When I stumbled into adulthood a couple of decades ago, money was an absolute mystery to me—or at least, the management of it was. Expenses like car maintenance, water, trash, health insurance and taxes came as a huge shock, stunning me with how quickly they could consume my pay. And who knew food was so expensive?
I’d always had big ideas about all the cool stuff I would do in my adult life, but not much of a plan for how I would fund those ideas. No one ever sat me down and went line-by-line over the actual expenses of the real world, so the first five or ten years of my adulthood were indoctrination by fire.
I want my kids to go into careers and adulthood with their eyes wide open. I want them to know what life really costs before they leave home and choose a career path. So I’m making sure I teach them.
But I’m making it fun.
I’ve been turning real-life money lessons into a game of make-believe. My kids imagine an entire world based on their career goals and desires for their future. And then we plug in all the numbers as if that life were real. Think LIFE meets Monopoly meets Sims. Here’s how it works.
Have your kid pick a career
Then direct them to a salary website such as Salary.com, Glassdoor or PayScale and find out how much they would expect to earn per year in that career. You could even find a job listing that lists the pay and pretend that your child was hired for that job. Determine their take-home pay by deducting a percentage for taxes and health insurance.
Find out where they’d like to live
If they found a job listing and pretended they were hired, they can use Realtor.com or Zillow to look for an apartment or house near that job’s location. Use this exercise to compare the difference between renting an apartment and buying a home.
Talk about the long-term benefits of using equity to build net worth. Talk about home insurance and real estate taxes and home maintenance expenses. Determine what their monthly payment will be for housing. How much could they save by employing sweat equity to update an older home, rather than buying a newer, more expensive home?
Ask how they’d like to spend their free time
Do they plan to travel? Do they imagine themselves eating at nice restaurants? Do they see themselves having roommates to help share expenses? Jot down their ideas and determine how much they’re likely to spend every month.
Now: it’s time to budget
We use Kiplinger’s budget worksheet. It allows you to enter income and expenses and then does the maths for you. Have them fill in the expenses portion of the worksheet with all their food, entertainment, utilities and travel costs.
Notice that car insurance is typically only billed twice per year, but it still needs to be accounted for in a monthly budget so it doesn’t come as a painful surprise every six months (like it did for me as a new adult). At this point, the game will really start to teach your kid something.
You might also consider how much it will cost your kid to furnish their house or apartment by “shopping” on furniture websites and then going to Facebook marketplace and checking out secondhand finds. How much could they save by buying used?
This make-believe game can be both entertaining and also a reality check. Looking for a pretend job and going pretend house-hunting is fun, but realising how expensive it is to be an adult can be overwhelming. For most kids, life is way more expensive than they think it is.
Still, parents who do this exercise set their kids up not only to be more financially aware, but also more ambitious with their goals, whether they decide they wish to earn more money to fund their hobbies or to be content in a career that pays less but fulfils them in other ways. Beyond that, creating a make-believe world with your kids can also help them appreciate what you provide as a parent. And you can’t put a price on that.