TONTOGANY – Most likely, the last concern of high school students is saving for their future.
Otsego Local Schools Treasurer Steve Carroll is trying to make them realize a penny saved will equal a lot earned in later years.
Earlier this month, Carroll led a class of 11 students, discussing budget and saving.
“Why do you want a budget?” he asked. “From your budget, we want to be able to plan and not react.”
Planning means putting money aside, reacting is having an unexpected expense.
“Pay yourself before you do fun things,” Carroll said.
He also stressed the value of saving as a way to plan for future needs and wants.
“If you take away two things from this course, I hope you take away the value of planning your budget … and do your best to stick with it. But (don’t disregard) the value of saving and compound interest.”
When none of the students knew what compound interest meant, Carroll went to a formula on a Smartboard that tallied savings, interest rates and length of time.
“Compound interest is the most important thing for you in 10, 30, 40 years,” he said.
Why? Save $100 per month at 10% annual interest for 40 years, and you earned $531,111 off an out-of-pocket investment of $48,000. Save the same amount for 20 years, and it will total $68,730.
“That is the value of starting at your age,” Carroll said. “The last year is most profitable, but the first year is most important.”
Investors are not always going to see a 10% return. More than likely there will be years with a smaller return, but there could also be years like was just seen where over 10% is very possible, he said.
Invest whenever you can, but the interest rate is important. A savings account may pay 1% while a certificate of deposit may pay 2% to 3%, Carroll said. Both are guaranteed earnings. A mutual fund will pay more, but the earnings could rise and fall.
“Earning interest is in your interest,” he said.
Carroll said he usually has about 20 students in each class, which is held every Thursday during Success Period. He said he’s been doing it a couple months.
“Anyone who has that Success Period available can come down and do it.”
Success Period is an opportunity to learn how to do something, such as the career path on how to be a doctor or how to build a resume.
The first class had maybe two kids, he said, then eight, and now he must turn students away.
While the high school now offers a personal finance class, Carroll said he can go off on a tangent and doesn’t have to follow any state standards.
After finishing the budget and savings classes, he will move onto how to buy and house and a car.
As for budgeting, Carroll pointed out income is quickly eaten away when insurance, home and car payments, cable and cell phone charges, groceries and student loans come out of a paycheck.
After the class, Logan Krompak said he needs to learn how to save.
“I would like to be investing after this,” he said.
Carroll, who taught business at Otsego for two years before being named treasurer three years ago, said he missed the interaction with students in the classroom.
In addition to the class, Carroll takes on an intern every year in the treasurer’s office.
“I loved teaching kids and I was in this role for two or three months and realized how much I missed the classroom setting and thought that by doing an internship, it would allow me to teach still.”
Ben Gray, a senior, is Carroll’s unpaid intern this year. They meet three hours a week.
“I want to get students involved and show them a couple career paths and show them the value of accounting,” Carroll said. “It does help me, because I have someone doing data entry and things that allow me to use my time elsewhere.”
He hand-picks one or two seniors a year who he thinks can work in his office and would gain from learning these skills.”
This is the third year Carroll has worked one on one and the first year he has led a class.
“I was really happy about it,” Gray said about the opportunity. “I’m very fortunate to have this position because I know I’m going to study business, and learning all the numbers and accounting, it’s very eye-opening for me.”
He wants to study business at Mount Union College – he is going on a baseball scholarship — and realized this is an opportunity to learn.
“The skills that he’s learning, it’s something he will be able to use in college and down the road when he starts his career,” Carroll said.
Gray explained he is learning spreadsheets and data input and analyzation, including payments received for the district’s extended care program.
Gray will earn credit for the internship, which is graded.
“He’s getting an A this year,” Carroll said.