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Category Archives: Teacher Resources

Teaching Children About Money

If you’ve spent much time on social media, you’re likely aware of the tendency for social media feeds to showcase users at their high points. For example, carefully constructed vacation selfies or clever captions highlighting expensive purchases (Ugh, I just want to bluetooth my iphone7 but I’m not techy enough to figure out BMW’s touchscreen!). Although some adults may be getting better at seeing through others’ (or curtailing their own) humblebrags, regular brags and all of their derivatives, children may still be socialized into thinking mindless consumerism is the norm, especially if their parents involve them in these behaviors.

What children might not realize is that parents are working long hours, or that they are stressed out paying for that consumerism. While the ability to buy on credit has made initial purchases easier, it doesn’t give children the whole picture. They may see big houses full of luxury items, but what they don’t understand is whether or not there’s money in retirement accounts.

The topic of money (other than showing that we have it) is often taboo and something many don’t talk about. But it can be framed as a fairly simple, logical concept, even for younger children. Although parents and children will make financial mistakes, it’s important to take advantage of intentional, teachable moments while children are young. Here’s three basic topics to be aware of.

Wants vs. Needs, Modified

Helping young children understand what is a need and what is a want by discussing the differences. Needs include food, shelter, utilities and clothing. You don’t want to buy your wants at the expense of your needs or of the future. Though easy to use, credit cards shift spending into the future, which can sometimes be a bad financial move.

To make money more concrete than swiping a credit card through a machine or waving a smartphone over a reader, make it a point to use cash once in awhile to demonstrate the value of the dollar.

For example, if a child has been given a dollar or two, let them physically hold it while shopping and talking about prices. Let him or her decide to use the money for a store’s product or opt to keep the cash for a later purchase. If you’re doing a monthly budget at home, involve children enough to understand that the work you’re doing on the computer now is connected to later swiping a card or uses a phone to purchase something.

Just make sure to keep the discussion developmentally appropriate- children shouldn’t be given too much information or worry about their family’s finances, just enough to understand that there’s intentionality behind spending money.

Opportunity Costs

Opportunity costs are the value of something that is lost because you have chosen an alternative course of action. Youngsters can begin to pick up on this as they age. In the cereal aisle of the grocery store (often designed to be extra eye-catching to young children), a parent or caregiver may say, “You can have one thing on the shelf. Pick one but give up the rest.” In a good way, this forces children to weigh their options.

As a child ages, parents can say, “Here’s $2 or here’s $5, but there’s no more.” On the other hand, if a parent gives in to a tantrum at the store, this can reinforce an immediate gratification mindset as well as teach that tantrums or pleading works. The reality, however, is that things cost money and there are tradeoffs.

Pick Your Battles

Taking children shopping can set up difficult situations, but can also get children used to the idea that “you don’t get something every time we go to the store.”

Conversely, times with children in stores become teachable moments. If they bring up the topic, it’s more effective than if the parent does. Rather than saying no, present a choice: You can have this or that, a tradeoff. Take your child’s questions and turn them into something more.

Overall, giving your children “a sense of agency,” a sense they have power and control in making financial decisions, is a positive.

Survey of the States 2011: The State of Economic and Personal Finance Education in our Nation’s Schools

“Just as it was not possible to live in an industrialized society without print literacy – the ability to read and write – so it is not possible to live in today’s world without being financially literate. To fully participate in society today, financial literacy is critical.”

-Annamaria Lusardi, Denit Trust Professor of Economics and Accountancy at the George Washington University School of Business

On March 12 the Council for Economics Education released the seventh Survey of the States. The Survey of the States is a biennial report that brings attention to the critical importance of economics and personal finance education by documenting its status in the fifty states and the District of Columbia.

The recent economic downturn has brought nationwide attention to the dangers of a financially illiterate society. The 2011 Survey shows that while there has clearly been progress since the first Survey in 1998, that over the last two years, the trend is slowing and in some cases moving backwards.

Key Findings

  • The number of states that now require students to take an economics course as a high school graduation requirement increased from 21 in 2009 to 22 in 2011.
  • However, only 16 states require the testing of student knowledge in economics, 3 fewer than in 2009.
  • No improvement has been seen in the area of personal finance. The number of states that require students to take a personal finance course (or personal finance included in an economics course) as a high school graduation requirement remains at 13.
  • Only 2 more states now require that personal finance content standards be implemented, bringing the total to 36.

The full report can be found here:
http://www.councilforeconed.org/wp/wp-content/uploads/2011/11/2011-Survey-of-the-States.pdf

Since You Asked

Last Friday afternoon, I met with a couple of bankers and the executive assistant of a financial professional who lives in New York, NY.  The financial professional hails from Columbia, MO and is funding a financial literacy program for elementary school children in our town.  He was referred to us by the executive of a different bank, who used to be the Director of Economic Development for the State of Missouri.  When in that position, he and I came up with a plan to write a Top Ten Teen Financial Tips, to be delivered to high school students by members of the Missouri Chamber of Commerce.  We wrote the program but it was never implemented due to our Governor putting his political capital behind Missouri becoming the third state in the nation to require a course in personal finance for high school students[i].

As luck would have it, I mentioned this at our meeting.  Those present thought that this might be a good idea to use for third-graders.  We could call it the “Top Ten Third-Grade Financial Tips”, I guess.  I made the point that it would have to be different but that it might work.  Then, one of the women present told me that she is a reader of this “Tip”. She asked me to take a stab at “Top Ten Third-Grade Financial Tips” for this week’s Financial Tip.  So, since you asked……

Tip #1: Believe You Can – Each American has dreams that they are free to pursue.  To achieve your dreams, however, requires you to set goals.  Accept those things you cannot change and then work to change those you can.  Begin with a goal you have for today, and then work toward it.  Think about other goals you have in sports, scouting, church, family, relationships, or whatever.  You can reach them, if you devote yourself to your goals.  America remains the wealthiest country in the world and, by making good choices; you will achieve your measure of financial success.  Today is the day to make choices in support of your dreams for tomorrow.

Tip #2: Discipline is Power – Learn to save some money and save it in a bank, a credit union, or other investment.  Watch it grow, while you learn how to interact with the bankers and other financial professionals.  Do not be afraid of people in ties.  Learn the power of compound interest, while you are young and continue to use it through life.  Simple, good decisions at a young age will make you a financial success.

Tip #3: Budget Your Money – If you receive an allowance, save a portion of it before you spend it.  Make yourself learn to live on less than your income, in this case your allowance.  If you don’t have enough money, look for ways you can earn money.  Ask your parents for a job, other than your usual home tasks.  Help your older neighbors (like me) when they are shoveling snow.  We just might find something to help you reach your goal.

Tip #4: Debt Can be Bad – Try not to borrow money to purchase anything that does not have a chance to go up in value.  Too much debt can take away your freedom and make you a slave to the credit company.  Too much debt can make the whole economy sick.  Can you think of things you have purchased or your parents have purchased that you really don’t use anymore.  I bet you can.   (Don’t you wish you had that money now?)

Tip #5: Greater Income Means Higher Education – It is clear that those with higher education earn greater incomes.  This means that you need to work hard at school and do the best you can, all the time.  Make good choices and act like you want to make more money by making good investments in yourself.  Set goals for your grades today.  Make a deal with your parents that you will surprise them with the best grades you’ve ever had.  Make it a game to do better in school than your parents did when they were in school. Then, do this every day and the rest will take care of itself.  (If one of your parents did really well in school, pick a different parent to compete with!)

Tip #6: Take Care of Your Health – If you are not sick, you can go to school, go to work, go to scouts, go to church, or go out and play.  If you are sick, you are sick.  Eat good nutritious meals, when you can.  Try not to eat too many sweets or drink too many sodas.  Eat more vegetables and fruits.  Make yourself take one bite of everything – especially if you have never eaten that food.  You never know, you might like it.

Exercise daily.  Play and have fun.  Practice sports.  Walk the dog.  Walk the cat.  (You should try this one.)  Swim with your fish.  Whatever it takes for you to enjoy being active is a good thing.  We all need exercise.

Staying healthy makes you more productive.  Those that are more productive, make greater incomes.  Greater incomes help us be financially successful.  So, you really are what you eat and how you act!

Tip #7: Set Up an Emergency Fund – Have some cash around so, if you need it, you’ve got it.   Ask your parents if they have an emergency fund.  If they do not, tell them that you think it would be a good idea to start one, just in case the car needs repaired, the refrigerator needs replaced, or you have a health problem.  “Be prepared” is not just for Boy Scouts.

Tip #8: Review Your Risk Program – While you are too young to worry about the financial risks of life or to buy insurance, talk with your parents about their insurances.  If they own your home, they have homeowner’s insurance.  If they drive, they have automobile insurance.  If they get sick, they have health insurance – or do they?  Ask them what would happen if someone got real sick in your family and needed to go to the hospital.  What would they do?  Insurance is not about talking lizards or clumsy, goofy ducks.  Insurance is about protecting you from losing your dreams due to a terrible financial loss.

Tip #9: Diversify Your Talents – Don’t gamble your money.  Make investments in yourself and with your money, by making many different investments.  This lowers your risk of missing out on something you’d like to do – like win!  Think about what would happen if you were “made to be a swimmer” but you never learned how to swim?  The same is true for investments.  We need to invest in different investments because some will be better than others and, unlike our skills in sports, the one that is best today may not be best tomorrow.  So, when you are young and growing up, don’t just play basketball because you “know” you are going to play in the NBA.  Play football. Swim.  Do gymnastics.  Dance.  Run.  Play baseball.  Sing in the choir.  Play dodge ball.  Climb trees.  Just play.  Do lots of different activities and find the one that brings you the most joy or the one that fits your skills.  Diversity will enrich your life, just like diversification protects your investments.

Tip #10: Have a Balance Life – Yes, work hard in school and at your hobbies, jobs, and other activities.  Yet, take some time to look at the clouds and imagine what might be on the other side.  Chase fireflies, then let them go.  Go fishing.  Get dirty.  Let yourself dream.  Be thankful for what you do have and promise yourself that you will work hard to change the things you can.  Smile, laugh, and allow yourself to love for, as the famous band from your parents’ and grandparents’ era, The Beatles, sang, “Money can’t buy you love”.

Salus populi suprema lex esto.
Motto of the State of Missouri


[i] The good news is that our Office for Financial Success has just received funding for teams of our MU students to deliver this program in 50 Missouri high schools!

Mrs. Weaver’s Wise Ones

Many of our readers are students that are in either college or high school.  Others are teachers that work with those students.  One such teacher in our Columbia Public School system works to teach personal finance to IEP students.  They are today’s Wise Ones.  This semester they wrote a book entitled, A Teenager’s Guide to Our Financial Institutions.  According to the preface, “We are writing this book in order to teach teens about banking, the economy, the benefits of saving, and the structure of the Federal Reserve.”  (Nothing like a good challenge.)

I attended the book signing and I even purchased three copies of the book: one for me, one for the journalist from the local paper, and one for a financial planner friend who left his wallet in the car. (Like I’d never hear that one before!)   There were several local financial professionals that gave up their time to reward these students with some attention – mostly in the form of questions.  The students had sections of the book that they were responsible for writing and responding to questions, when asked.  My most common remark, at the conclusion of my interrogation of each student, was, “You know more about this subject than 90% of the people on the street.”  It was clear that the pride instilled by this project was bursting forth among these kids and, yes, my heart told me that there was no better place for me to have spent the hour, as IEP students are especially endearing to me.

One of my favorite sections was entitled, “How to be Financially Successful”.  It read:

What does it mean to be financially successful?  Well, in the words of Tennessee Williams, from his play Cat on a Hot Tin Roof, “You can be young without money, but you can’t be old without it.”  To me, that means that your parents can buy your necessities, or they can give you an allowance when you’re young.  However, when you get older and start living on your own, you can’t live without your own money because you have bills to pay.

I bet you are wondering “well, why do I need to know about being financially successful?”  I will tell you.  If you start saving while you’re young, you can get ahead in things like saving for college or saving for a dream home that you want.  What I am trying to say is that you can be more financially successful if you set a goal.

All of this made me begin to wonder about why we make the choices we make and how they can change our chances for financial success.  Particularly, since some choices greatly reduce our ability to succeed.  Perhaps, you’d like to ask yourself the following questions and discuss your answers with your friends.  The correct answers are at the end.

The main reason for being in school is to ________

  1. Get a degree
  2. Get an education
  3. Get a job to pay for my car
  4. Party hearty

It is okay to go into debt for an education, as it is an investment in ourselves that has a greater return than many others and we can control it by our choices.  Along the way, however, be sure you ___________

  1. Have nice clothes while in school
  2. Join the hippest clubs and groups
  3. Go on a costly trip for spring break
  4. Finish your degree before you leave

The main reason college students leave school before they graduate is ___________

  1. Bad grades
  2. Legal problems
  3. Financial problems
  4. Health problems

It is ok to borrow money to go to college and, if I go bankrupt, I won’t have to pay the money back.

True or false

In order to have enough money to make it through the semester without getting into financial problems, I can’t go out and have any fun.

True or false

Answers:

  1.  A.  Get a degree.  Five to six years of college without a degree, while you learned a lot, indicates only one thing to most people: You did not finish.  Employers want to hire finishers – not quitters.  DO NOT LEAVE until you have earned your degree.  An “education” is not enough.  You want the degree and, the more you do learn in the process, the better will be your return on the time it takes.
  2.  D.  Finish your degree.  DO NOT LEAVE until you have earned your degree.  (There is an echo in here.)  College debt must be paid back whether you finish your degree or not.  Leaving school with debt, but without a degree, is a disaster waiting to happen.
  3. C.  Getting into financial problems can derail your plans to finish a degree – in fact; it is the main reason students are forced to leave school before earning a degree.
  4. False!  Student loans are not able to be discharged through bankruptcy.  You have to pay them back – unless you die.  (The “death” solution is not recommended.)  If you envision difficulty, get help through credit counseling – NOW!
  5. False!  You may not be able to go out four nights a week or buy every CD you want; but if you don’t go out occasionally or pay to purchase or download a CD, you will get burned out really fast.  It is ok to enjoy yourself.  Do not forget that.

PS  I owe a thank you that sent me a response indicating resources that you would recommend to teachers.  Some of you told me about arrangements you have with local colleges and some of you even invited us to come to your school.  We thank you and ask all of you to keep in touch.  If you want us to come visit, after the first of the year, give me a reminder email and we’ll see how resources are matching up with needs.

Making Economic Education Fun

Occasionally, I have a student that stands out above the others with their desire to learn and to share what they’ve learned with others. One such student was Jack. Jack, when taking an introductory personal finance course from me, would send me links to interesting articles that he wanted to share.

Although he took the course several years ago, Jack subscribes to the Financial Tip of the Week and this weekend Jack sent me an email about an article he read in the Kansas City Star (attached). Within the article were links to sites maintained by the Federal Reserve Bank. I found the sites interesting, fun, and to be potentially very useful in engaging young people in learning more about our financial system.

The Federal Reserve Bank maintains a website dedicated to financial education with particular emphasis on teacher resources – for all levels of instruction. Link: http://www.federalreserveeducation.org/FRED/?CFID=116485&CFTOKEN=89597974 . For the high school teachers in our readership, I particularly want to call to your attention the academic competitions; LifeSmarts, the Fed Challenge, Essay contests, and, in Missouri, the Missouri Personal Finance Challenge. These are excellent ways to engage your classes in learning, as well as providing opportunities to highlight your school.

For individual and classroom use, the Federal Reserve Bank in Boston maintains a website (http://www.bos.frb.org/economic/quiz/index.htm) that has, approximately, sixty quizzes each with four to five questions that are quite interesting to read and to ponder the answers. The quizzes use subjects ranging from the “Music Industry and Sales” to “Ethanol” to “March Madness” as a way to teach economic principles – the root discipline of finance.

I often say that there is no shortage of good information on the subjects of personal finance but there is a huge shortage in readership. While I know I’m preaching to the choir, I encourage you to take advantage of resources such as those provided by our Federal Reserve System to help pave your road to Financial Success.