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On a recent Tuesday, I stood inside a bank storefront and talked to seventh graders about how to save money, why we save and how to evaluate banking options. It was part of a financial literacy program that emphasizes hands-on learning.
Instead of worksheets, textbooks or lectures, these middle schoolers engaged in a simulation of real-world budgeting and financial decision-making. It’s part of a Junior Achievement Finance Park program in Maryland. The first location opened in 2003, and there are now 65 finance parks all over the country.
The parks consist of a large space filled with storefronts representing different types of expenses and financial decisions. These include paying for utilities, going on vacation or buying a car. Students visit each storefront and create a realistic budget based on an assigned income for the day.
“Experiential learning fundamentally changes how students engage,” says Monica Goldson, Ed.D., CEO of the Junior Achievement of Greater Washington. “Typically, middle school students have no clue about the types of bills that parents are paying every month for them to live.”
The park gives students the chance to practice money management. “They are learning how to adjust budgets that don’t balance,” Goldson says. “It allows them to practice and begin to ask questions that help them think about their own economic mobility.”
That kind of financial literacy might also help them boost their financial security one day. According to a NerdWallet financial resilience survey from last year, 26% of Americans say that strong financial literacy is among the most important factors to their financial resilience.
Learning by doing
Hands-on financial learning has gained steam in recent years, and there are plenty of ways to provide it.
Educator Whitney Ramirez started the nonprofit Financial Field Trips after noticing how powerful in-person experiences are for students. She partners with credit unions, banks, real estate agents and other financial professionals in Maryland to organize field trips for students in local school systems and homeschooling families.
“I want to take kids to the same places I wish someone had taken me,” she says. If students can see how to open a bank account, apply for an apartment lease or explore an open house before they face the real thing, she adds, they will be more prepared to ask questions and advocate for themselves.
“Our highest rate of information retention is around times when we learn by doing, teach others or practice doing ourselves,” she says.
Ramirez is especially committed to helping students who might not otherwise get access to these kinds of financial experiences. “It’s a known fact that a lot of minorities and underserved communities do not have healthy relationships with banks. How can we heal that relationship?” One way, she suggests, is through field trips.
She recently took students from a Baltimore high school to an apartment complex to show them how to do a move-in inspection. They met with the leasing agent, viewed a model apartment, conducted an inspection and filled out a mock rental application.
One student told Ramirez she could picture herself living in the apartment. “Sometimes students don’t believe they are capable beyond what they see unless you show it to them,” Ramirez says.
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Getting real-world practice at home
For students who don’t have access to these kinds of field trips at school, educators say parents can create their own experiences.
Talk about prices at the grocery store. Show kids how to compare expenses when shopping for activities or clothing. These can start valuable conversations, Goldson says. Similarly, paying kids an allowance in exchange for chores can help teach them financial responsibility.
“Let students manage their money, and require budgeting rather than replacing those funds if they run out,” Goldson suggests.
Ramirez suggests taking your child with you whenever you’re making financial decisions, such as closing on a home purchase.
“Experiential learning plants a seed,” she says. They might not realize the value during the experience, but they will likely recall the moment later — when they’re in charge of their own finances.
Practicing budgeting trade-offs
I got to volunteer for the seventh-grade Junior Achievement Finance Park trip because my son was part of the cohort. As a personal finance columnist, I had a blast sharing savings tips and budgeting strategies in front of the mock bank storefront.
As the students navigated through their assigned personas — applying for mortgages, taking out auto loans and making choices about where to spend limited paychecks — they had plenty of questions for me. Can I stop paying for my children’s expenses? Why do I even have children and a spouse if they just cost me extra money? What’s the cheapest vacation I can possibly go on?
They were considering what it’s like to make trade-offs and have to look for ways to earn more money when their income wouldn’t stretch across all the categories they needed to fund.
Most of them eventually completed their budgets, even if they had to cut back on clothing expenditures or rent the lowest-cost apartment they could find.
Goldson says her son, now in his mid-twenties, still remembers his day at the Finance Park from middle school. “He wanted a house but couldn’t afford furniture because he wanted an expensive car,” she says. Today, in the real world, he has a home with furniture, but a lower-cost car.
“I’d like to believe his Finance Park experience contributed to those decisions,” Goldson says.
At the end of my day at the Finance Park, one teen, frustrated when her numbers didn’t add up, eventually logged out to take a breather.
“But you can’t log out of life,” she said, acknowledging that in the real world we all have to face money trade-offs without such an easy escape.
That’s exactly why these kinds of financial literacy experiences are so valuable.
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