Monica Casters took a trip to the future a few weeks ago: Suddenly, the eighth-grader was 30 years old, married, with a child and working at a job that paid her $93,000 a year. This was no dream, but it wasn't real, either. She was visiting Junior Achievement Finance Park, an educational center in Fairfax, Va., where kids learn about managing money. Lessons about spending, saving and borrowing are becoming a regular part of classes, sometimes starting in elementary school.
Why do kids need to know about money?
"All kids see parents do with money is spend it," said Neale Godfrey, author of Money Doesn't Grow on Trees. But the amount of money you can spend isn't endless. "There really is such a thing as a budget," Godfrey said. (A budget is a plan that limits how much you spend on different things to fit the amount of money you have.)
Educators agree. School boards in Maryland and Virginia decided in the past three years that students must learn about money-related topics in school.
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In Fairfax County Public Schools in Virginia, all eighth-graders take a half-day field trip to Finance Park after spending 20 hours in class talking about managing money.
On a recent visit, students from two middle schools were each given a card that told them how old they were, whether they were married or had children, and how much money they earned each year. Their task? Visit 18 pretend stores or offices and choose how much of their imaginary salary to spend at each place.
That meant some big decisions. A house with four bedrooms or a smaller one with a pool? A family car or a convertible? Movie channels or basic cable?
Students said that staying within their budget wasn't always easy.
"I went over my limit on clothes," admitted one student. "I've learned I can't have everything I want."
Kareem Homsi ended up with more savings than his budget required by choosing a practical car.
"Maybe after that I can buy the convertible," Kareem said.
Setting up a system
Buying a car involves a large amount of money, but spending habits start with smaller purchases. Let's say there's a $30 Lego set that you want, but Mom says you have to buy it yourself. That may seem impossible when your allowance is $5 a week.
Godfrey says that the Lego set is a reachable goal even for kids who are tempted to spend money as soon as they get it. The key is setting up a system. Her system has four jars into which you put all the money you receive. (You can ask your parents to save empty jam jars.)
Jar 1: Charity -- food bank, cancer organization, etc.
Jar 2: Quick cash -- apps or ice cream.
Jar 3: Medium-term savings -- toy, gifts for friends and relatives, video game.
Jar 4: Long-term savings -- computer, college, car.
She suggests putting 10 percent of your money in the first jar, then splitting the rest evenly among the others. Under this system, you would divide your $5 allowance by putting 50 cents in the charity jar and $1.50 in jars 2, 3 and 4. Money for toys comes out of Jar 3, so if you put in $1.50 every week, the Lego set will be yours in 20 weeks. It's easy to keep track of if you create a monthly chart of the things you need to buy -- a birthday gift for Dad, maybe -- and the things you want to buy. And don't sneak money out of long-term savings!
Your long-term savings shouldn't just sit in a jar, Godfrey says. It belongs in a bank, where it can earn interest (the small amount of money the bank pays you for keeping it in a savings account). Ask your parents to open an account for you at their bank or see if your school has an in-school bank branch. At Glen Haven Elementary School in Silver Spring, Md., any student with $5 can open an account.
"We've had deposits from two cents to $200," said Yvette Reynolds, a teacher who coordinates the Educational Systems Credit Union branch.
Reynolds said the accounts have helped students think beyond the latest toy or game they see advertised on television.
"Everything is buy, buy, buy," she said. Having the bank at school sends a different message. "They learn the importance of savings," Reynold said.