What We Can Learn from Chicago's High School Students' Perspectives on Money

In January, I started a new part-time job teaching personal finance to high school students in Chicago. I left Wall Street to help young people get control of their money, and so I was excited by the opportunity to teach teenagers financial strategies for success.

What I did not anticipate, however, is how well these teenagers already grasp three major money principles -- planning, mitigating risk, and getting basic financial products. Growing up in Chicago has uniquely shaped their perspective on money and made them eager to make good financial decisions. What these students have taught me is that one's approach to, and level of comfort with, money can be positively influenced by one's environment.

I teach classes in the heart of Chicago's Southside at the Gary Comer Youth Center, which prepares students for life through extracurricular programming. These students believe that they can be just like First Lady Michelle Obama, who grew up in the same neighborhood. They also fear dying like Hadiya Pendleton, a 15-year-old honor student and talented majorette, who was gunned down while standing at a bus stop one week after performing at the Presidential Inauguration. Hadiya was an innocent victim of gang violence and my students recognize that they are just like her -- wanting to do everything in their power to do great things with their life, and yet still susceptible to a chilling violence that plays a big role in their daily lives. Despite the violent circumstances, these students are aggressively preparing themselves for success.

My students understand the significance of planning for their future. I asked them to create their personal financial timeline -- a representation of what they will do at each phase of life, from young adult to post-retirement. The exercise forced them to think about the short-term action steps needed to achieve their goals. One student told me "I want to have over $50 million in the bank when I retire. In order for me to get that kind of money, I want to graduate from high school, go college, get my masters, get a high-paying job, and eventually own my own business." While he couldn't tell me how much more graduates with a college degree make over time, he understands the well-documented positive correlation between getting a degree and his salary potential.

In the long-run, he is not satisfied with just earning a paycheck; he is inspired to build a company like Twitter, which he uses everyday to communicate with friends. His intuition tells him that he can create real wealth by owning a business instead of working for one. By articulating a numerical retirement goal, my student is also ahead of the game in effectively planning for his retirement. I am confident that he will not be part of the 50 percent of the American population that has not gone through the exercise of trying to figure out how much they need to retire.

Mitigating risk is another financial principle that my students are eager to grasp. One student told me that she faces the risk of high student loan debt when going to college. While she is excited by the thought of attending the University of Chicago, she cares more about making sure that her family is not financially strained, particularly with three siblings coming behind her. Considering that over 71 percent of baby boomers are helping pay their kids' student loans and 55 percent have allowed their adult children to move back into their homes and live rent-free, according to an Investment News survey, my student is making a very smart decision. She has appropriately assessed that her college choice is not only risky for her, but for her entire family.

More importantly, she has taken steps to mitigate her overall risk by decreasing her debt load and applying for any scholarship that she can find. Intriguingly, she feels neither sorry for herself nor discouraged by this stark reality. In fact, she has a sense of pride in telling me her plans and welcomes the communal benefit of a low-debt burden. When evaluating risk, it is also very important to focus on the potential return.

Lastly, my students are very familiar with basic financial products -- checking and savings accounts -- available to them. Almost every hand went up when I asked them who has a checking and a savings account. One student told me "Ms. C., I don't cash my check at the check cashing place because I do not want to get robbed. People will know I'm coming out with money and want to take it. Instead, I go to the bank downtown because it's safe." Crime in her neighborhood has forced her, and many in the class, to open traditional bank accounts with the aid of a parent or grandparent. These students will spend five dollars on bus or train fare and an hour traveling in order to acquire safety. As a result, my students are also very comfortable with making trade-offs, or exchanging one thing in return for something more desirable, a key skill-set in good financial decision-making.

When we finally discussed the additional pitfalls -- high fees and transaction costs -- of using currency exchanges, students quickly concluded that these institutions prey on poor neighborhoods that lack banking institutions. In order to compensate for the low level of physical branches in their immediate surroundings, my students choose to bank with institutions that have excellent mobile and online services, as well as low ATM fees.

I am inspired by my students' desire to comprehend more than the basics of financial literacy. I look forward to our future discussions on investing and portfolio management. I believe that a big part of their financial acumen is shaped by their experiences on Chicago's Southside. I have no doubt that these smart, talented, and college-bound students will continue to acquire the practical skills necessary to make good life decisions. I am confident that each of our own unique experiences can allow us to do the same.