Financial literacy in high school

[KCC]

I went to the local high school principal and guidance counselor to see how I might help out as a volunteer, and they asked me to develop a seminar on financial literacy for grades 9-12 (slightly different seminar per grade). Whenever I ask kids who teaches them about money, I usually get a blank stare, and when I ask what they have been taught, the usual answer is "it does not grow on trees".

I am updating my working outline and am interested in your ideas on "things you wish you knew about money when you were in high school". What, if anything, would have made an impact on or difference to you at that age?

[Twilight1]

The concept of saving. I wish I was taught how to do that in highschool, heck I am still learning how to do it and I am in my 30's!!

[BittyBug]

I'm so glad to read this, as I've often been completely that a country driven by capitalism doesn't have basic financial issues as part of a core high school curriculum.

Expanding on Twilight's comment about savings, I'd include:

- how to balance a checking / debit account (how many kids end up over drawing their accounts? )

- the true cost of debt - how something with a $20 purchase price can end up costing $40 or $60 with interest costs

- how to save, using examples of tangible purchases like a new pair of sneakers, a new cell phone, etc., to show how they could save up for these purchases by putting $x a way each week or month

- the impact of saving regularly, even if it's just a little bit of money at a time (maybe use the example of that lady who recently died a millionaire, yet she had only ever worked as a washer woman)

[Artemis@BC]

Teaching teens about financial management is an uphill battle because it goes agains the basic tenets of adolescents: everything is now and nothing is later; all is short-term and long-term consequences are irrelevant.

However, if you're willing to take on that challenge ... here's what's in the grade 10 curriculum in BC:

demonstrate financial literacy related to
− budgeting skills (differentiating between needs and wants, setting priorities, determining anticipated income, identifying fixed and variable expenses, keeping accurate records, making provisions for saving, planning for unexpected events)
− planning for transition from secondary school; financial products and
services related to planning for transition from secondary school
(e.g., bank accounts, investments, student loans, RESPs)
− short-term and long-term implications of using credit and
assuming personal debt, including positive and negative effects
on credit rating
− knowledge of legal requirements for reporting personal income
− goal-setting and problem-solving skills

[made_in_canada]

Not me personally but many of my 20-something friends have zero understanding of how credit cards and loans work and consequently have got themselves into financial trouble.

[Grannyfan]

Budgeting, saving and wise use of credit

[attyfan]

Cost of debt, including credit (teach them to consider fees and interest). Also, some basic facts about investments (differences between stocks and bonds, differences in types of mutual funds, etc.)

[UMBS Go Blue]

Maybe you could reach out to area chapters or the national HQs of Junior Achievement to access ready-made materials and curricula.

[Aceon6]

What things REALLY cost... cell phone contract, car, your own place.

This was a while back, before the unemployment crisis, but I did an exercise with some kids asking them to calculate the take home pay for a minimum wage job vs. the take home pay for the typical job that required 2 years of college.

We then figured out how long it would take to save for certain things, to qualify for a cell phone, to qualify for a car loan. We figured out what the minimum wage person could afford vs. our hypothetical associates degree grad.

Some of the kids had no exposure to costs, and were shocked at how much their parents paid for their cell phones, car insurance and the like. Others had part time jobs that went towards their family budgets and were all too familiar with the financial trade offs they had to make. The less well off kids ended up helping the others with some of the financial realities of life.

It was fun, and I think most of them learned at least a little. One kid was really in to it. His goal was a house in one of the Boston suburbs. I showed him how to figure out the mortgage, insurance, taxes and how the amount of the down payment influenced the long term cost of the house. IIRC, he calculated that he needed to make $60k, marry someone who made $40k, and sock money away for far longer than he thought.

[susan6]

Teach them that credit cards are not free money. They're just convenient....they are to be used so you don't have to carry around a big wad of cash. If you don't have enough money in your bank account to pay for what you just used your credit card for, don't buy it. You don't NEED the latest electronic gadget or Fall 2011 fashion just because your friends have it. Racking up credit card debt and interest to buy a closet full of over-priced clothes is ludicrous.

(My roommate in college had racked up $20,000 in credit card debt on clothes. Add that to your college loans and enjoy being in debt for the next 30 years.)

[sk8er1964]

The importance of a credit score and how it relates to interest rates. Also how you can maintain/improve (and ruin) your credit rating.

[Jenny]

There was an interesting thread a few months bad about getting rid of debt: http://www.fsuniverse.net/forum/showthread.php?t=75113

I'll copy a post I made there here:

Thought this worth sharing - for the first time this month, one of my credit card statements came with this notation:

The estimated time to repay the current statement balance if you only make the minimum monthly payments on each due date is 33 years and 9 months.

This is on a balance of just $1900.00. Further, if minimum payments stayed the same, the total paid over that time period would be $15,390.00.

If that isn't motivation to make clearing credit card debt and paying the balance every month a priority, I don't know what is.

I always knew interest = evil, but when I saw that, I

[Prancer]

I am updating my working outline and am interested in your ideas on "things you wish you knew about money when you were in high school". What, if anything, would have made an impact on or difference to you at that age?

Interesting. I took Personal Finance when I was in high school and had assumed that it was available everywhere. I was surprised to find out that it wasn't. It is available in our school district, however, and my son took it last year.

In the first half of class, they covered:

Basic banking--savings, checking, fees, IRAs, other accounts
Personal taxes
Job benefits
Insurance--life and health
Credit--credit cards, bank loans, interest, etc.
Investment--the stock market (very briefly)
Budgeting--they had to do the same thing we did in school, which was create a budget based on having a minimum wage job and trying to live on our own. They had to find apartments and go shopping and things like that.

For the second half of class, they used a customized version of the the SIMS 3000 to apply what they had learned; they had to work, go to school, pay their bills, etc. Every now and then, the game would throw a random event, like a major car repair or (in my son's case) a burglary (he chose to save money by living in a bad neighborhood) and they would have to deal with it. Nearly everyone in the class died the first week . Death or bankruptcy equaled an automatic F.

My son learned a lot, just in time to get his first job .

[Veronika]

My high school had a required class called Consumer Education--it was mandatory for all seniors. It was only a semester, but they taught us the basics: balancing a checkbook, calcluating APR for credit cards, contacting the FTC, etc.

[KCC]

Thanks for the ideas and experiences -- keep them coming! I'll definitely look at the Jr. Achievement info and review a few other sources, and add some info on managing bank accounts. I've done the "survive on minimum wage" before, but may not have time to do that in my seminar series. Maybe the teachers will follow up with that exercise. I might also sprinkle in a few of your anonymous quotes.

[Twilight1]

Prancer that sounds like it is a fun class.. I really wish we had that at my school!!!

[Aussie Willy]

Budgeting.

Showing them some programs like Excel and how they can be used to help with listing expenses by creating a basic spreadsheet.

Also doing calculations on Excel spreadsheets that they can work out things like interest if they borrow money. I find that most useful myself. But it might teach them about the cost of credit and is quite practical.

Well done on offering to volunteer and good luck with it. Please let us know how it goes.

[barbk]

Charles Schwab has a pretty cool program -- if you have an office nearby you might check and see if you can use some of their material.

Our local credit union also has a nice set of materials that seemed pretty straightforward.

But my biggest advocacy would be helping them learn about paying for college, the FAFSA, and the difference between loans and grants. I'm horrified at the number of kids who think that they're going to finance college with huge loans.

[Aceon6]

But my biggest advocacy would be helping them learn about paying for college, the FAFSA, and the difference between loans and grants. I'm horrified at the number of kids who think that they're going to finance college with huge loans.

Good idea. One look at a typical repayment schedule might get some of them thinking.

[KatieC]

Just a thought, because I work with seniors on a government supplement. Figure out how much seniors can get from the government currently, compared to costs - rent, food, medicine, etc. Then add a emergency item, like needing a new set of dentures, or a wheelchair or something. Here we have two gov't pensions - one you contribute to, one you don't. The rest is up to you. How much fun is life when you can't afford to buy oranges out of season, or ice cream once in awhile?