list of necessary expenditures was very detailed. Some of the students even chose to get a second job or enlist in the military to boost their monthly income.
When I went to the child care booth, I heard one student complaining about the high costs of child care. She noticed additional options for kids to be involved in sports. She looked confused and asked, “How will it (kids sports) benefit me?” The volunteer responded that there would be no financial benefit and she quickly replied, “No, thank you!”
It didn’t take long for the required expenses to quickly deplete each student’s monthly income, leaving them surprised and frustrated.
This exercise was a great way to help kids understand personal finances and expenses. What do you do to teach your kids about finances? Do you talk to them about household expenses? Have you showed them how to budget?