Students get a taste of financial reality

By Denise Coffey - Staff Writer
Killingly - posted Tue., May. 3, 2011
(L to r) Student Hannah Phelps, Kim Bartlett and Erin Noren at the 'Financial Reality Fair' at Killingly High School. Photos by D. Coffey.
(L to r) Student Hannah Phelps, Kim Bartlett and Erin Noren at the 'Financial Reality Fair' at Killingly High School. Photos by D. Coffey.

Seventy credit unions in the state came together to provide a reality check for more than 320 students from area high schools during the Credit Union League of Connecticut’s “Financial Reality Fair” at Killingly High School on April 27.

Bankruptcy among students has risen 96 percent in the last 10 years, according to Kim Bartlett, community relations coordinator for Charter Oak Credit Union. “Clearly, there’s a gap in the education system in how we’re teaching students about personal finance,” she said. “We’re here to bridge that gap. We don’t want to raise a generation of teens who are going to be in debt down the road.”

Barbara Bass is the vice president of education and human resources at the Credit Union League of Connecticut. “The primary goal of the fair is to give kids a snapshot of what it’s like to live on their own,” she said, “to give them an idea of what it encompasses. We’re here to tell them they need to budget. This fair gives them an idea of why it’s important.”

The Credit Union League started coordinating with high school teachers in August. In order for students to attend, they had to research careers and choose one that they thought they would pursue. Based on their choices, the league printed up individualized budget worksheets that each student received at the fair’s orientation. On each worksheet was printed an average annual salary by career. Mechanical engineers made $54,500 yearly, while marketing management trainees made $32,000. The salaries were broken down by month in both pre-tax and net pay amounts. Each student was given an arbitrary credit score, and a credit card payment due. Their minimum payments had to be figured into the student’s budget.

The students had to determine how much money they wanted in their pockets at the end of the month. Armed with their budget worksheets, they went through a gauntlet of booths representing unavoidable costs they would face once they graduated: transportation, rent, food, insurance, furniture, utilities, clothes, cell phone and nightlife.

No one was allowed to choose unrealistic salaries.

“There were no baseball players making $2 million,” Bass said. “We took out taxes, which surprised a lot of students. And we took out health insurance premiums, which average $107 a month. We took out 3 percent for retirement.”

The students were also given college loan payments appropriate to the amount of time their career required. Assuming parents would pay 30 percent, students would pay 30 percent and loans would cover 40 percent, and using figures based on attending the Universityof Connecticut, the league came up with average balances owed on 20-year terms.

“We looked at what it would cost overall,” Bass said, “including tuition, housing and books, and came up with balances. It’s not unusual for a student to graduate from college with a loan due of $100,000. It’s a teachable moment.”

Students were let loose with portfolios, budget worksheets, calculators and mechanical pencils - with erasers - to plot their financial courses. Every expense was well researched by the Credit Union League.

At the transportation booth, they were given a choice of vehicles from new to used. They could carpool, bike or take public transit to work. Each option came with its own price tag that the student would need to figure into his or her budget.

Once a vehicle was chosen, and most students bought cars, they had to purchase insurance. These costs varied for male and female drivers. They had to pay taxes on the vehicles and they had to purchase gasoline, based on $2.50 per gallon - the only unrealistic figure in the fair. Once they chose a vehicle, they had to go a credit union booth to get a loan.

At the clothing booth, there were different plans to choose from based on a student’s profession. The plans were based on what a person might have to spend in a year, and this was broken down into a monthly figure. There were plans for professions requiring uniforms and those requiring business attire.

Each student had to purchase a bed and a chair in which to sit down to eat.

If they purchased a computer, they had to purchase an Internet provider plan.

There were booths that didn’t require purchases. They were there for temptation only. Booths selling pets, electronics, entertainment, gym memberships and travel were scattered throughout the fair.

A wheel of reality was one stop all students had to make. On a spinning wheel were 12 possible outcomes, six good and six bad. Each student had to spin and figure the ‘selection’ into their budget. One student received a tax refund of $275. Another had to pay $195 when his car broke down.

Before they could finish the exercise, each student had to bring their budget worksheets to a financial counselor for review. The counselors talked with them about planning for the future, as well as looking over their monthly purchases. Many students were sent back into the fair because they had gone over budget. Some students had to return that brand new car and buy a used one. Some decided not to live alone in an apartment but to share with a roommate. Some got second jobs to cover the costs of what they wanted to have.

“They realize what it’s like to live alone. They appreciate their parents more,” Bass said. “They realize that they need a plan.”

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