Comp students get taste of 'real world' finances
Date: 3/31/2010
March 31, 2010.By Mike Briotta
PRIME Editor
CHICOPEE -- With the American economy still reeling from the worst financial crisis in decades, it will be up to the next generation of young adults to manage their money more wisely. Unfortunately, many Americans -- especially the young -- lack a basic understanding of how to prepare for their short and long-term financial needs.
Enter financial literacy day at Chicopee Comprehensive High School (CCHS). The second annual event took place last Friday in the school gymnasium, the goal of which was to expose high school juniors and seniors to the kinds of financial hurdles they will try to overcome upon graduation from high school or college.
The CCHS program gave students first-hand, albeit simulated, experience with real-world financial struggles. Upon entering the gymnasium, each student was randomly assigned a career and life situation including marital status and dependents.
From there, each student was instructed to walk to different tables, paying down their mortgage, finding the money in their budget to pay groceries, and somehow trying to allocate extra funds for luxury expenses like entertainment. An all-important "fate" table doled out unexpected bonuses or challenges depending on which cards were drawn.
"The gist is to encourage students to find out more about their own financial literacy," teacher Mary Paleologopoulos said. "We have to prepare our youth for the challenges they will face in a tough economy. It's a whole new road map for education."
Kenneth Widelo, director of career and technical education at Chicopee Public Schools, helmed last year's inaugural event.
"I think these students are becoming aware of the realities of financial literacy," Widelo said. "When a high school student first looks at a salary of $20,000 or $30,000, it looks like a lot of money. But even having a pet changes the grocery bill, and they start to see much larger bills that have to be paid, such as housing."
Financial literacy statistics in the wake of the 2009 financial crisis are staggering. The national savings rate fell into negative territory for the first time since the Great Depression. The cost of college has almost doubled in 20 years. At private colleges, the tuition increase was 81 percent during this period.
As a result, the number of students graduating college with more than $25,000 in debt has tripled since the early 1990s. The average credit card debt for college students is nearly $2,500, with nearly a third of all college students carrying upwards of $3,000.
The Obama Administration announced in late 2009 a new campaign to promote financial education for high school students nationwide. The effort stems from a recent survey showing that young adults had much lower financial literacy than prior generations.
Respondents with higher levels of financial literacy were more likely to plan for retirement, have emergency "rainy day" funds, and avoid high credit card fees and interest rates.
The first step in this effort, the administration said, is the National Financial Capability Challenge, a national award program designed to encourage financial education in schools nationwide. The administration has pledged resources to support the program's implementation and increase its reach to focus on poorer communities, which the survey said suffer the most from little access to financial education.
Teachers, schools, school districts and youth groups can register online to participate and early next year a teacher "tool-kit" will be sent out to all registered teachers. The challenge exam is being offered this month.
"The reality is that all children don't know the basics of saving and investing," Education Secretary Arne Duncan said in a press release. "It's a skill they need to be successful in our economy. The initiative we're announcing today with the Department of Treasury is a step in the right direction."
Treasury Secretary Tim Geithner added in a written statement that the administration is not solely focused on financial regulatory reform in the wake of the current crisis, but increasing financial education as well.
"We must also do a better job making sure our students graduate from high school with a better understanding of basic economics, basic finance, and the benefits and risks associated with debt," Geithner stated.
CCHS has plans for a larger financial literacy program next year. Rather than a one-day event giving high school students a glimpse of microeconomics, the 2011 program is scheduled for an entire week, with follow-up financial lessons planned. According to Widelo, Superintendent Richard Rege envisioned an across-the-board financial literacy program that dovetails with recent statewide initiatives.
CCHS senior Jessica Dzwonkoski said she learned a few life lessons in the realistic financial simulation.
"I thought it was pretty interesting," she said. "You got some real-life experience. It's completely random, so they said I was a graphic designer making $40,000 a year and had a spouse making $55,000 a year. By the end, I was up $2,870 for the year, and took trips to Las Vegas, New York and the beach."
She added, "Of course, I had a husband and no kids." In real life, she plans to attend Worcester Polytechnic Institute next year and wants to go into mechanical engineering.
Fellow senior Todd Roy was assigned the job of Web design administrator earning nearly $70,000 per year, but there was a catch: all of his salary went to support three hungry kids at home and his wife did not work, as she was at home raising the children.
"I had a medium house, three kids and a large dog," Roy recounted. "We were still able to take a trip to the beach." He continued, "I actually had no idea what this was going to be about today. The most surprising thing was the kids. They ate $1,100 a month in groceries."
In his actual career path, Roy intends to study at Holyoke Community College in the fall to study in the criminal justice program.
Two seniors dispensing life events at the "fate" table, Anthony Thomas and Starr Bargalla, had fun handing out random things like winning the lottery or having a faulty car transmission that must be fixed (for a cool seven grand). In this game, they said, dinner for two with your spouse is considered bad. After all, that evening on the town will set you back fifty bucks.
"Life throws things at you, but you have to be ready to handle them," Thomas said.
Kara Blanchard, community-student workforce developer with the school system, said the program has been a real eye-opener for the students.
"I think they were surprised, especially the ones that were given children," Blanchard said.
She continued, "At first they see their salaries and think, 'Wow, this will take me far.' But that's before all the expenses. Now they know that, if they want to be successful and independent, they have to make smart financial decisions. They are young, and just starting out, but they're getting a glimpse of the real world."
