Under the Hood with Dave Buten Co-Founder and Co-CEO: Credit Card 2

This is the second post in the ‘Under the Hood’ series.  Like the first post, this is also about credit card usage in the simulation. We’ll take a deeper look at the behavior of the credit card in the simulation, how it impacts the student experience and address some feedback we have received. This second post is written for our teachers who use Budget Challenge with their students and those who are thinking about starting.

Let’s begin with asking a couple of questions. 

1. “Does having a credit card in the simulation represent an endorsement for the use of credit cards in real life?” 

2. “Does having a heavily used credit card in the simulation set a bad example for students to imitate in real life?” 

If you answered “Yes” to either of these questions, then this post is certainly for you!  This perspective is one that we have seen from teachers and below are some examples:

  • “YES, please dismiss the credit card feature. We are teaching students bad spending habits with this.”
  • “Students have been taught to avoid credit card debt, so it's frustrating that all of life expenses get charged to a credit card in the challenge -- it sends conflicting messages to students.“
  • “I realize this would be difficult to change but I wish the simulation didn't use a credit card.”
  • “It would be best to have the money spend on daily living come from the checking account and only larger purchases put on the credit card - it concerns me that the simulation teaches putting everyday expenses on a credit card - NOT GOOD MONEY MANAGMENT ADVICE.  Very frustrating that the simulation promotes that unfavorable money habit.”
  • “Yes - the credit card set up is horrible.  Redo and choose a more realistic situation.  Starts off too fast before students are familiar and puts them in the hole.  That is not good at all.”
  • “Don't use credit cards. I am trying to teach my class to not use credit.”

We understand that students can imitate the behaviors that they are exposed to, but I would like to present 3 different perspectives to persuade you to see this situation in a new light.

Perspective 1 - Simulations are powerful education tools that excel in the development of real world skills.  They are used in a wide range of situations from teaching surgery to evacuating an oil rig.  When used properly, simulations include unavoidable bad situations that trainees need to be prepared to handle in the future.  Let’s use a pilot learning to fly in a flight simulator as an example.

I think we would all agree that commercial airline pilots should operate the plane as safely as possible and should avoid any situation that involves unnecessary risk.  So, with the understanding that we all want smooth flights while traveling, would you design the flight simulator to simulate the calm flying conditions that we desire?  Or would you purposefully design the flight simulation to include rough weather combined with mechanical problems so the pilot will know what to do when the unexpected arises?  I’m guessing that most passengers on a plane would feel better knowing that their pilot has been trained to handle the majority of bad case scenarios. 

How does this relate to personal finance?  The same way that we feel an untested pilot isn’t really ready for passenger flying, we feel the same way about young people being taught how to handle money in only ‘clear skies’ situations.  The consequences of financial mistakes/behaviors are real and often cause lasting damage for people.  It is a design feature of the game to give students some exposure to classic financial ‘rough weather’ situations, such as overspending, unexpected expenses, getting behind on bills, etc.  Like pilot simulation training, we think it is critical for students to be exposed to these situations BEFORE they start their life so they can recognize it faster and deal with it better if it happens to them in real life.   Not preparing for rough weather is a recipe for making any bad situation much, much worse.

Perspective 2 - Students feedback shows students are learning the ‘right’ message about credit cards. But I’ll let them speak for themselves.  If it is important for your students to learn about the dangers of credit cards and to avoid/limit using them in real life, then Budget Challenge may be better at this than you think.

  • “I am very good at saving money, and I purposely don’t have a credit card and this stimulation solidified that for me.”
  • “at first I thought credit card debt was a joke but I learned that it is super hard to get rid of once you get deep into it.”
  • “I know a lot more about budgeting and writing checks. And I am more aware of the negative effects of a credit card.”
  • “I now know the complete struggle my parents make with having to pay bills. And how much I hate having a credit card for it puts me in debt.”
  • “I have a greater knowledge of writing checks and now know how risky a credit card can be.”
  • “I felt like credit cards were bad before but now I know they are terrible!”

Perspective 3 - Though the amount of credit card charges may seem large, it is worth remembering that in 2019, the average credit card balance for those 35 and under was estimated to be $5808. Some might argue we are not making the number of credit card charges “realistic” enough.

In closing, the design of Budget Challenge has always centered around the belief that the best learning comes from learning-by-doing.  Showing students some simulated ‘rough weather’ with credit cards makes for more prepared students that approach their first credit card decisions in life with some experience under their belt.