Money matters - Teens learn importance of financial management

By Ben Brow, 15, and Joseph Short, 15

By the time they graduate, 65 percent of college students owe at least $3,000 in credit card debt. During a recent presentation at Northern Michigan University, a representative from the Federal Reserve Bank told teens how to avoid falling into debt.

Ericca Maas, a senior project manager in the community affairs department of the Federal Reserve Bank of Minneapolis, gave a presentation to youth about money management. The presentation was part of a seminar called "Marketplace Economics and Entrepreneurship: Money Matters," co-sponsored by the Federal Reserve, Michigan State University Extension, and NMU's Center for Economic Education and Entrepreneurship. The seminar's primary purpose was to educate teachers and youth-serving professionals about the importance of teaching financial management to youth.

The Federal Reserve Bank of Minneapolis is the center of the Federal Reserve Bank's ninth district, which includes the Upper Peninsula, Northwestern Wisconsin, North Dakota, South Dakota, Minnesota and Montana. There are twelve districts in the country.

"I wanted to talk about money because I've made a lot of mistakes with it in my life," Maas said. "I want others to be able to learn from my mistakes and to make better decisions in the future when they deal with their own money."

The community affairs department is dedicated to helping low and moderate-income communities get better and equal access to capital and credit. That means that they work on housing and small business development as well as financial education.

"Financial education needs to start at a young age," Maas said. "What we say at our office is ‘K to Gray.' It needs to continue into the older years as well."

Maas told the teens that money should be handled like a relationship with another person.

"People need to be careful not to start a relationship with money that will give it too much control over their lives," Maas explained. "Money is powerful and deserves respect."

One of the main problems kids have with money management, according to Maas, is they don't save their money.

"They wait for their allowance and always have their eye on the thing that they need," she said. "I've been in contact with kids who would borrow future allowances from their parents and would even be accumulating debt at that young age."

One of the biggest reasons college students, as well as many adults, have so much debt is credit cards.

"When I was younger I frequently would just go and buy whatever I wanted and typically pay for it with a credit card," Maas said. "That was the major mistake I made. It took me about five years to pay down the debt and start saving again."

One of the money management techniques Maas recommends is making a spending plan.

"It doesn't need to be elaborate," she said, "but it is very important that you figure out where your money is coming from, and where it needs to go. Spending plans can help you do this."

Seventeen-year-old Danielle Thoune, a junior at Marquette Senior High School, enjoyed the presentation.

"I do believe the presentation was helpful," Thoune said. "I'm going into college in a few years, and I don't want to come out of college with too much debt."

Thoune says that more financial education is needed in schools.

"The econ classes right now tell you how to do some things, but it doesn't really show kids the difference of being totally in debt and getting by and surviving in the world," she said.

Thoune plans to put what she learned from the presentation into practice—someday.

"Considering I don't have a job and I don't have income, it makes it a little hard to save," she said. "Once I get a job, I can apply what I learned."