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HSFPP Weekly Update 134—Budgeting, Part III

Message from Bob & Chris: Based on feedback that we’ve received, one of our goals this year is to include more survey and research studies so teens can compare their opinion with those of the general population of teens and adults. So this week we’re using a recent Capital One survey to illustrate the need for parent input on teen budgets.

Knowing how to create and maintain a budget is one of the most important means for managing money wisely. Parents often miss good opportunities to educate their children on budgeting and managing money. One such opportunity is when their children are shopping for back-to-school clothing and other school supplies. Another is when their children work after school or receive an allowance.

It was interesting to see, in the Capitol One survey that was covered in many newspaper stories early this month, that “ 91 percent say their parents have not taken the time to discuss their back-to-school finances with them.”

As educators you have the opportunity to help teens set up a budget—many for the first time—based on their wants and needs, both short- and long-term. As teenagers track their expenditures they can see whether their money is going toward budgeted items, toward impulse purchases, or toward unexpected expenses. As we’ve learned, many of us have to learn the hard way to set money aside for unexpected expenses; but teens can learn to do this from the outset if they are told what can happen if they don’t: running short of cash, having trouble paying bills, even having to declare bankruptcy.

We’ve received some good input on Update # 132, regarding teenagers’ views on cheating. However, we would like to hear from more of you, and will report back to you in future updates. How did your teens’ views change when the focus was on them, rather than on teachers’ behavior? What were their views on the societal implications of cheating to get ahead?

Also, please let us know what you think of this update: How are we doing? We want to know! Remember, these weekly updates are for your use and the format and content is based on your feedback. You can reach me (Bob) by e-mail at rflashma@uky.edu .

Related Updates:

Update #115 - Budgeting - 31 January 2005
Update #99 - Budgeting - 27 September 2004
Update #58 - Spending Style - 5 May 2003

Web Site Pick of the Week:

http://www.nefe.org/hsfppportal/index.html

Since we have so many new subscribers this fall, we are once again highlighting the NEFE High School Financial Planning Program’s Web site, which includes all the material found in the student guide, as well as information for educators.

Activity for Educators:

Have students read the article and discussion questions. Then use the questions in a class discussion about budgeting. Also ask students about their experiences in handling money. For example, what have they typically done with weekly allowances and holiday or birthday money gifts in the past?

Incorporate information from the student guide into the class discussion; those of you who don’t use the student guide, but who do incorporate the financial lessons into segments appropriate to your regular curriculum (e.g., social studies), can go instead to the Web Site Pick of the Week and read the budgeting unit there.

We also have included a homework activity for teens to complete.

In the New$... Back to School Season: Capital One Annual Survey Finds Parents Need to Talk Dollar and Cents

“MCLEAN, Va., July 18, 2005 /PRNewswire via COMTEX/ -- Capital One Financial's (NYSE: COF) fifth annual back-to-school shopping survey shows that parents are missing the perfect opportunity to talk to their kids about making the most of their shopping dollars. This year's survey finds that more than 83 percent of high school and middle school students expect their parents to join them on back- to-school shopping trips, but an overwhelming 91 percent say their parents have not taken the time to discuss their back-to-school finances with them. The survey also finds that nearly 60 percent of parents will spend more than $125 per child on back to school costs this year, yet only a quarter of them are taking the time to discuss back to school budgeting.

“For the first time, this year's survey found surprising differences in teen girls' and boys' knowledge of money matters. Findings show that girls are more accurate in judging how much their parents will spend on back to school items -- 33 percent of girls responded more than $125 compared to just 25 percent of boys. When it comes to contributing to back to school necessities, more girls (53 percent) reported that they will contribute money to back to school shopping compared to only 48 percent of boys.

“‘These survey findings prove that parents are missing an opportunity to give their teens one of their first experiences managing money. Developing a budget with their parents and putting the skills to use while shopping allows teens to test their financial judgment skills. It also better prepares them for financial decision-making as an adult,’ says Diana Don Colby, Director of Financial Education at Capital One.

“Does Money Grow on Trees?

“When it comes to sharing the cost of back to school shopping, this year's study finds that 50 percent of teens plan to contribute to the bill, with almost 70 percent responding that the money will come from job earnings. Parents plan to pay for back-to-school purchases predominantly with cash (75%), while 30 percent plan to pay using credit.

“‘More and more young people are earning their own income and wanting to make their own financial decisions. This makes it even more important for them to develop good money management skills early on,’ adds Don Colby. ‘By contributing their own funds to back-to-school costs, students have a vested interest in their purchases -- purchases that will range between 'needs' and 'wants.’”

Source: “2005 Back to School Season is Around the Corner, Capital One Annual Survey Finds Parents Need to Talk Dollars and Cents,” by Alison Athay, Capital One Financial Corporation. July 18, 2005. http://phx.corporate-ir.net/phoenix.zhtml?c=70667&p=irol-newsArticle2&ID=731104&highlight=

Class Discussion Questions:

1.) Approximately how much did you and your parents spend for back-to-school items this year? How much of the costs did you pay?

2a.) Do you receive an allowance? Yes ___ No ___.

2b.) Have you worked on any budgets together? Yes ___ No ___.

If so, how did this go?

2c.) Do you feel you learned anything from the process?

3.) Have you ever tracked where your money went for at least one month? Yes ___ No ___.

4.) If you said Yes to Question 3, what did you learn?

 

Activity for Teenagers:

Those who have the student guide should go to Unit 3: Budgets. Those who do not have student guides can go to the following Web site: http://www.nefe.org/hsfppportal/includes/main/home.asp?page=13000. We highly recommend you read the entire section on budgeting.

Step 1:
Track your expenditures for a week.

Step 2:
Write on a separate sheet of paper what you consider necessary and unnecessary expenses.

Step 3:
Go to http://www.nefe.org/hsfppportal/files/13420_Assignment%203.2.pdf, print and fill out the budget form, and have it ready to turn in during your next session.

 

Kentucky High School Financial Planning Program

http://www.ca.uky.edu/fcs/hsfp

The purpose of this Web site is to assist county extension agents, credit union educators, and high school teachers in improving the economic well-being of our constituency, beginning with today’s students; and also, to assist teachers in Kentucky in meeting KERA’s goal that all students become technologically literate. Weekly Updates are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators.