"Mom, I'm ready to move out. I have a couple hundred saved up, and I'm looking for an apartment. I know I don't have a car yet, but it'll all be fine. Plus I can always come home for dinner, right?" Says the eighteen year old.
Orrrr it could be even more complicated.
"Mom, we're getting married. How hard can this adulting thing be?"
Enter in one of the most important things we can teach our kids.
How to manage their personal finances.
We had a friend ask us once what our plans were for our kids. Did we have an "You're eighteen and out" rule, or something more laid back? I told her that we had never really talked about it, but it definitely wasn't eighteen and out.
Which, of course, sparked the question later with the Yeti. We both agreed that there wasn't a rush to get them on their own, but the time would come naturally when the boys would need to be the alpha of their own homes, but our daughter could live with us forever. 馃槀
Really, if we had our druthers, we would own enough land that we could all be close. Far enough apart they would feel independence, but close enough that we could still live in community.
However it goes, wherever they are led in life, there are certain skills they should really learn first, and one of those is Personal Finance.
I had a great experience in school where our math teacher taught a similar class. We purchased cars, had pretend jobs, got apartments and had monthly bills. So, I thought this would be a great lesson to pass on to them. It's real, it's practical, and it could really ease the stress of becoming an adult.
Where to Start?
The first thing I did was scour the internet for ideas of how to manage this. How real should I make it? What bills should I include? What would be the most helpful without being overwhelming?
I found a super helpful site where a teacher assigned "jobs" that they "earned" monthly paychecks for doing things around the classroom. The more labor involved jobs earned more money, while the less labored jobs earned less. They also "rented" their desks with the option to buy.
This really got my wheels turning. I thought of all kinds job titles they could have for chores around the house, but then I realized that unlike a regular school, I would be managing this all the time. That didn't sound like much fun. So, instead, we decided on any job they wanted, with one condition. They would only be making minimum wage. Of course, I knew when I told them how much it was, they're going to think they're rich. I laughed a bit inside.
The big question after this was, how much money should they start with? If they have all of these big expenses coming, are they jumping in head first? Probably not. So, we created a scenario that they would have been working already for six months and saving everything they earned. Now really, they probably wouldn't have saved everything, but in some cases simpler is better. So these darling, good savers, saved it all! Again, they're going to feel rich.
Before presenting them with all this information, I made sure to take out 25% for taxes to give them an opportunity to learn about gross and net earnings.
I also came up with a list of all the different bills they would have. Electric, car insurance, phone bill, rent, gas and groceries. With the car insurance, I came up with two different amounts, one for monthly and also for semi-annual that had a discount. Sometimes real life comes with options.
We also asked the bank for registers so they could learn how to keep track of all their transactions by hand. Of course, we live in a digital world, so later we'll teach them about electronic banking. I may have stumbled on a free simulation!
Then the day arrived to launch the project!
They were really excited and full of questions. I explained everything they would be doing, and dropped their money amounts. Dang, they were excited!
They jumped right into the paper and Craigslist looking for a car first. They also made plans to haggle with their Dad later on prices like he were the one selling the vehicles. At one point we called their Grandpa to ask car questions. Just how essential the rear differential? Turns out a lot, haha.
When it was time for the wheeling and dealing, it was so much fun to listen to them try and get a better deal and then hearing the Yeti say things like, " I can't give you advice and sale you the car." and "If this were real, you wouldn't buy this piece of crap." LOL
Then they started to look at apartments. The Dreamer found a great deal, and the boys hopped on her band wagon, but chose to live together to lessen monthly rent. Smart move! I told them they could rent a three bedroom, but the Dreamer insisted she was "going at it solo with her cat!" 馃槀
Next, they needed to title and license their cars, and also pay car insurance. The boys both chose to go semi-annual for the discount, the Dreamer went monthly. I think she's going to get tired of that extra bill, but that's what lessons like this are for!
Everything was almost covered...almost...
Now, to wrap up this experience, I decided to make Chance cards like Monopoly. There are twenty of them, half good, half bad. For example, you can draw and get "Christmas Present: receive $100" or "Flat Tire: Pay $125". I also made Temptation cards. These are things like, "New movie is out: go to the theater spend $10" or "Want a new laptop: spend $600". The Temptation cards are optional, because just like real life, we always have a choice to say no. Both sets of cards are drawn monthly.
So, so far so good! Of course, they were excited to draw a Chance card. The poor dreamer got "Rent was raised: pay $50 more a month" while both boys received money! The look on her face was priceless.
The hardest part of this was explaining that although we get hit with Chance cards in the real world, their Dad and I pray through them...but they can't really pray through theirs, hahaha.
Our plan is to do this for a whole year, and then maybe we'll work on tax filing next spring!
Next up...Homeschool Personal Finance 102: How to manage your Crypto Portfolio 馃槀
Thanks so much for sharing this with me!
Take care!
Much love,
Stacie D