Another money question for you

Around a year ago I spoke with my friend Lauren Lindsay, a Certified Financial Planner, about talking to your family about money. You can read about that conversation here.

Lauren told me that she likes to begin all client conversations--whether it's people saving for college or preparing for retirement or trying to avoid bankruptcy--with a hypothetical question about budgets. 

Imagine you have a $400 dining out budget for the month. How would you divide it? One really fabulous meal a month, and then normal meals at home the rest of the month? Go out on weekends, but watch your spending to make sure you don’t go over? A cheap fast food meal almost every night, and spend the grocery budget on something else? Talk through your answers and your reasoning.

It's a good icebreaker for often-stressful discussions about money, because it gives you a way to think about how you approach money. Lauren says we all have a "money message" and our own way of approaching finances, and this question allows people to become more aware of that. It also lets people discuss their differences in thinking.

I liked the exercise so much that I ask all my coaching clients to have the conversation with their own families. And now I've thought of another hypothetical question specifically for high school students about to take on debt for college. Debt means risk, and it's important to understand your own unconscious and emotional responses to risk before making big decisions. My hypothetical is a little more devious than Lauren's pleasant dining out question:

Imagine that I have three pieces of paper, and you can steal one of them from me without me knowing.

The first is a hundred dollar bill. You take it from me, you have an extra hundred bucks, game over.

The second is a lottery ticket with 50 numbers for the next Powerball drawing (they cost $2 each, so it costs $100 total). The jackpot is $100 million. If you take this, you'll probably get nothing. Or you may get a little bit of money. But you just might (a roughly 1 in 292 million chance) win a hundred million dollars. If you win the big jackpot, there's a risk that I will accuse you of stealing the ticket from me, but that would be very difficult to prove. And that would only be likely if you win the big one. You'd probably get away with it.

The third is a bank statement that includes my account number and password. If you steal this, you'll have access to (probably) more than $100 but (almost certainly) less than $100 million. But getting the money from me will take more work, and it also has an increased risk of me or my bank catching you. If you know the right...or in this case wrong...people, you could probably sell the data to someone else and let them deal with it.

Which would you choose? Why?

I'll tell you my answer. I'd take the Powerball ticket. One hundred dollars wouldn't have a huge impact on my life right now, so it wouldn't feel like losing money to me. But $100 million would have a giant impact. Plus, I like the fun and suspense of it. (I think my wife can confirm that "frivolous but not technically disastrous" sums up pretty well my approach to money. Sorry, Darling.)

I can also see how someone who is behind on a car payment or stressing about family Christmas gifts would want the cash and would see the other options as really stupid. Or I can easily imagine someone saying "all three options are stealing, so don't judge. I'm going to take the bank statement and use my work ethic and ingenuity to maximize my returns." There isn't a wrong answer, but thinking about your answer and the reasons behind it can be illuminating.

Think about your own answer, and ask your friends and family about theirs. I only have two warnings:

1. This is just an intellectual exercise. Don't steal anything from anybody, even if you're sure you won't get caught!

2. This isn't a simple one-to-one correspondence. There's no "if you chose the hundred dollar bill, then you should go to this kind of college" formula here. It's just a matter of understanding your thinking--and feelings--about debt and risk before you have the student loan papers in front of you awaiting signature.

Thanks for reading! Please share this with people who would like to read it. Follow Apply with Sanity on Facebook and Twitter. You can hire me to work with your group or do one-on-one coaching

Should you join an honor society?

Should you join an honor society?

Ideally, we'd all have the intrinsic drive to make the best grades possible, focus our energy on tasks and projects that are useful to ourselves and our community, explore new interests, and push ourselves to become stronger leaders. But life just doesn't work that way. For most of us, the best way to look like we have that intrinsic motivation is to set ourselves up with some extrinsic forces to push us into more discipline. If you want to be a strong student, want to learn more about leadership, and want to volunteer to help others...but don't always get around to it, then joining a group that enforces scholarship, leadership, and outreach can be a very smart thing to do. 

Meet Grace

Meet Grace

Meet the Class is an opportunity for parents, educators, and admissions professionals to get a look at individual seniors and what they go through to find their college.

It’s updated each month from September to May. Each month will feature an interview about both the facts and the feelings of where the student is in the process.

In this first post in the series, we meet Grace. Grace is a senior in the Houston area. She attends a public magnet high school.

What should 9th graders be doing right now?

What should 9th graders be doing right now?

Work at being good at high school. This has an academic side—take the most rigorous classes you can, get the best grades you can, be involved in your education. But just as important at this point are the social and emotional sides. You’re easing your way into a new and exciting (and challenging) place. You’re going to have missteps, and you’re going to change your mind about things. That’s normal, and that’s fine.

What should 10th graders be doing right now?

What should 10th graders be doing right now?

When you get recruiting information from colleges, hold on to it. Make a special email folder to archive all the "college stuff.” Have a box to keep all the materials you get in the mail. You don’t have to examine it all closely and make decisions about schools—but keep those resources near you. When it comes time to find a school that’s a good fit, starting with the ones who reach out to you early is a great strategy.

What should juniors be doing now?

What should juniors be doing now?

You probably already know this—you’re living it—but 11th grade is generally acknowledged to be the toughest year of high school. There’s a major jump in the rigor of your classes. You’re moving into leadership positions in your extra-curricular activities. You have some major high-stakes tests. People are beginning to ask you more and more about your plans after high school. You’re more likely to be working an after-school job, you’re more likely to be driving, you’re more likely to be dealing with the ups and downs of dating and relationships. You likely have growing responsibilities at home. You’re more likely to be dealing with emotional or social issues.

What should seniors be doing now?

What should seniors be doing now?

Your daily high school homework isn’t quite as compelling as it was a year ago. On the other hand, you also need to be preparing yourself to be a good college student, and the best way to prepare for college is to be a good high school student. As tempting as it is, you can’t just coast through senior year; that never works as well as it seems like it should. So it’s perfectly normal and appropriate for you to be less diligent your senior year than your junior year. The important thing is to ask yourself why.

This one's for Houston

This one's for Houston

But maybe you're out of the most direct danger and wondering what this means for your financial aid. Maybe, on top of the distress of 20 trillion or so gallons of water being poured on our area and entire neighborhoods being destroyed, you've realized that what's going to help your family get through this is spending your college savings on something other than college.

Don't just get in to college, finish it.

Don't just get in to college, finish it.

But the advice, which is really good and worth your time, is aimed at students about to begin their first year of college. What can you do as a high school student to make sure you're ready for the transition and to stay in college until you've earned your degree?

Summer's almost over

Summer's almost over

Depending on how your school calendar works, you probably have somewhere between two and six weeks of summer left. If your house is anything like mine, you're beginning to run out of planned activities and good ideas. So I thought I'd give some suggestions to smart and ambitious high school students for wrapping up the summer.

In case you missed it, June and July

It's been a quiet, slow summer for me. But that doesn't mean I had nothing to say! Here's what I wrote about this summer.

I gave a concrete example of how to put your College Mission Statement to use.

I responded to the Harvard Meme Incident and gave some advice about taking control of your communications.

I explained that supply and demand work the opposite way than many of us think about it: there are more universities trying to get you in than there are universities trying to keep you out.

I gave a summer homework assignment to research income trends. I've no idea why this was such an unpopular post!

I tried to make sense of the report that an alarming number of Americans think that universities are doing harm to our nation.

I argued that there are few good reasons to pass up a full scholarship, even though people do it all the time.

I'll be keeping my only-on-Thursdays approach to blog posts through August, and then moving back to twice a week when things really get moving in the fall. Thanks for reading Apply with Sanity!

So...are you about to do something that harms our nation?

So...are you about to do something that harms our nation?

Why have Americans--especially, but not only, Republicans--turned cold on college? Do they no longer value education? No, despite some of the over-the-top headlines, this probably isn't it. While the Pew poll doesn't ask each of the respondents to explain their answers, there are a couple good guesses as to what's going on. 

A summer homework assignment

A summer homework assignment

Last week The Atlantic published this article by Joe Pinsker titled "Rich Kids Study English." It's a really fascinating piece that I hope you'll take the time to read, but here's the main idea: "the amount of money a college student’s parents make does correlate with what that person studies. Kids from lower-income families tend toward 'useful' majors, such as computer science, math, and physics. Those whose parents make more money flock to history, English, and performing arts."

Thinking about supply and demand

Thinking about supply and demand

If you only read the major news headlines, you might think that there's too much demand for universities and not enough supply. The news is dominated by stories about the really, really low acceptance rates at places like Harvard and Stanford. But the reality is often the opposite: most colleges are trying to get people in, not keep them out.

Run (again) before the bell

Run (again) before the bell

It’s wonderful that you’re willing to make dramatic efforts toward something: staying up all night to study for a test; starting an extreme fitness routine before a sports team try-out; concocting an elaborate Promposal; doing extra credit work to boost your grade. But run before the bell and do those things at a time when they’ll be more beneficial: stay up a little late five nights before the test instead of a self-destructive all-nighter; start exercising months before the try-out; ask that person out now in a non-theatrical way instead of waiting until Prom season; keep your grades up so you don’t have to beg for extra credit. It’s not as dramatic, but it costs you a lot less.