It's (Not) Just an Exercise

Today is one of my favorite days of the year. No, not because it’s NBA playoff time (though that helps!). It’s the final session of my high school money class. During our time together, we’re going to do one of my favorite exercises, which is meant to help them understand what young adult life looks like. Until now, they have very little income, very few bills, and very little need to be fully intentional with their finances. That will surely change within the next handful of years. In the exercise, I give them a theoretical young adult monthly income, a handful of known monthly expenses, and ask them to create a full monthly budget for the life they want to live. The energy is always high, they complete the exercise with optimism, and it ends up being a referendum on their values/interests.

Then, it gets fun (for me, at least). After completing this budget, I ask them to draw pieces of paper from a hat. Each piece of paper has a dollar figure on it, representing the monthly debt payments they’ve put into their life through the choices they’ve made. Student loans, car loans, and credit cards. I explain to them that many decisions will be made between now and when they start this theoretical budget. For every decision they make, there’s a consequence (positive or negative), and these consequences will impact our life (financial and otherwise) for years to come.

The next step of the exercise is for them to do the same budget process as before, but this time factor in the monthly debt payment they pulled out of the hat. This is where the mood changes. I can see the stress on their faces build as they try to make the numbers work with this new reality of debt. Many of their wants/hobbies get removed, their giving shrinks, and they must find ways to get creative with housing and other basic needs. Needless to say, the tone shifts from optimistic to frustrated and overwhelmed.

While this is an innocent exercise for them, it’s the reality for millions of adults. Many of us have made decisions that resulted in negative consequences for years/decades to come. Myself included! While we can’t go back and magically undo any of them, each day presents an opportunity to make different decisions for our future selves. More importantly, we all have younger people in our lives who still have a chance to avoid many of the painful outcomes we’ve experienced. Let’s encourage and equip them! They deserve it.

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When "Skin in the Game" is Anything But

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The Psychological Impact of Sunk Costs