I like the idea of a sneaky project, that creeps up on kids. For example, I’ve started a unit project by asking my unsuspecting students the following question on the board:

What would you do with a million dollars?

The project, linked here, leads students to learn about budgeting for an economics class I taught. Students reply to this with the typical fantasies.

I’ll buy a new car, and some new Jordans, and a new house!

But by adding a few caveats, we’re able to grab all of these kids wildest dreams and smash them against the rocks of reality. The main caveat is that students have to survive for 20 years off the million dollars, and they have to pay taxes. They first have to choose whether to receive the money all at once, or over 20 years. Kids immediately go to calculating the tax bracket and realizing that receiving all the money at once means you pay much more in tax compared to having the money split up over 20 years. At this point I tell students to opt for regular payments (although I imagine an interesting side story might be to take the money upfront and try to invest it in a stock market simulator to see if they can earn back the original amount).

From this point in, students have to figure out how to live on 50,000 a year. This is pretty close to the US national Median income, so it should line up with what they’ll make as soon at they enter the work force.

So then I ask them to think through what they would do with that 50,000 yearly amount, and make them budget how much they would spend on all of the following things:

  • Clothing
  • Household Products
  • Furniture
  • Utilities (heat, electircity…)
  • Inside Entertainment (Cable/netflix/music/videogames)
  • Phone
  • Gas
  • Health insurance
  • Life Insurance
  • Outside Entertainment
  • Anything else…

Once they come up with these numbers, I have them put it all in a spreadsheet that gives them little suggestions of websites to use to estimate all of these amounts. The final thing I have them do is write a little paper describing what they did with the money.

If I had more time I would have them actually learn the mortgage formula ahead of looking for houses on Trulia, and use the mortgage formula to estimate a range of houses they want to look for. My kids used the estimators on Trulia and Zillow, which assume a down payment, and also don’t let the kids use their brains, so I would like to not depend on those.