There are many hard life lessons that cannot be effectively tought in the classroom. The perils of money mismanagement can drastically impact someone’s life. The fact of the matter is, there are many students who are not adequately taught how to manage their finances intelligently.
The Alabama Cooperative Extension seeks to change this by using a hands-on financial literacy simulation called Reality Check.
Isaac Chappell, a regional Extension agent in the area of consumer science and personal financial management, travels to middle and high schools in nine counties to educate children.
Chappell described the program as life-changing to these children.
“It is an awesome experience, you have to see it to understand,” Chappell said.
The two-day program stresses the correlation between education, fiscal responsiblity and quality of life.
On the first day, Chappell comes in to the school to explain the program and teach a few lessons.
“The first day is the orientation day with teaching points,” Chappell said. “I teach them the importance of saving, paying yourself first and the proper use of credit.”
The second day is the hands-on simulation. Students from grades seven to 12 are told that they are 25-years-olds and in various entry-level jobs. They are randomly given a packet with the circumstances that dictate their level of education, job and family situation. There are more than 100 potential jobs that vary depending on level of education.
Each job has a salary that incrementally increases with education level. “This is one of the most important lessons that students need to take home. It shows them that education is connected to your success,” Chappell said.
Once they have received their packet, the students proceed through 14 booths, nine are mandatory and five are optional. The booths include a supermarket, daycare, insurance for home, family members and car, home mortgage or rent, utilities and a just-for-fun. The students must use ledgers to track all their spending.
The goal is that students travel through the booths as if it were a month’s worth of spending. They aim to remain above the bottomline of their paycheck.
Chappell says that its incredible, and somewhat comical, to watch the students react to the simulation.
“You see that students want all name brands when their parents are making the purchases,” Chappell says. “But when they have the paycheck, they will buy generic brands.”
Their commentary also proves that the intended educational outcomes are not lost on the students.
“I have heard them say, ‘I see that it is important to have gone to college to support a family’ or ‘I now know what my parents go through'” he said.
Chappell runs this program between 15 and 20 times per year.”It is my passion,” he said. “It is so important that they learn these lessons young.”