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Taking us into the holiday is regular writer Kosmo. I thought about putting this article on sister-site Kid Wealth<\/a>. However, that website doesn\u2019t make money, so I can\u2019t justify paying Kosmo for articles there. As you\u2019ll find out this is important.<\/em><\/p>\n In another programming note, this article is likely to be the last one of the year. Remember to finish strong with these year-end tips<\/a>.<\/p>\n My son is a Boy Scout.\u00a0 Dustin is working toward his next advancement (second class).\u00a0 One of the requirements is to earn money that he can either spend on a particular item or save.\u00a0 He\u2019s a 14 year old with no job, so his opportunities to earn money are somewhat limited.\u00a0 Many scouts achieve this goal by mowing the lawn or performing other household chores.\u00a0 Dustin is earning the money in a unique way \u2013 I\u2019m paying him for an interview.\u00a0 I decided to write an article about a 14 year old\u2019s views on personal finance, so I needed to pick the brain of an actual fourteen year old.<\/p>\n I decided to play a \u201cPrice is Right\u201d game and have him guess the price of various grocery items.\u00a0 I then checked the price of the items at the local Hy Vee grocery store.\u00a0 The price is for the brand that we typically buy.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Dustin did surprisingly well on the grocery costs \u2013 the total variance was less than 2%.\u00a0 His answers were reasonable for all of them items.\u00a0 I suspected that he might be low on the Ruffles, simply because potato chip prices have skyrocketed in the past couple of years.\u00a0 We don\u2019t typically buy beer, so I threw that one in as a bit of a curveball.\u00a0 I expected him to be way off, but he was fairly close.<\/p>\n \u00a0<\/p>\n I kept the Price is Right theme going, but asked him about some non-grocery items.<\/p>\n \u00a0<\/p>\n Dustin stayed pretty close for the first two items.\u00a0 His guess on the electronics were further off.\u00a0 $90 wasn\u2019t a bad guess for the Chromebook \u2013 there are a lot of refurb Chromebooks on Amazon in that price range.\u00a0 It\u2019s actually pretty difficult to separate the new items from the refurbs in the listings, so I had to bounce to HP\u2019s web site to get a good price.\u00a0 I wasn\u2019t surprised that he was far off on the MacBook cost \u2013 the price gap between Chromebooks and Macs is pretty large.<\/p>\n The car price wasn\u2019t too far off for the sticker price of the base model \u2013 but by the time you add a few options and pay taxes and other fees, this is going to creep up to around $35K.<\/p>\n I asked him to name as many typical monthly expenses as he could.\u00a0 This was his list:<\/p>\n That\u2019s a pretty good list.\u00a0 Here are a few more to add to the list.\u00a0 Of course, this is not a comprehensive list.<\/p>\n Home maintenance is a big expense that teens may not be aware of.\u00a0 There\u2019s everything from replacing various filters (refrigerator, furnace) to buying and maintaining lawn mowers and snow blowers to huge expenses like replacing a roof or a furnace.\u00a0 When you become a homeowner, there\u2019s much more volatility in your expenses.<\/p>\n We then shifted to a conversation about wages.\u00a0 Dustin correctly guess that the federal minimum was was $7.25.\u00a0 When I asked him how long it has been $7.25, he guessed that it was set at that amount in 1985.\u00a0 It was actually set to that level in 2009, which is still quite a long time.<\/p>\n When I asked him the length of the standard work week, he knew that it was forty hours.\u00a0 The concept of \u201ctime and a half\u201d overtime pay was a revelation \u2013 he thought that overtime pay was paid at the normal rate.\u00a0 He did know that salaries employees were exempt from overtime.<\/p>\n I asked what a typical mortgage length was.\u00a0 He mentioned 15 and 30 years, which are the two most common.<\/p>\n When I asked what the common components of a mortgage payment were, he was quick to name principal and interest.\u00a0 With a slight bit of prodding, he also mentioned property taxes and insurance.\u00a0 He wasn\u2019t familiar with the concept of escrow, so we had a brief conversation about that.<\/p>\n I asked why someone might choose to refinance a house.\u00a0 He said that if someone couldn\u2019t afford the payments, they might choose to refi to spread the payments over a longer time.\u00a0 That\u2019s correct, but there are other reasons, such as refinancing to take advantage of lower rates or doing a cash-out refinance to free up cash for other expenses.<\/p>\n I asked for an explanation of income tax brackets.\u00a0 His description showed a very clear understanding of how they worked \u2013 with income at each level being taxes at progressively higher rate.\u00a0 He knew that the income at lower levels was not taxed at the higher rates.\u00a0 The concept of marginal tax rates is something many adults don\u2019t understand.<\/p>\n Dustin was able to name property tax and sales tax as other types of taxes we pay.\u00a0 He was unfamiliar was several other types of tax, such as gas tax and the hefty taxes that are levied on cigarettes.<\/p>\n He guessed that Social Security was a 10% tax and didn\u2019t realize that the employer and employee each paid a share.\u00a0 Employer and employee each pay 6.2% for social security (OASDI) and 1.45% for medical.<\/p>\n I had him guess the exemption amount for federal estate tax.\u00a0 His guess was $5.5 million for a single person and $11 million for a married couple.\u00a0 In 2025, the exemption will actually be $13.99 million for a single person and $27.98 million for married couples.\u00a0 Some states have a state estate or inheritance tax.\u00a0 In our state (Iowa), the existing inheritance tax will go away on January 1, 2025.\u00a0 Even prior to this change, direct line descendants and ascendants were exempt.<\/p>\n I asked for an explanation of some terms:<\/p>\n I asked him to guess the top five companies by market cap.\u00a0 His answers:<\/p>\n The five companies that actually have the highest market cap are<\/p>\n Dustin got two of them right.\u00a0 Here are his other three guess:<\/p>\n Then came the fun part \u2013 guessing the top five companies in market cap in the year 2000.\u00a0 Note that this was almost a decade before he was born \u2013 how well would you do with this question?\u00a0 Here were his answers:<\/p>\n Here are the actual top five:<\/p>\n Dustin got one of those five.\u00a0 Here is the market cap for the other four in 2000:<\/p>\n This was a lesson in how a company\u2019s fortunes can change over time.\u00a0 In 2000, Google and Nvidia were still fairly small companies that have skyrocketed.\u00a0 McDonalds stock has been up and down over the years, with an overall gain of about 5-6% per year.\u00a0 In 2016, the core assets of Yahoo were sold for about $4.5 billion.\u00a0 Yahoo was the search engine juggernaut in its heyday, but was left in the dust by Google.\u00a0 Apple was a well-known company, but its market cap at the end of 2000 was 4.2B.<\/p>\n Then I asked for the top three companies by revenue.\u00a0 Here were his answers:<\/p>\n Here are the actual answers<\/p>\n Apple is 7th (383B), behind Saudi Aramco, Sinopec (Chinese petrochemical), and China National Petroleum.\u00a0 Microsoft\u2019s revenue for the past year is about $250 billion.<\/p>\n Overall, Dustin did quite well in the exercise.\u00a0 I was pleased that he did as well with the Price is Right questions as he did.\u00a0 This will hopefully prevent sticker shock when he is living on his own and buying his own groceries.\u00a0 While he does have some gaps in his knowledge, this is to be expected with someone his age.\u00a0 Overall he has a good grasp of personal finance and the stock market.<\/p>\n My own son is a 12-year-old in Scouts, but he\u2019s not too far trying for his Second Class rank. I don\u2019t think he\u2019d do nearly as well as Dustin did here. He doesn\u2019t go shopping with me very often, so I don\u2019t think he\u2019ll know the grocery prices. I could be surprised though because he has a crazy memory and he might remember prices from one time a while back.<\/p>\n I was amazed at the financial knowledge of the other stuff. I doubt I knew about mortgages at age 14 and I was reading Kiplinger\u2019s and investing in mutual funds. I think Dustin did better than many adults would do.<\/p>\n On a side note, I was driving the kids to school a couple of weeks ago and they went into a detailed conversation about inflation that was dead on. I was quite surprised (and proud!) I often give little financial nuggets as they come up, but I don\u2019t think inflation has been part of that.<\/p>\n <\/div>\n\n","protected":false},"excerpt":{"rendered":" Taking us into the holiday is regular writer Kosmo. I thought about putting this article on sister-site Kid Wealth. However, that website doesn\u2019t make money, so I can\u2019t justify paying Kosmo for articles there. As you\u2019ll find out this is important. In another programming note, this article is likely to be the last one of […]<\/p>\n","protected":false},"author":1,"featured_media":19072,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[93],"tags":[10924,5275,1140,11199,629],"dealstore":[],"offerexpiration":[],"class_list":["post-19071","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-finance","tag-olds","tag-personal","tag-views","tag-year"],"yoast_head":"\nThe Price is Right<\/h3>\n
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\n Item<\/b><\/td>\n Dustin\u2019s guess<\/b><\/td>\n Item cost (Hy Vee)<\/b><\/td>\n<\/tr>\n \n Ramen noodles<\/td>\n 50 cents\/pack<\/td>\n 39 cents for a single<\/td>\n<\/tr>\n \n Box of saltine crackers<\/td>\n $3<\/td>\n $3.79<\/td>\n<\/tr>\n \n Gallon of milk (1%)<\/td>\n $6<\/td>\n $4.99<\/td>\n<\/tr>\n \n Dozen eggs<\/td>\n $4.50<\/td>\n $4.99<\/td>\n<\/tr>\n \n Ruffles (party size bag)<\/td>\n $4<\/td>\n $5.99<\/td>\n<\/tr>\n \n 12 pack Busch Lite<\/td>\n $15<\/td>\n $13.48<\/td>\n<\/tr>\n \n Total<\/td>\n $33.00<\/td>\n $33.63<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n More Expensive Items<\/h3>\n
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\n Item<\/b><\/td>\n Dustin\u2019s guess<\/b><\/td>\n Item cost<\/b><\/td>\n<\/tr>\n \n Meal at Longhorn (6 oz Flo\u2019s Filet + Coke)<\/td>\n $28<\/td>\n $28.68 + tax and tip<\/td>\n<\/tr>\n \n Gallon of gas (87 octane, 10% ethanol blend)<\/td>\n $3.50<\/td>\n $2.54 (Gas Buddy, December 14)<\/td>\n<\/tr>\n \n Cheapest new HP Chromebook<\/td>\n $90<\/td>\n $220 (HP.com)<\/td>\n<\/tr>\n \n Cheapest Macbook<\/td>\n $300<\/td>\n $999<\/td>\n<\/tr>\n \n Most expensive iPhone (iPhone 16 Pro Max)<\/td>\n $1600<\/td>\n $1200<\/td>\n<\/tr>\n \n Base model 2025 Chevy Equinox<\/td>\n $25,000<\/td>\n $28,600<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Family finances<\/h3>\n
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Mortgages<\/h3>\n
Taxes<\/h3>\n
Investments<\/h3>\n
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Stock market knowledge<\/h3>\n
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Overall results:<\/h3>\n
Editor\u2019s Thoughts<\/h3>\n
Related<\/em><\/h3>\n<\/p>\n