The best way to teach something to a teen is to make them think they came up with the idea themselves. The Cs of Credit (capacity, collateral & character) activity used in the Wealthy Habits camp does just that.
Credit is something that few of us understand completely, but we are very aware that it can impact us greatly. The 3 Cs of Credit activity provides students with an opportunity to see credit from the perspective of an underwriter.
The activity has students work in small groups because everything is more fun when you get to debate things with friends. A quick explanation of what information is included in each of the 3 C categories provides a general idea of the actions that can affect a person’s credit. Each group is provided with random characteristics of an individual requesting a loan as well as the amount and item they are intending on purchasing. Groups review all the information given while categorizing the different details into each of the Cs. Finally, the group must determine if the person is a good credit risk and if they will make the loan or not.
As students make judgments about who they aren’t willing to loan money to, the desire not to be like the individual they just denied is planted into their brain.
A budget is a breakdown of what a person can spend based on what they earn. A goal is something an individual wants to achieve. Which option makes you feel more motivated to make good decisions?
Wealthy Habits focuses on building a mindset that sets goals and does what it takes to achieve them. Through the Spending Plan activity, students individually decide what is important to them to spend their money on. Some students will select the lowest cost on every purchase, but most students realize that some things are more important to them and spend more of their money on those, instead. Once they have decided what’s important, it’s time to add everything up to see how much their lifestyle will cost them. This is a personal finance class and not math class so students are provided calculators to total up what they need to earn. Once students have their total, they follow directions to see how to calculate both the net and the gross income they need to earn.
This is certainly eye-opening when students realize they need to earn over $20/hour to live their desired lifestyle. Instructors then discuss with the group how to get to the lifestyle goal they calculated.
Supply and demand is an economic theory and a pretty easy concept to understand, but seeing it as something fun to learn about is a bit more challenging. A loved childhood game of musical chairs is an ideal activity that brings students out of their “reluctant to learn” mentality. Of course, there are always those few students that are “too cool” for a game of musical chairs, but we use that to our advantage.
Starting off with a short discussion of a few important economic terms, students are then asked to arrange the chairs in a circle. Instructors announce that they will be playing musical chairs. Some faces will light up while others will look confused about how it is relevant. After explaining how the game relates to supply and demand as well as what the prize is at the end of the game, students are asked to raise their hand if they are planning to win the game. Instructors will count the number of hands and the number of chairs and ask if they will need to try hard for a chair. If the supply is higher than the demand, there is little need to try too hard. The game is played until there is an equilibrium and paused for a short discussion.
Those students that were a little “too cool” at the beginning tried really hard not to smile, but by this point, we have broken through their comfort zone. The game is completed to find a single winner. The class has a final discussion about how learning financial “stuff” is pretty easy and can actually be FUN!