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HSFPP Weekly Update # 165—What’s the Best Way to Learn About Money?

Message from Bob: This week's article In the New$... focuses on children’s need for financial education. My personal bias is that financial education should be taught not only by parents, but also in the school systems, in all grades and by all teachers. It is clear from the JumpStart survey of high school students, which consistently shows an average grade of "F" on their test of basic financial knowledge, that there is a need for more financial education for everyone. The Fayette County School System now plans to train teachers in financial education, and I applaud them for including it as part of their plan to improve the education of all students.

 

Note to Educators: Teachers who receive these e-mail updates, please share them with teachers of subjects such as Family & Consumer Science, English, History, and Business.  Please also let them know that they are welcome to join our listserv by submitting a reply form at the following Web site:
http://www.ca.uky.edu/fcs/hsfp/response.htm

Alex Lesueur, Jr., who has an undergraduate degree in English as well as a master’s degree in Library Science, has for the last year been writing the follow-up section for educators in English, history, business, and occasionally math, on ways they can incorporate financial education into their subject matter. Until we hire a new work-study student, Alex will also assist me in writing the news stories. I hope that, next week, when students will be back on campus, we will be able to replace Chris Hart, who has worked with us for the last four years and graduated from UK this past May.

Additional Activities for teachers in different fields to use are:

For English Classes: Look up encyclopedia articles (Americana preferred) about Horatio Alger, Jr. If your class has time and the resources, read one of his novels. His works are in the public domain; you can find full online texts of many of his novels on Web sites such as Project Gutenberg (http://www.gutenberg.org/browse/authors/a). Write a paper about the themes in Alger’s fiction of wealth and the ability of Americans to improve our individual circumstances. Give your opinion of how true or false his lessons are. Is Alger simplistic or profound? Also contrast his style with other writers you’ve studied. What is the difference between good and bad literature? (Agreement with Alger’s viewpoint doesn’t necessarily mean that he was a good writer, and vice versa; the same applies to any writer.) Three pages plus notes and bibliography.

For Business and History Classes: Who do you think was the richest American of all time? Not Bill Gates. In today’s dollars, Benjamin Franklin was richer. Read encyclopedia articles (Americana and Britannica preferred) and appropriate sections of books about Ben Franklin. Also look him up in dictionaries of quotations, as he was quite the pundit; what did he have to say to Americans? How did he earn his money? How did he manage to accumulate so much? Write a paper on Franklin’s secrets of business and wealth. You might also mention his bad habits and how he worked to rein them in; this is especially important, as bad habits can bankrupt anyone. Three pages plus notes and bibliography.

 

Web Site Pick of the Week:

Adventures in Education, developed by the Texas Guaranteed Student Loan Corporation, provides a Web site for educators to help high school students prepare for postsecondary education and for careers. The following page of their Web site features links to articles for educators, as well as a video on the FAFSA form and much more:

http://www.aie.org/Educators/index.cfm

 

In the New$... What’s the Best Way to Learn About Money?

by Alex Lesueur, Jr., M.S.L.S., University of Kentucky Cooperative Extension

It’s the beginning of a new school year, and your class is discussing financial topics. This might not be the first time you have had such a discussion, and you might have begun to realize how important money and finances are to adults. You know you need money, and you’ve certainly wanted to buy things you can afford, as well as some that you can’t afford. Money is a fact of life as we know it, and it’s something you will have to deal with all your life. So what is the best way for teenagers to learn about money?

This topic comes up frequently in financial publications and often in newspapers and popular magazines, as well. Various ideas are explored, but one comes up again and again: Parents need to teach their children from an early age, as soon as their children want something and see their parents paying for it, as soon as they wonder why they can’t have something they want, or as soon as they see a parent get money from an ATM. Parents can tell their children then that there is no such thing as magic money, not even from credit cards or an ATM; all of it must be earned, and sometimes it runs low. Those are times when the family must cut down on expenses and not eat out as much, or put off buying new clothes, for instance; though it can get much worse.

As Janet Bodnar says in her “Money Smart Kids” column in Kiplinger’s Personal Finance, “Dealing with money is such a natural part of life that [the parent doesn’t] even have to set aside extra time to talk about it. Instead, [parents] can take advantage of situations that crop up every day.” Ideally, these occasions are the perfect time to discuss money and how best to deal with it so you always have enough.

We’re not living in an ideal world, though. Some parents know all about money and finances and teach their children well, giving them allowances in return for household chores or yard work, so the kids understand that money must be earned. And, as Janet Bodnar points out, “Nothing is better for teaching kids how to set priorities and make spending decisions than having to get along on ten bucks a week.” That’s true, but, unfortunately, many parents don’t have enough money to meet basic needs, let alone give an allowance; and many who do have the money spend it unwisely themselves and don’t invest for the future. Some who have a lot of money spoil their kids and let them have anything they want, no matter how much it costs. Bankruptcies have reached record levels, which resulted in passage of a new bankruptcy law in 2005; and credit card debt limits have been raised to accommodate big spenders. Even millionaires can be extravagant or unwise enough to get into financial trouble; in those cases, other people are likely to get rich at their expense. Are those parents prepared to teach their kids to handle money? Probably not. So who is?

For better or worse, money and finances must be dealt with in school, and not just in a single course that students take one semester. Results from the Jump$tart survey that is conducted every other year consistently show students, even those who have had some financial education, do poorly on a test of basic financial knowledge, answering 56% (or fewer) of questions correctly, a failing grade in any course. Even the course that many of you are taking this year will not be enough. We have to do better, and this means teaching about money and finances consistently, all the way through school, and providing opportunities for students to experience saving and investing money, and spending it wisely. And providing financial education all the way through school doesn’t have to mean skimping on the academic subjects.

Perhaps, one day soon, school curricula can be changed to accommodate the need for financial education. Fayette County Schools, for instance, recently added the goal that “Teachers will receive training in such areas as diversity, financial literacy and school safety.” (Lexington Herald-Leader, 8/02/06.) All three areas need more attention, but how this teacher training will translate into actual learning by the students remains to be seen.

Saving your money doesn’t mean that you quit having fun, though. Even learning about money should be fun, as you watch your money grow and look forward to what you will be able to buy when you have enough. If you don’t have enough to do this now, you could work at a job and save a portion of your money for future goals. In Bodnar’s opinion, and in ours, “saving for a goal is a key money management skill that every child needs to master before leaving home.” Maybe nobody will make you do this, but you can take some of the responsibility for yourselves. For those of you who don’t have enough now, taking responsibility for your lives might be the only way you can get enough. Unless money doesn’t matter to you at all and you really don’t want it, you will do well take the time to learn how to improve your finances. It can mean a better future, in which you always have enough and can go where you want to and live out your dreams.

References: (1) “Everyday Ways to Teach Kids,” by Janet Bodnar, from her column, “Money Smart Kids,” 7/26/06.
http://www.kiplinger.com/personalfinance/columns/drt/archive/2006/dt060726.html

(2) “2006 Jump$tart Questionnaire,” with correct answers (*) and percentage of students who gave each answer.
http://www.jumpstart.org/media/2006SurveyWithAnswers.doc

(3) “School System Goals,” Lexington Herald-Leader, 8/02/06.
http://www.kentucky.com/mld/kentucky/news/15177319.htm

 

Discussion Questions:

1.) How many of you have written down your short- and long-term financial goals?

 

2.) How many of you have a weekly or monthly budget?

 

3.) How many of you have your own Visa or MasterCard? What about other credit cards?

 

4a.) Seniors, if you plan to go to the senior prom, please estimate how much it will cost you.

 

4b.) How do you plan to pay to go to the prom?

 

Follow-up Activities:

“My Needs and Wants: Can I Tell the Difference?” Assignment 1.1 in HSFPP Student Workbook; also available on the following Web page:
http://www.nefe.org/hsfppportal/files/11410_Assignment%201.1.pdf

“My SMART Goals,” Assignment 1.3 in HSFPP Student Workbook; also available on the following Web page:
http://www.nefe.org/hsfppportal/files/11430_Assignment%201.3.pdf

 

Follow-up Questions:

1.) What are your goals for the future? Name at least three.

 

2.) How do you plan to achieve those goals? For non-financial goals, what finances will be necessary in order for you to reach those goals?

 

3.) How will you measure your progress? How will you know when you have accomplished what you set out to do?

 

Kentucky High School Financial Planning Program
http://www.ca.uky.edu/fcs/hsfp
The purpose of this Web site is to assist county Extension agents, credit union educators, and high school teachers in improving the economic well-being of our constituency, beginning with today’s students; and also, to assist teachers in Kentucky in meeting KERA’s goal that all students become technologically literate. Weekly Updates are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators.