Back when I was taking my one day workshops to high schools all across my state, it was so surprising to me to see how inconsistent financial education was. In one school I visited, money was only taught as a remedial math course. Another school told the math teacher who wanted to teach money that it wasn’t rigorous enough. At yet at another school, one of the three business elective teachers snuck it in to her curriculum.
Now that I work with families all across the states I see the inconsistencies continue. I have worked with one client whose school does require that their students take a personal finance class! Some clients have had the option to learn about money through electives. And yet others have no access to financial education at all.
It is shocking to me because money is something that we all interact with on a daily basis. In addition, one of the first things we ask young people to do when they become adults is a major financial decision - college.
This is why including financial education in my programs is so important to me.
That text came from the mom of a client of mine. She was so surprised to get a seemingly random text from her daughter asking to start a retirement account, but it wasn’t random. Her daughter was in our coaching session when she sent it.
She had gone through the first two modules of Life Quest® which helped her name her values and solidify her priorities. Just before the career exploration module comes the money module. Ava learned that week about how compound interest works and what it looks like in a retirement account. She learned that the earlier you start the better. Taking just a fraction of what she makes with a high school job and putting it into an account can have a big impact later on.
You might have heard that teens don’t have the same capacity for future-thinking as adults do. However, delivering knowledge in just the right way, a teen can think about their future more than we might give them credit for.
College is expensive! So, of course we all want to do our best to save some money. Most people look for ways to reduce costs, which you know I am all about.
What most don't realize is that many students have been blindsided with unexpected, surprise college costs that get added on top of what they were expecting.
You read that right...
Thousands of students get blindsided by $25,000, $50,000 or more on top of what they were already expecting to pay. For some, this has resulted in more loans and more debt. For others, this leads to dropping out. As a matter of fact, when college dropouts were surveyed, the number one reason for not completing their degree was costs.
Students are strongly encouraged to attend college after high school. And that is about where the conversation ends. The financial realities of college and degree choice is rarely, if at all, discussed. These days it takes more than just “so, where do you want to go and what do you want to major in” to make a sound decision. We need to be helping teenagers take a look at the financial investment for their particular situations. How much aid they may receive based on their situation, the scholarships at the schools they are considering, the tuition cost for their school of choice as well as degree of choice, what amount of debt can they expect upon graduating, and how much income they are likely to make once in their field.
Knowing and evaluating these things are more important now than ever. Let’s take a look at a few facts first. Then I want to introduce you to someone who has experience in this particular type of evaluation to give you an inside look at how to calculate the financial investment.
First, a story from Dave Ramsey:
“Ben and Arthur were friends who grew up together. They both knew that they needed to start thinking about the future. At age 19 Ben decided to invest $2,000 every year for eight years.” This may seem like quite a bit but keep in mind this could be done by saving wages from a part time job while going to school. Back to Ramsey’s story. “He picked investment funds that averaged a 12% interest rate. Then, at age 26, Ben stopped putting money into his investments. So he put a total of $16,000 into his investment funds.
Now, Arthur didn’t start investing until age 27. Just like Ben, he put $2,000 into his investment funds every year until he turned 65. He got the same 12% interest rate as Ben, but he invested 23 more years than Ben did. So Arthur invested a total of $78,000 over 39 years.
When both Ben and Arthur turned 65, they decided to compare their investment accounts. Who do you think had more? Ben, with his total of $16,000 invested over eight years, or Arthur, who invested $78,000 over 39 years?
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Emma B Perez