Life’s lessons: MSU develops program to teach finances to students

BELGRADE — Having kids is expensive, as 18-year-old high school students Brandi Hulse and Cassie Lehman learned in a role-playing class on family finances.

By GAIL SCHONTZLER Chronicle Staff Writer

"We’re head over heels with loans," Lehman said, going over a fictional family budget for a married couple with a 3-year-old son.

"We are not getting pregnant again," Hulse said, tongue in cheek. "We’re getting fixed."

They and a dozen other Belgrade High students spent the last week play-acting as secretaries, highway workers, ranch managers, waitresses and construction workers.

The goal of the Life in Montana simulation was to show students what their parents’ generation learned the hard way.

"It’s hard — buying everything you need, staying in a budget," said Ashley Backman, 16.

Backman was given the role of a child care worker, earning a meager $13,000 a year, married to a computer support specialist who earns more than $27,000. Despite their combined $40,000 income, they were spending too much because they decided to buy a house, said Caroline Stovall, 17.

"We had to sell our dog and cat and artwork and sell our clothes," Stovall said. They also tried to save money but cutting their food back to just $100 a month each.

That’s a lot of Top Ramen noodles, other students pointed out.

To try to keep young Montanans from getting into financial trouble, Montana State University is developing the new lesson plans for high school students.

Nicole Chinadle, program manager for the Family Financial Literacy Project at MSU, said the idea that such education is badly needed came from the Credit Counselors of America Inc., a nonprofit counseling service. Seeing the financial misery some families get into, the service’s leaders wanted to do some prevention.

Credit Counselors gave a gift of $75,000 and a grant of $127,000 to MSU’s Department of Health and Human Development to create lesson plans. The lessons they’re developing are designed to be ready-to-teach in the classroom, Chinadle said.

"We really focus on active learning," she said. In addition to the lectures, there’s always hands-on activities for students, like the role-playing simulation Life in Montana.

The idea for the simulation came from a conference with 17 high school teachers of family and consumer science (known in their parents’ day as home economics teachers).

They said their students can’t relate to budgeting because Mom and Dad give them $20 allowance, and then when the students have spent all that, Mom and Dad just give them some more money. The idea of limits wasn’t real.

MSU based the Life in Montana simulation on the 2000 Census. Wages, married status, education, numbers of children come from realistic data about Montana wage-earners and families. Realistic figures were also used for the cost of housing, cars, insurance, heat, food and pets.

"It’s by far our most popular lesson," Chinadle said.

This year, 32 teachers are working with the curriculum, including teachers from Hamilton, Wolf Point, Three Forks, Manhattan and Bozeman. In June, MSU plans to train another 50.

The simulation in Ginny Francis’ housing and interior design class at Belgrade High lasted just six class periods, and she said it wasn’t enough time to cover everything thoroughly. Chinadle said they’re working to develop a semester-long class that would be available to every Montana high school (on http://www.familyfinance.montana.edu).

Students need a full four-month semester, she said, to cover values, goal setting, budgeting, saving, investing, checking, banking, insurance, and saving for retirement.

Credit card debt is one of the topics covered in the lessons. The U.S. bankruptcy rate has risen to 1.3 million households a year and most families in bankruptcy got in debt with their credit cards.

In Montana, 4,000 bankruptcies were filed in 2001, and 96 percent were consumer rather than business bankruptcies, according to the American Bankruptcy Institute.

Francis told her class that 60 percent of U.S. households don’t pay off their credit card bills every month, which means carrying a balance and paying steep interest charges.

She told students if they pay just the "minimum amount" on their credit card bills and carry a big balance from month to month, "it could take you 100 years to pay off."

Credit-card troubles start early in life — the average college undergraduate has $2,200 in credit-card debt, she said.

Retirement is another key topic, since responsibility for retirement saving has largely shifted in America from institutions to individuals.

Francis told her students that if they could start saving for retirement at age 22 and put aside $2,000 a year for six years in an IRA earning 12 percent interest, by age 65 they could have $1.3 million. But if they don’t start saving until age 28, they would have to put aside $2,000 for 37 years to end up with the same nest egg.

"The whole idea is to give them a head start," Francis said. "We don’t want them to be 50 years old and say, ‘I wish I would have known that.’"

At the end of Friday’s class, Francis asked her students what they thought of the simulation.

"It was good," Hulse said.

The one thing she’d change would be the "chance cards" handed out on the last day, designed to throw one of life’s curves into their budgets.

Hulse’s chance card had given her a $100 reward for returning someone’s wallet. Another student’s card said her computer crashed and it cost $200 to repair.

It would be more realistic and dramatic, Hulse said, to have people lose their jobs, lose their house or face major doctor bills.

And what did the students learn from the lesson?

"Two people make more than one," said Adam Baker, 17.

"Only have one kid," said Britney Williams, 18.

"Find a rich husband," Lehman said.

http://bozemandailychronicle.com/articles/2003/01/19/news/econbzbigs.txt