April 26, 2011, 5:00 am

Teaching Finance In High School

by: The Financial Blogger    Category: Personal Finance
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This is a guest post by Teacher Man from My University Money

Hello fellow personal finance readers.  I go by the pen name “Teacher Man” due to the fact that I recently graduated from university and am in my first year of teaching high school.  My partner and I have recently started up a website aimed at helping young people (with a specific focus on post-secondary students) who are dealing with ‘the real world’ of personal finance and money management for the first time.  The inspiration for our website came about when my partner and I were reminiscing about our time in university, and came to the conclusion that if we knew then what we know now, we would have been a lot better off.  Thus, My University Money was born.  Our goal is to help young adults and their families (or anyone for that matter) in their quest to learn how to succeed in their educational, financial, and career pursuits.  I have been a long time reader of TFB and would like to thank him for the opportunity to write a guest post and share some insights with a larger audience than our meagre following!

As I stated above, I have followed The Financial Blogger for quite a while now, and it was through this blog and a few others that I became aware of the Yakezie network.  This was a watershed moment in my journey through the world of managing my affairs as an adult.  The amount of knowledge and wisdom I have subsequently found on the blogs and comment boards of the Yakezie members is truly astounding.  It was only when I truly stopped to think about this that an idea came to me.

This is the first semester I have been fortunate enough to teach a business course in high school.  It is a grade 10 general business course and it gives me a lot of freedom to choose my own topics and focuses.  I had been looking forward to the opportunity because I thought that it would be easy to engage students with material that was obviously so relevant to their lives.  While it hasn’t been as easy as I expected, I have had some success.  When I first looked at the teaching materials for the course I was astounded to find the materials were terribly old, and the recommended curriculum was vague enough to be useless.  Unfortunately this is not uncommon in the education world.  At this point I set out to find some resources and put together a course that I thought would give students an introduction into the most important areas of personal finance.  Luckily my principal is very ‘hands off’ and is fine with whatever I choose to teach as long as it semi-related to business and the students are learning something!

One day after looking through yet another textbook I thought was ok, but fairly mediocre, I realized that just about every single blog in the Yakezie network held more relevant information and advice than these textbooks.  If I could somehow take out the most important ‘golden nuggets’ and channel the combined knowledge of the group, I figured I could put together a pretty comprehensive resource that was made by people more intelligent and well-educated than myself.  As a bonus, it would be a great spot for people to learn something new, and possibly debate the relative importance of certain parts of personal finance.

I have patterned my course in large part on many of the themes that TFB and the rest of the Yakezie group write about weekly.  I have also read a lot of personal finance literature and found that most personal finance books are more helpful than the textbooks currently on the market.  Perhaps the best model I have come across so far has been, “The Wealthy Barber” by David Chilton.  His chapters and general approach to teaching personal finance have been very useful to me.

Before I briefly outline what my course currently focuses on I should probably explain that if you haven’t talked to a group of grade 10 students lately you might be quite surprised at what you find.  The attention spans of today’s youth seem to be nanoseconds at times.  They are incredibly good at multi-tasking simple jobs, and equally poor at focusing on any single concept.  Without first showing them the personal connection to their immediate life you stand almost no chance of holding their attention for any length of time.  These parameters often limit the course from venturing into specifics such as the importance of mutual fund fees for example, so concepts must be general enough to be easily grasped, yet specific enough to be practical.  The eventual goal is to see just how all of you would organize the course if you had the freedom I have.  I am challenging TFB and all of his readers to put their stamp on the education of today’s youth instead of just joining the age-old chorus proclaiming that, “Kids these days don’t have any common sense when it comes to work or money.”

Here is a brief description of how I currently structure the course:

1) The Importance and Uses of Money

Money can be used to purchase things, as a store of wealth, or as capital to produce more money.  It is merely a tool.

2) The Fundamentals of Earning Money

What are the different ways people earn money?  We look at jobs, deductions from a pay cheque, taxes, renting, buying and selling for profit, and “Investment Income” which I leave pretty vague until chapter 4.

3) Budgeting and Basic Personal Banking

Sometimes I forget how taboo money is in a lot of families.  Many of these students have no idea how to manage money other than, “You spend until you don’t have any left and then you work harder to get more.”  Interestingly enough, if our government and certain individuals stuck to that basic premise we would be way better off than we are today!

The kids learn that just because a job advertises at $10-per hour, this doesn’t mean you will get $80 in your hand at the end of a work day.  They learn how to budget monthly and annually.  Finally, they learn how credit cards can be pure evil or great little tools, and we touch on some of the other options of modern banking.

4) Saving and Investing

What is the difference between putting your cash in a mattresses and putting it in a chequing account or savings account?  The kids then learn about the intense power of compound interest and how it can make them rich, or poor forever.  We briefly look at average return on investment rates of each of the asset classes.  Everyday I drill home the, “Pay yourself 10%” mantra that is cliché for good reason!

I also like to do an interesting exercise where we look at how much a pack of cigarettes a day costs.  We take the money that we would have spent on cigarettes and put it in various types of investments.  The kids are always amazed to see that they could be a millionaire by 60 if they juts put their smoking money into basic bonds.  I don’t really let them in on the dirty secret that due to inflation that million isn’t what they think it is, I prefer to focus on the anti-smoking, pro-saving lesson.

5) Insurance

How insurance works and the principles of shared risk/risk management.  We go into detail on life, car, house, disability, medical etc.

6) Macroeconomic Basics – Supply and Demand and Inflation

This is where you start to lose a lot of kids.  I just try to give them a very superficial understanding of economics so they can begin to understand the world around them.  My theory is that if I can give them the terminology, and some essentials, then learning about more complex economic issues, or just reading the business section of the newspaper won’t seem so intimidating.

7) How a Business Works

We try to look at a lot of case studies.  I live in a rural area so farms usually make for great examples of logistics, sales versus expenses, borrowing to invest, economy of scale, marketing, world demand, payroll, capital costs and some interesting tax situations.

8) “Through the Eyes Of an Entrepreneur”

As a treat (usually on Friday afternoons) the kids get to watch various episodes of Dragon’s Den (Canadian version).  I will pause the show when the initial pitch gets made so the kids have to figure out the valuation of the company and make some predictions.  This has unwittingly become a great teaching tool because the kids are so engaged!  The end of the year project is going to consist of them coming up with a product and business plan of their own, to pitch to 5 teachers/dragons.  I have really high hopes that the kids will get some ‘authentic’ learning from this that they will actually remember because of the hands-on experience.

Ideally I would like to get into some more macroeconomic stuff, but that gets pretty tough with grade tens.  I would also like to show them more about how the stock market works, but again, it seems students really have a tough time grasping it.  It’s appears too abstract to them.

So, now is your chance to directly influence the financial education that someone will be receiving!  Let me know what your suggestion is and why it is so important, and I guarantee it will be taken into consideration.

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TFB: welcome to the teaching profession! You’re right about being lucky to be teaching business. It is a treat to be able to take students to another level with a subject as vast as ours. I agree the textbooks can leave a lot to be desired. Thankfully resources abound on the internet. Re the curriculum, it is only the what. The how is up to you. I can assure you the curriculum was developed by fellow teachers with a keen eye on the needs of our students as they move forward. Your ideas above are terrific. We’ve been doing many of them in several different courses. It’s great to have keen young minds in the classroom. Good luck! And thanks for the terrific blog. It’s a regular read in my rss.

Well done! This will certainly be a positive experience for your grade 10 students.

I hope you can cover compound growth in your savings and investing section since all these teenagers have time on their side. The pitfalls of keeping up with the jonesses is probably a good one too.

Nice ideas. I’d be interested to find out what you cover in “Investing” besides compound interest.

There are also some criticisms of money that might be worth covering, including the ramifications of compound interest, how banks work, how money works. You might also put in a bit of social perspective, like “Here are the choices that the very poor have, here are the choices that the average middle class class, here are the choices that the rich have.”

I teach Business and Computers to high school students. I use my blog as a warm up at the beginning of class. I developed a personal financial management class for my students roughly 6-7 years ago. One of the first things I taught them was how to set and achieve goals. This is the basis for financial decision making. Another important aspect is making any information you want to show them relevant to them. Last, I recruit for my classes and I have more success with 11th and 12th graders. I spent over 30 years in business before I went into teaching, so I bring a very different perspective to the classroom.

I have long felt that it should be mandatory for high school seniors to take a course in financial common sense including budgeting, saving, and investing.

Why is this not that case?

@ Al Samsa: Thanks for the welcome (it’s me who is the lowly teacher, The Financial Blogger is a financial professional).

@ PP: My section on investing is pretty low key. We cover very basic asset allocation, the expected returns of asset classes, RSPs, and a little bit on certain investment veicles (ie Mutual Funds and Index Funds). We definitely do look at how banks work (including a brief rant about the most recent financial meltdown due to over-leveraging) but I have never thought about the social perspective. That’s a good point. For example the recent talk about increasing the TFSA account maximum will really only help a small percentage of the population.

@krantcents: I like the introduction of how to set and achieve goals. We do that to a limited extent later in the unit, but I think the focus and motivation that would come from doing it at the beginning is well worth it. I wish I had the option of ‘recruiting’ grade 11 and 12s, but I make do with a broad range of grade 10s.

Looks like a good course. I especially like the part about saving smoking money. A great lesson on multiple fronts.

by: The Financial Blogger | April 27th, 2011 (9:09 am)

It might be an interesting idea to have a homework paired with the parents. Most people don’t know much about finance so it would be a great way to both teach teens and parents about finance.

I would put the emphasis on what is cool about money instead of using the classic “credit is bad, pay your debts and live frugally”. How about; if you learn how to save, you’ll be able to pay yourself a car at the age of 16?

I would spend some times on how to use a credit card at your advantage (paying it monthly to save interest but benefit from the points and insurance).

I wish my kids will have the chance to have a teacher like you!

Thanks for the kind words optionsdude and TFB

@Macrocheese: I am not sure why this is. A conspiracy theorist might claim it was a class warfare thing, but I don’t think that is realistic at all. If we had a nation full of investors (who had some common sense about the use of leverage) it would be great for the government, and Canadian corporations.

@TFB: I like the idea about parents and kids working together…if only we seen more of that parent involvement! I’ll definitely take the suggestion about showing the “cool side” of money when we talk about how it is merely a tool to get what you want in the introduction. I have so far shied away from talking about the benefits of owning a credit card simply because I want them to fully realize the dangers of credit card interest first (ever try to explain the concept of danger to a 16 year-old? Interesting experience).

TFB: if you don’t already, consider introducing the IDC course Building Financial Security. We code it IDC4UB. Gives Business a U at the grade 12 level. You can do all the financial stuff possible.

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[…] Financial Blogger presents Teaching Finance In High School posted at The Financial […]

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[…] its own class.  I wrote pretty extensively about the business class I teach to my students as a guest post here.  Please believe me when I tell you that our children (or at least 90% of them) do not have a clue […]

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