Under the Hood with Dave Buten Co-Founder and Co-CEO of Budget Challenge: Credit Card

This is the first post in a series called ‘Under the Hood’, where I explain the thinking behind some of the not-so-obvious design decisions that you experience in the simulation.  In explaining these decisions, I also attempt to address some of the feedback we’ve received and propose alternate perspectives for users of the program to consider.  This first post is for our students who play Budget Challenge. So, let’s go!

The single biggest topic of feedback from students is the credit card and a dominant theme within this topic is the assertion that the student should have control over the spending that happens during the simulation.  Below are a few samples of this feedback from the thousands we have received:

  •  “Don’t charge so often on the credit card in real life I hardly go out as much or buy as much crap as the simulation says I do."

  • “Have the person not waste so much money on the credit card because not all people in the real world waste so much money when they are not doing so good with bills and financial things."
  • "Some of the things are unrealistic, like spending money on your credit card while you’re already in debt.”

  • “More discretionary spending. I felt the credit card purchases were beyond my control and non-representative of my spending habits.”

  • “Um maybe let us charge our own credit cards?? I was 1,000 dollars in debt because you kept buying crap for me and I didn’t need it”

  • “Maybe make the credit card less annoying, let the student choose his own expenses (LIKE REAL LIFE)”




Before I address the feedback, it is time to go back and visit some of the earliest design decisions ever made with Budget Challenge.  During the construction of the first simulations, we felt it important that young people get to see and experience a ‘typical’ and complete household budget.  Even though people can and do grow up living very different lives financially, we thought it was important to research every type of expense, calculate some sort of average, and include it in the game.  While the expense statistics we calculated would probably not match-up well with students in the future, the opportunity to show students (probably for the first time) what a complete budget looks like would be such a powerful learning experience. 

We understand most adults don’t account for every penny they spend, but in the Sim, we wanted students to see everything, and from all sources.  This would naturally include all possible methods of spending such as, checks, debit cards, credit cards, cash, ACH, Venmo, etc.  For simplicity, we’ve aggregated all non-check spending on the credit card.  I know this isn’t how most people spend money, but it is a decision made after balancing the tradeoffs.  One interesting side note: Covid-19 has accelerated the move to a society where the vast majority of transactions will take place without cash, so this decision is ageing better than expected.

The second design decision involves who decides which expenses the student experiences in the simulation? The Student or the Sim?  We saw benefits to both and decided to include both, but with a twist.  Before the sim starts, students make initial expense decisions during vendor selections (or planning/buying phase).  Then during the simulation, many of the variables are locked-in and the Sim controls the day-to-day living expenses (the execution/living phase).   We felt this was more realistic because as adults, making decisions is one skill, and then dealing with those decisions is quite another and lasts much longer.  

Now that we’ve established why all the charges are on the credit card and why you can’t control them in the Sim, the discussion shifts to whether these are representative of the typical expenses that you will likely see and should be prepared for in the future. 

When I read the comments from students about the credit card in the Sim, I often hear frustrated and angry comments that dismiss the Sim as ‘unrealistic’.  My response to these comments is this: Young people typically have misconceptions about spending money, their ability to control their spending, and the total cost of living. This of course doesn’t apply 100% to everyone; but let me explain and I’ll even give you some ways to test-out if what I’m trying to say applies to you.  Below are three misconceptions that will disadvantage your financial future, if left unchecked.

Misconception #1 -  You significantly underestimate your own cost of living.

Your parents/guardians probably don’t share much specific information regarding your current household budget with you and as a result, you significantly underestimate how much you think you’ll spend.  There are probably a whole bunch of expenses that you’ve never even seen.  How are you supposed to budget for the expenses you don’t even know about?  To verify this, ask your parent /guardian the following question: “What percent of the costs of in this household do you think I am aware of?”  Or vice versa, you can ask “What percent of the costs that they think you are not aware of?”  Consider that the savings rate for the average American is about zero, any answer above 10% is a serious blind spot in your expense estimating ability.  Experts advise people to have an emergency fund for the rare, unexpected event because of the havoc these events can have on a budget.  If your parents think that you might be blindsided by totally normal and expected expenses, what kind of future budget drama is awaiting you?

Misconception #2 – You likely think that you can ‘decide’ what to do with the majority of your paycheck. 

This is understandable because most students grow up with parents giving out relatively small amounts of money (allowances, birthdays, graduation, etc.) that the child can spend at their discretion (within reason).  From an early age, children start making the association of discovering new money and then imagining the best way to spend ALL of it.  Even in situations where the parents insist on some of this money be saved, it is usually a low figure like 10%, which leaves 90% for discretionary spending. Even if you currently work, you’re probably not expected to pay your share of household expenses.  “Hold on” you say, “I pay for many of my things”.  That’s a good first step towards independence but you also need to be better aware of your share of utilities, groceries, dining out, mortgage payment/rent, not to mention dish soap, toothpaste or toilet paper. To verify this, ask your parent/guardian the following question: “When you get your paycheck, what percentage do you get to decide to spend on fun stuff?”  You will likely hear an answer that looks exactly backwards to what you are used to.  Most of American’s paychecks are spent or allocated to necessary expenses before they are even deposited in the bank, which doesn’t leave much to ‘decide’.

Misconception #3 – You likely know what ‘living paycheck-to-paycheck’ is in theory, but you also are more likely to underestimate how extremely difficult it is to avoid. 

Even though it is a well-known fact that close to 80% of Americans live paycheck-to-paycheck, it is echoed through our feedback how students simply would “choose” not to live this way.  Is there more to living within your means than opting-out of paycheck-to-paycheck living?  To verify this, ask your parent/guardian the following questions: 1.) “How difficult would you say it is for people to avoid living paycheck-to-paycheck?”  2). “Is ‘living within your means’ something that you learned to do at an early age or is it something that requires continuous effort and difficult decisions?” 3.) “Do you think that I currently have the financial discipline to live within my means and avoid living paycheck-to paycheck?”

In closing, the design choices inside of Budget Challenge are intended to develop adult-level skills in managing money.  We believe that the skills learned in managing any realistic budget are transferrable skills that can be used later in life….  even if that life looks different than you might have imagined.