Senior Kuwann Crawford wasn’t looking to live an extravagant lifestyle on his firefighter’s salary, but he found himself feeling flummoxed when discovering that being able to pay the bills meant living with his parents.
“This is very stressful,” he said, looking for ways to cover the cost of housing, transportation, food, furniture, technology and clothes, before even thinking about having anything left for entertainment or charity.
Kuwann was participating in a simulated budgeting session using an app called Bite of Reality 2 in East Kentwood High School teacher Amy Broekhuizen’s personal finance course.
His challenge: create a budget on an income of $1,864 a month (the amount left after deductions from a $2,500 monthly income). He and his classmates chose professions with varying salaries and visited 10 stations with options for how to spend their money. An Audi Q7? A used Ford Focus? Restaurants every night? Cooking at Home? High-tech electronics? A modest Internet package?
Kuwann at first chose to live in a studio apartment for $640 month, drive a used Honda Civic for $459 per month in total transportation costs, and eat at home for $360 a month. He soon found he couldn’t stretch his income to pay for everything else.
“I’m in debt!” he said, after figuring in clothing costs. “I feel like I’m seeing how hard it is to be an adult and realizing all these responsibilities.”
Kuwann circled through the stations twice, begrudgingly agreeing to live with his parents and switch to a used Ford Focus to cut costs. “Figuring out how to manage the money is stressing me out.”
After more finagling, he ended up with $109 at the end of the month, 30 percent of which he put into savings and 70 percent toward the credit card debt the game had assigned him.
Lessons In Money Management
Ben Harman, a relationship development manager with Arbor Financial Credit Union, offered the simulation as a cornerstone of several sessions he’s led in the class on financial literacy. He said many students don’t know how to buy a car or even what a credit report is, and East Kentwood is unique in offering a personal finance class. The Kalamazoo-based credit union has partnered with other high schools as well.
“The reason it’s important to reach these young people is they haven’t really had a chance to make a ruckus of their credit reports or bank accounts; they probably don’t have many bills,” he said, adding that if he can protect one of them from being taken advantage of losing money he considers himself successful.
East Kentwood’s semester-long personal finance class can be taken as an elective or for a math credit. Topics include taxes, checking and savings, credit cards, loans, credit reports, investing, insurance and budgeting.
“The big takeaway is for them to really understand that a lot of the financial decisions they make now are ones that need to be continued throughout life,” Broekhuizen said. “They don’t have to have that instant gratification of buying it now and getting into debt… You need to get into the habit of saving so you can make those large purchases without going into debt.”
During the simulation, senior Morgan Arnold had a bit more money to work with than Kuwann, with her $4,100 lawyer’s take-home income. She had the most left over in the class — $1,400 — at the end of the month. “You don’t need to buy a new car to have a nice car,” was one of her tips. “Prioritizing is the biggest thing.”
Senior Chase Montague, however, learned he would need to take on a “side hustle” blogging to live on his journalist’s salary, $1,700 a month after deductions, wasn’t cutting it.
Senior Deivi Martinez also struggled, deciding against becoming an actor after trying to cover expenses on a $2,100-a-month income. “I couldn’t afford a nice car and a decent apartment,” he said. Instead, he wants to be an electrician.