Tracking Cashflow

“Cashflow” or “cash flow”… I can’t seem to find a definitive answer.

Anyways! My Kicking Off post shared how I set the scene in my class by bringing awareness to what our current attitudes, beliefs & values are around money, as well as discovering how perilous the financial situation is for many adults in American society.

Now that we know there’s a problem with how the average person manages their money, it’s time to start doing something about it! Our journey begins with cashflow tracking. We can’t begin to talk about things like budgeting, saving, investing, retirement, etc. until we have a solid idea of where our money is coming from and where it is/has been going. While you can certainly try to be a money detective and figure out who took all your money over the past month, it’s a lot more accurate and impactful to track your spending over the course of a month. Here’s how I approach teaching cashflow tracking in my classroom.

Let’s Play Monopoly

Monopoly is one of my favorite games from my childhood and it brings me so much joy to be the person to introduce it to a handful of students every year. Most have played it at home and apprehensively stare as they see me take the boxes out on day 4 of our class together. Memories of cheating, flipped tables, tears, or un-ending games float to the surface and you can’t blame them for being worried about replicating that experience in a room full of peers.

Thankfully, the way we play in the classroom is a little different to what happens at home. I’ve created a series of Monopoly resources to use in the classroom that allow for games to be played within a 60-90 minute class period as well as weaving in an important financial education concept.

Important classroom (“house”) rules include:

  • If a player lands on a property, they may pay the printed price on the board for it OR they can send the property to auction. Every player is allowed to bid on the property and the player with the highest bid wins the property. This gets the property into the game faster and allows for players to get great deals or “bid up” and property to demonstrate the power of value over price.

  • The aim of the game is to have the highest net worth at the end of play in the class. Net worth is calculated by adding up cash, owned properties, and other miscellaneous assets, and then subtracting any money owed.

There are other rules that impact play, but those are the big ones that differ from the traditional rules provided in the game.  

The first time I introduce Monopoly, we play for two days in a row. The first day makes sure everyone understands the rules and gives them a chance to practice tracking cashflow. The second day is a serious effort at it.  We use my Monopoly Cashflow Tracker resource which has students log their initial $1500 cash and the proceed to track all income and expenses for the duration of the game. Each time they log cashflow, they update their balance column to reflect the change. The idea is that the balance column should always match the cash that they have.

Monopoly Cashflow Tracker and Net Worth Calculator

This resource is used to help students realize the importance of tracking all income and expenses, and using that knowledge of cashflow to make budgeting decisions. In this activity, students track all of their transactions over the course of gameplay. They log the description of the transaction, whether it was income or expense, category, and their updated balance. The balance on their sheet should always match the total of their cash.

Getting Serious

The first time we play, students are getting used to the classroom rules, particularly auctions. They typically forget to track transactions and will realize at checkpoint times that their balance is off. Totally normal! Their strategy is often very interesting to watch too, with some students super aggressive and cash-poor by the end, and others ultra conservative and sticking with just cash. As the teacher, you get to float around, observe, ask probing questions, and enjoy the excitement that comes from playing a game with peers.

On day 2 though, things get real. The cashflow tracker sheets are out and now that everyone knows what to do, the stakes are raised. I let them know that at any point in the game, I can call for an audit and the players at the table count a different player’s money which is then compared to their tracker sheet balance. If there’s a discrepancy, the player owes a $50 fine to the bank or Free Parking.

I end the game a little earlier as well to allow for adequate time to calculate net worth. This involves adding up the board-printed value of the property (not what they paid for it), their cash, and other potential assets. If they have any liabilities, those get subtracted out and we find the player with the highest net worth at each table.

We conclude with a conversation about lessons learned, tactics, and the challenge with tracking cash flow in real life. One side conversation that came up this year was about how you needed to have assets to bring you in extra income because cash alone was getting spent in higher amounts as the game went on (inflation?). We drew comparisons to people in the real world just relying on their salary and never finding additional streams of income, and explored what other ways, besides real estate, could be used to bring in more.

Monopoly Resource Bundle

I've created 6 resources that I use with Monopoly to help introduce, simulate, and practice different personal finance ideas such as:

  • Cashflow Tracking

  • Budgeting

  • Credit and Debt Paydown

  • Cryptocurrency and Blockchain

  • Investing

  • Asset Evaluation

  • Asset Performance

  • Return on Investment

  • Net Worth

  • Digital Transactions

  • "Balance a checkbook"

Let’s Do It In The Real World

The game is great for letting students track lots of transactions in a short period of time, but the real value comes from tracking real-life income and expenses. Our next challenge is to track all income and expenses for an entire month. We use a cashflow tracker with pre-filled categories related to the average person’s spending areas. Over the course of the next 30 days, I will be pushing students to remember to track everything. Every time they make money from their jobs, some family gives them money, they find a dollar on the floor… everything! They also need to log every time they spend money, and in the relevant category. This gives us the ability to see where money is being spent and what percentage of our spending is happening in different categories. Match that up with an exercise about the top 10 things that make you happy, and you’ve got a great point about why spending isn’t lining up with the things that truly make us happy in many cases!

What if I don’t spend any money?

There will be plenty of students who have not had the experience yet of handling their own money besides maybe birthday or holiday gifts. Normal, but unfortunate since we want students to learn now while the sums of money are small, rather that with huge amounts in their twenties. There’s two things I do here:

  1. Encourage the student to start logging all spending on their behalf. Ask what their share of the utility bills would be. How much of the grocery bill belongs to them? What are they spending on entertainment or dining out each week? It’s a great opportunity to talk to family about household expenses and what it costs to be them. Of course, they will have a negative cashflow balance at the end of the 30 days, but they can see what they would need to bring in to maintain their current lifestyle.

  2. Communicate with home. Let parents and guardians know that students have this 30 day challenge and invite them to help out. Encourage discussion about bills related to the student and what their share of it would look like. Float the idea of taking the money they are already spending on their kid and giving it to them instead along with the responsibility of paying the bills, buying their needs, and managing a mini budget to fit in wants. I did an interview with Dan Sheeks about The Ultimate Teen Money Hack and this would be perfect to send home with the above message.

You’ll do a lot of things in your personal finance class whilst they are tracking their cashflow in the background, but once you are done, take a look at the numbers and ask them to draw conclusions about their spending and maybe compare to a budget that you have built since the start of the challenge.

Cashflow Tracker

A cash flow tracker is used as a place to write down all income and expenses that an individual or business experiences over a given time period, in this case 1 month. Students (or adults) will be asked to track all income (salary, gifts, dividends, allowance) and all outgoings (spending investing, and saving to other accounts) for one month. This information is then used to help individuals, families, and businesses identify where they are currently spending their money, and then make informed decisions when it comes to building a budget.

The Ultimate Teen Money Hack with Dan Sheeks

Dan Sheeks, author of 'First to a Million: A Teenager's Guide to Achieving Early Financial Independence', is joining us to share with teens his Ultimate Money Hack. This strategy will allow teens to start handling more money, make more purchasing decisions, and feel the consequences of their choices, rather than letting parents/guardians make all the decisions now.

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