Prevent financial madness later in life

Help prepare young people for financial realities through this hands-on simulation.

How does a young person prepare to be a financially responsible adult? Do they know how much money they need to earn to live comfortably on their own? The financial challenges of adult life can be hard for a teen to grasp. How a young person saves, spends and invests their money is greatly influenced by their parents. Research shows parents play a key role in helping young people acquire financial knowledge. However, according to a 2013 parents, kids and money survey, more than one-third (38 percent) of parents avoid talking to their kids about their family’s current financial situation, and the kids know it. Unfortunately, by not discussing these money topics with youth they are often unprepared and ill-equipped to make sound financial decisions later in life.

Where else can young people learn or gain financial literacy? In McCormick’s review of the research on the impact of financial education on youth, the results are mixed. However, the research does imply that financial education programs that are interactive and grounded in real life could be more effective in increasing financial literacy than teaching from a textbook.

One program that helps prepare youth for the financial complexities of adult life is Mad City Money.

In this two hour simulated program, young people receive a career, salary, a family scenario and debt. During this interactive program, young people have to make the tough adult choices of where to live, transportation, child care, food, clothing, entertainment, household necessities, furnishings and utilities while building a budget that includes savings and retirement.

In 2013, the effectiveness of the Mad City Money program in Southeast Michigan was evaluated by Michigan State University Extension. On a post reflective evaluation of 199 high school and middle school youth who participated in the program the following results were found.

  • 97.8 percent of the students evaluated agreed or strongly agreed that as a result of participating in the financial literacy program they plan to save regularly to achieve their goals.
  • 87.7 percent of the students evaluated agreed or strongly agreed that as a result of participating in the financial literacy program they plan to consider the things they won’t be able to do or buy later with the money they spend today
  • 91.3 percent of the students evaluated agreed or strongly agreed that as a result of participating in the financial literacy program they plan to use a system to track income and expenses (create a budget).

Mad City Money allows participants to make mistakes, and suffer the consequences of their decisions, in a realistic, but safe environment. Most participants are surprised to learn “I can’t have a big house and a new truck on my salary and still pay for day care and groceries.″ Once the shock wears off, they reevaluate choices and manage their money more effectively.

Mad City Money program is offered many times throughout the year by MSU Extension 4-H Youth Development in partnership with Credit Union League Association. More financial education resources can also be found on the Michigan 4-H website.

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