I don’t know if you’ve ever sat down with a group of young teenagers, but to say that learning how to manage money and do a budget are not at the top of their priority list would be an understatement.
So when I was invited to teach basic money management to a group of young teens at a local high school, I was more than a little apprehensive.
How was I going to make budgeting and money management interesting and relevant to students who likely didn’t have a job yet or a steady income or a need or desire to manage money!?
How was I going to cram enough relevant and engaging content into the one-hour time-slot I had?
I knew that walking in with a spreadsheet or any kind of math exercises would spell my death.
I had to come up with a way to make the core budgeting concepts both interesting and attainable for them.
So I spent a few evenings planning out a fun exercise that would teach the core concepts of budgeting and money management in 3 easy steps without the need for extensive supplies or delving into math or spreadsheets.
I was nervous walking in, but 5 minutes into the lesson I knew I had them.
The students really engaged with the activity, had fun, opened up with each other, and I hope learned something quite valuable.
Something I wish I had learned at their age.
And I believe this exercise could be used by anyone to teach students – or non-students – the core concepts of budgeting and money management.
So today I want to share with you my Easy 3-Step Budget Exercise for Students.
I hope you find it useful.
- Sticky Notes
- Sharpie Markers
Step 1: Write Down What You Want to Buy
For my group, I gave them a scenario where they were given a fictitious $100 and they could spend that money however they wanted.
Then I had them take some sticky notes and a sharpie and write down what they wanted to purchase – one item per sticky note.
The number of items they write down is entirely up to them, but you’ll want them to have at least 5 items for the rest of the exercise to work.
I told them not to worry about the price of each item yet, but just to write down how they would ideally spend the $100.
This was a relatively easy task as just about every teenager has a laundry list of items in their head that they want to buy at any given moment.
After about 2 minutes I had them go around the room and share some of the items they wrote down.
This was really fun for me as I got to play the resident old man in the room asking, “What is that,” again and again.
I now know what supplies I need to properly apply and paint my own fake nails! (Learning is a two-way street, ya know.)
Goals of Step 1
- To think about how best to spend the money based on their own individual wants and needs.
Step 2: Put Them in Priority Order
I then told them to take their items and place them in priority order starting with the thing they absolutely wanted or had to have at the top and going all the way down to the least important item.
This step was a bit more tricky.
They did well with the first few items on their list, but as they worked their way down you could tell they were having some trouble picking which items were more important than the others because just like us, they wanted them all!
As they wrapped up organizing their list, I had them go around and share their highest priority item and their lowest priority item and tell us why they put each in that specific place.
By sharing it gave them the opportunity to not only learn about each other but to hear some of the reasoning the others were using to make their choices.
Some prioritized the fun thing they really wanted.
Others prioritized the things they really needed.
Money is super personal, and this was a great way for them to see that everyone has different needs and wants as well as different emotions and priorities when it comes to those things.
Goals of Step 2
- Recognize how different everyone’s items are, and learn it’s ok to be different and have different priorities with your money.
- Give the kids an opportunity to voice their rationale for why they prioritized their list the way they did to help them better understand their own internal motivations and emotional connection to the items.
- Allow the kids to listen to the rationale of others and rethink their own motivations. It’s ok to learn from others and adjust our own behavior if it makes sense.
Step 3: Remove the Last 3 Items
I told the students to imagine they had taken their $100 down to the store and as they picked out each item from their prioritized list they discovered they wouldn’t have enough money to purchase the last 3 items on their list.
I then had them crumple up those sticky notes and move them aside.
Now, you may not think this fictitious exercise would elicit any real emotions, but you would be wrong.
As they saw the last 3 items on their list and both mentally and physically removed those items from the rest of their sticky notes, there were very real grimaces and moans.
Just the mental exercise of thinking of something they wanted to buy, then being told that they couldn’t have it has a real physiological effect.
I then had them go around the room and share which item in their bottom 3 was the most painful to let go of.
They each shared their tale of woe.
The “fun” people were sad they didn’t get something they likely needed even more.
The “need” people were sad they didn’t get to do some of the fun things they wanted.
One girl was frustrated because the 4th-to-last item on her list was a compliment to the 3rd-to-last item on her list, and not being able to get one item made the other item pointless.
This was a powerful moment!
They instantly felt the real-world ramifications of money management.
I could have done the exercise with $100 or $1,000 or $100,000.
No amount of money is ever enough to get everything we want.
We all have to make difficult choices about what to buy today and what to put off until later.
This is the most critical money management skill.
Not the ability to do the math.
Not the ability to use a spreadsheet.
Not having the right app on your phone.
It’s not even understanding investing or compound interest or the power of saved money.
The critical money management skill is being able to say no to things that aren’t necessary today.
That skill is a hard one to master for all of us, not just teenagers.
It’s something we are likely good at on some days and poor at on others.
Mastering the skill of controlling our own impulses and emotions is a lifelong pursuit, and through practice, we can get better.
That was the critical lesson I wanted to share with these students.
Money will never be the answer to our problems because money cannot fix the selfish and impulsive desires inside of us.
It’s only as we tame those internal struggles that we can gain any significant mastery over money.
Goals of Step 3
- Realize there will always be things that we cannot have right now. Learn to get comfortable with that reality.
- Learn the priority we place items in matters. We only have so much money to spend at any given time. Putting wants before our needs can come back to bite us once the money is spent.
- Understand that more money is not the solution. Our desire for stuff will always outpace our income if we let it. That’s why multi-millionaire athletes and pop-stars go broke.
As we wrapped up the class, I shared with them that they had just done their first budget, and many were surprised to realize how simple it was.
I explained that a budget is just a plan for how we are going to spend our money – and that’s exactly what they just did.
Budgeting really can be that simple.
It can be done with sticky notes and sharpies.
It can be done with a spiral notebook and a gel pen.
It can be done in the Notes app on your smartphone.
It doesn’t require a fancy spreadsheet or a dedicated budgeting app.
It doesn’t require a college level degree in finance.
Those things may help, but they are not necessary, and I wanted every student in that room to know it.
There was no technology or expensive app or college course holding them back from learning to make smart choices with their money right now.
And the biggest challenge they face won’t be learning how to use a spreadsheet or passing a class.
It will be the internal struggle to say no to themselves when what they want and what they can afford are not in alignment.
And that struggle is not unique to them as students. It’s the same struggle they will have to tame for the rest of their lives, and the sooner they learn to control it, the better off they will be.
I had a little bit of time left in my class, so after feeling the sting of losing the last 3 items on their list, I gave them all the opportunity to go back and reprioritize their list based on what they knew now.
Many of them did.
The emotional impact of losing some of those items at the bottom of the list made them realize they were more important than some of the things they initially prioritized higher.
The got a do-over!
They got to reshuffle the deck and start again, this time with a better sense of what was really important to them.
And I shared with them that those last 3 items on their list weren’t lost forever. They were just on hold until more money came in.
As they purchased items at the top of the list, items at the bottom could just move up waiting for the next round of money to come in.
Having to wait for things never feels good, but we rarely have to say no to something forever.
Sometimes it just feels like forever.
Especially when we’re young.
Caroline at Costa Rica FIRE
My daughter did a budgeting exercise in high school, and it was very helpful for her to simulate the decisions she would need to make about where to live and how to allocate spending. I also think she got a lot out of seeing how much things cost.
I volunteered to give a financial literacy workshop for high schoolers, and since it was just a one-time thing with no time for research, I gave them an exercise on brainstorming income streams. I asked them to identify something they wanted that would be a reach — e.g., car, new computer, etc. They worked in groups to figure out how they could pay for the item themselves within the next 90 days. It got the students excited about the possibility of managing their own spending, not assuming No even for a large expense, and several got quite creative about possible businesses!
Live Your Wage
Your lesson sounds fantastic, Caroline. Whatever we can do to help the next generation better manage their money the better!
This is actually amazing. I wish I had someone come in and teach me about this when I was younger! Great job!
Live Your Wage
Thanks Mr. FDU. I wish I had learned this stuff when I was in high school too.