No contest, the worst nightmare of a class I ever took in college was accounting. I’ve never felt less competent in my life. No matter what I did, I couldn’t muster the confident state of mind needed to assimilate information and find my own style with the work. Looking at a ledger made me freeze.

Now I try to remember that on days when I don’t have much patience or sympathy for my students. There are simply concepts that can be difficult to grasp at certain ages. I look at a ledger today and I don’t see what my problem was. I even think in terms of revenue and expenses when I try to assess any monetary situation. When I’m stuck, the accounting process helps me to be decisive. That’s the great thing about accounting; a simple majority always rules.

And therein lies the whole point of teaching your teens and college kids to go beyond just setting up a budget (see Budget post) and keep an actual ledger, before they ever take an accounting class, or instead of one. Later in their lives it will really sink in. With some kids, it will sink it immediately, so even better. If kids can apply the ledger concept right away, they will be supremely organized little monetary beings. My brother was one of those.

First things first in the ledger lesson: Tell the kids about the real-life applications of keeping a ledger, which they’ll experience immediately: 1) They’ll be able to maximize profits from whatever summer job they have right now (or even just allowance). 2.) They’ll be primed to create a balance sheet next, which records assets and liabilities. A balance sheet, which I’ll cover in another post, is the chart they’ll need when they’re ready to buy investments— such as CDs, stocks, mutual funds, bonds— and understand how they fit in to their financial profile. I will be covering investments in the next few blogs. 3) Last and most compelling: They’ll have a new way at looking at decision making, which, among other things, will make them very compelling coercers.

If I had ever understood accounting when I took the class, I would have used it to manipulate my parents . Think how much more compelling your teen’s argument will be to spend money on a big ticket item if they can demonstrate the rationale on a ledger. Tell them that!

Now, the steps to creating a ledger, which is all about getting granular with your budget, looking at it as one picture, seeing how the revenue and expenses are related. With a budget, and even line item tracking for their checking account debit cards, they see expenses as they scroll by. They create lump sums in categories. They know when they’re broke. But with a ledger, the details come to life, and there may be creative ways around certain details.

For instance, in a budget you simply have a lump sum for tuition. In a ledger, you’d detail the different aspects of tuition, if there any. Cost of class, cost of textbooks, cost of any student fees. When you get granular, you may find ways around certain costs. Even if you’re not running in the red. The goal may be simply to reduce expense. If the total textbook costs kept jumping out at me—and they would because they’re exorbitant—I’d get annoyed and start actively looking into used textbooks, which is a growing market.

This lesson assumes they have a checking account with a debit card, and a general budget they’ve created.

1. Get them an official, standard accounting ledger form online, one which you can edit. Don’t make one up. Use a real one, with a revenue/expense paradigm. The form can be a simple generic practice one, or your QuickBooks, or one our financial institution offers.

2. Have them go through their budget, with a computer screen open to their debit account, so they can see their expenses in line item form. They need to make line items, on the ledger, for each category. For instance, it’s not enough for them to put a dollar amount on weekly entertainment expense. They need to itemize it—movies, junk food, concert, etc. How they spent every cent. That’s why the online debit card tracking screen is so important. It’s too laborious otherwise. Then put all of this into the ledger.

3. Have them balance their ledger each day, in the evening, for one month. I know that sounds like a lot, and the debit card tracking does enter it online, so they could just grab the data once a week. But daily is a great way to form a habit. Tell them to time themselves, and just spend 5 to 10 minutes on it. Out of all the lessons, this one is perhaps most important. If you keep a quick eye on your money each day, it will never overwhelm you. Up the ante by being Pavlovian about it. Give them something they like while doing it—a favorite soda, candy. Does that sound terrible? Probably. But I’ll tell you, I eat chocolate covered espresso beans, my weakness, whenever I have to do my books. It helps. Quality of life, I always say. (My husband always suggests a cold beer, which is why he’s not allowed near the money.)

4. At the end of each week, sit down with them and ask what they think about how the week went. Don’t lead the witness too much. Just ask what they think about it, if they would change anything. My guess is that they’ll want more revenue. Just nod at first. Don’t start to make suggestions. Let them want it really badly first. Wait the whole month before making life change suggestions. My guess is by the end of the month they’ll be making the suggestions, and that’s when the whole lesson pays off. That’s the true goal.

5. At the end of the month, change one thing on each side of the ledger for the next month. Cut an expense, and mow an extra lawn for the revenue side. Use their suggestions, otherwise offer them. It’s fascinating for them to see how just one life change can make a difference.
It’s a great life metaphor too. You don’t have to be overwhelmed in order to make changes in your life. In fact, it’s often most realistic and lasting to change little things, one at a time.

Please write in about experiences teaching accounting, and if you have questions along the way, ask them here. I finally do know how to conquer a ledger!

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