Grandpa Moneybags and The Summer Choice

The following is the eleventh story in the Grandpa Moneybags series. Created by Hurlow Wealth Management Group, Grandpa Moneybags is a fictional character who shares lessons that parents and grandparents can use to teach the next generation of wealth holders. This lesson helps teens evaluate major financial investments and learn how to make good decisions about how to spend their money. 

Grandpa Moneybags and The Summer Choice

by T. Claire Kest, CFP®, CAP®

On an unseasonable warm February day, Charlie Hill went to his mailbox and found a note from his oldest grandson. As he unfolded the paper, a rush of nostalgia swept over him. The familiar scrawl of his grandson's handwriting made him smile, reminding him of the first thank you note he received when Keith was only six. Charlie chuckled, thinking about the constant reprimands he used to receive as a child for poor penmanship. Charlie felt grateful for this rare gift of correspondence and eagerly read it's contents. 

Dear Grandpa Moneybags,
I have a decision to make. I have a chance to go to an educational camp this summer, but it's expensive. Mom and Dad said they would pay half, but I have to come up with the other half from my savings, which I have. But I also want to buy a car. Dickinson College in Carlisle, Pennsylvania, hosts a Biotechnology class for high school students. If I go, I'll learn about new technology in medicine and agriculture. I'll get to work in a lab to isolate DNA molecules, split genes, and examine DNA vaccines. It sounds so cool! The class is three weeks long and will cost $6,599. So my dilemma is first, it will cost almost all my savings, so I won't be able to afford the car this year, and second, since I will be gone for three weeks, plus a week's family vacation, I'm worried I won't have a job when I get back. 

I'm not asking for help paying for this class, but I am asking for help making this decision. What do you think I should do? I'm really interested in this topic and think it would be an excellent opportunity to explore before I commit to majoring in Biotech when I apply to colleges this fall. But I also want to keep my job and buy a car. What do you think? 

- Keith

Dear Keith,
Thank you for asking for my opinion. Your choice is both an emotional decision and a financial decision. Financially, you know this camp will cost you approximately $3,300, and your parents are willing to invest the remaining balance plus transportation costs in your education. Will this program give you college credit? The average college course is three credit hours and averages $477 per credit hour. So, figure $1,500 of that has a tangible value that will carry forward towards your future career. The remaining amount is probably for room and board. If you look at this as an investment, you can calculate the financial impact of investing in a career in Biotech. 

The other part of the financial calculation is the lost income. Even if your employer is willing to work with you to hold your position while you are gone, you still need to factor in the lost income from the time away. How much can you earn in three weeks? 

The emotional decision is hard to calculate. First, you have the desire to go. You know that we don't always get what we want in life. So, that reason alone is not enough to overcome the financial cost. The other emotional factor to consider is how you will feel when your friends have cars and drive to school, and you are still taking the bus. Think about how long it took you to save $3,300. How long will you need to work to replenish that account? What will happen if you leave and don't have a job when you get back? 

I recommend looking into other options to get a similar educational experience. Here in Indiana, we have a robust Community College system through Ivy Tech that allows high school students to enroll in college for free. Does Illinois have a similar program? The third option is to go next year. Since you are only a Sophomore, you have time. I understand you are eager to learn about advanced sciences, but you will not decide where to go to college and what to study until your senior year. 

You will have many financial choices to make throughout your life, and I would recommend keeping this decision checklist in mind. 

1. Run the financial calculation and compare the cost to the long-term benefit. 
2. Are you flush with cash, or will you spend all your money on the purchase? In general, I would recommend always keeping some cash in reserve for emergencies. 
3. Look for alternatives. Can you find a suitable replacement that is cheaper? 
4. Can you wait? Sometimes, the answer is yes, but not right now. When I was young, the best piece of financial advice I received was not to be in a rush to have nice things. 

I know this is not the answer you wanted to hear, so I hope you're not too disappointed. I'm truly excited for you to pursue your passion, and I want to encourage that activity. Let me know if you would like help looking for some alternative programs. I'd be happy to help.

Love Always,
Grandpa Moneybags

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