Making Real-Life Financial Decisions

One of the things parents should know about kids and money is that children will spend unlimited amounts of the green stuff as long as it's yours. But when their dough is on the line, they gain a whole new perspective -- even when the cash is just pretend.

For example, I recently had the pleasure of observing a group of eighth-graders make real-life financial decisions in a classroom setting. The students, from Rocky Run Middle School in Chantilly, Va., were visiting Finance Park, a computer-equipped mobile classroom.

Sponsored by Capital One and Junior Achievement, Finance Park uses a curriculum developed by JA. Each student is given a real-life scenario that includes a job with a monthly salary and a family situation (married with two kids, for instance). Then they have to buy a house and a car, budget for phone service, entertainment and other expenses, give to charity and save money ("Where am I supposed to get savings from?" wailed one student.)

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At first, the kids tended to choose the biggest houses and the fanciest cars from those available. But when they couldn't afford the mortgage -- or fit a spouse and two children in the sports car -- they had to cut back.

When a student named Victor balked at contributing to charity, an adult volunteer explained that even a small amount can make a big difference. Victor relented and gave $20 -- to Junior Achievement.

One young "dad" bought a $50 football ticket but ditched his "son" to save money. Asked if that was a bit harsh, the student was unrepentant: "I already passed up a $60 concert ticket, and I want to go to the game."

The students got plenty of pointers from adult mentors -- "Don't just make the minimum payment on your credit card, or you'll be paying for the rest of your life" -- and picked up lots of lessons on their own. "I was surprised by how much cars and groceries cost," said a boy named Kevin. "But it was fun to be an adult and balance my budget." He ended up with a $155 surplus (which he put into savings).

Before visiting Finance Park, the students got 24 hours of classroom instruction. "Now they understand what their parents mean when they say they can't afford something," said their teacher, Janell Finley. "They used to think their parents just didn't want them to have it. Now they know better."

And as a bonus, they know how important it is to get an education so they can have a career that will support themselves and their future families.