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Some friends and I were talking about the US educational system and how we aren’t taught some of the more basic and practical aspects of life, one of them being personal finance. Think about it, what did you really learn in high school about personal finance? Why aren’t we taught about money from an early age? We learn countless irrelevant subjects that most of us if tested would fail today, but when it comes to a subject that would stick with us for a lifetime, there isn’t a mention of it anywhere that I could see in high school.
So what would a personal finance 101, 201, 301 and 401 class look like? This week we’ll address the different levels and what should be taught in these classes. A personal finance curriculum if you will. Feel free to add your own suggestions in the comments area.
Personal Finance 101 Curriculum Overview
Ideally this would start in 9th grade (1st year of high school if not sooner) and we’d start off with the basics.
Attitudes About Money
Assignment: Students will be asked to write a short essay describing their attitudes about money. What have you learned thus far about money and it’s meaning to your life. Do you work for it? Do you have free access to it? Do you save it or do you spend it? What does money mean to you? Be sure to indicate specifically what your parents have taught you about money so far. Personal finance is personal so there is no wrong answer!
Your Paycheck: FICA, Medicare, State Tax, Local Tax, and Federal Tax
- What are they, where do they go and why do they get paid before you do?
Assignment: Research your federal, state and local tax rates and familiarize yourself with the following sample paycheck:
Budgeting and Cashflow
- Budgeting Basics-Create a budget based on paycheck pictured above
- Tracking Your Spending
- Pay Yourself First (Saving)
Assignment: Create a budget based on paycheck pictured above. Students will be assigned different life scenarios based on the CASHFLOW 101 board game by Robert Kiyosaki and write a reflective essay on the importance of budgeting and saving money wisely.
Savings and Investing
- Importance of Saving: Set It And Forget It, Making It Automatic
- Saving For a Big Ticket Items (Car, Shopping Spree, etc)
- Emergency Funds
- Compound Interest Is Your Friend: Make Her Work For You!
- High Yield Savings Accounts and other types of savings accounts
- Using Webware To Track and Achieve Your Savings and Investing Goals: Yodlee, Mint, Rudder, Quicken Online/Mobile, PocketSmith et al
Assignment: Identify the top 5 high yield savings accounts based on interest rates and obtain the permission of your parent or guardian to open one in your name. Then, based on your fictional paycheck and life scenario assigned in previous classes, detail your monthly expenses and determine how much you’ll need to save in an emergency fund.
Credit and Debt
- Credit Basics: What is Credit?
- Avoiding the Credit Trap
- What does the APR, Interest Rate, Billing Cycle and Universal Default mean to you?
- Your FICO score and how it shapes your financial life
- Debt To Income Ratio: How Much Is Too Much?
Assignment: Write a reflective essay on appropriate uses for a credit card. Create a case detailing an item you really want to purchase, however, you are 6 days until your next paycheck and it’s now or never. Write down the pros and cons of purchasing the item now using a credit card instead of later using cash. Please be thoughtful in your answers.
How’d I do? What would you add to the first year of a personal finance 101 class for high school students?
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Comments
05.13.09
Great post.
I took an elective class my sophomore year of high school called Consumer Economics. Not only was it my favorite class, but I use most of the lessons from the class today.
In the first half, we learned how to balance a checkbook, build a budget, the differences between stocks, bonds, money markets and got information about credit cards and mortgages. The second half of the class focused on marketing, advertising and culminated in us writing mini-business plans that we had to present in front of the class.
I think that some form of personal finance class should be required Freshman year of high school. Its more important than many of the other subjects we learn about and will provide a solid foundation for the rest of students' lives. A class like this may even be interesting enough that it keeps kids who might otherwise be bored, interested in school.
05.13.09
Although there wasn't a specific class for personal finance in my high school, I recall several assignments over the years where I had to create a realistic budget for myself for after high school. The scenarios included tuition, transportation, rent, income, etc. While these were useful assignments, I learned about finances from my parents.
In my mind it is the parents that should be teaching their children about money management. If the parents don't know what they are doing, they should be taking a class.
05.13.09
I remember that sex ed classes in school required students to care for a doll for a week or so etc. Maybe, students should be given a pretend credit card, checkbook, a specific income etc. and asked to manage their money in and money out for a week. Each day, the teacher could provide them with real life situations that would affect how they could spend (e.g. broken down car that costs $650 to repair). How will you adjust the rest of your week and still save for retirement etc.?
05.13.09
I'll play devil's advocate here: High school is about academic and to a smaller extent about skills that you use in real life (i.e. sex ed.). This personal finance realm is the realm of parents. Parents should be teaching their kids about saving, not getting in debt, and so on. Sure some things such as taxes can be worked into the mathematics curriculum, but savings? buying big ticket items? emergency funds? Where is personal responsibility?
05.13.09
This is a great idea. In Canada, some schools (like mine) had a class called "Independent Living" It was an elective you could take and it taught you things like how to do your taxes, how to budget and some other things that have gone by the wayside for me.
I think that it is in some ways the parents' responsibility to help their children manage money and the treatment of it. Too many parents don't teach their kids the value of a dollar. But I think that something like this is a great asset, and something with some take-aways.
05.13.09
Thank you for writing this post! This is a great idea! Now how do we get schools to open their eyes to it? My high school was really good and yet I only learned of theses things once I started working (post college).
05.14.09
Brilliant, but parts of it should start earlier ~3rd/4th grade, esp since so much marketing targets these young age groups. Re: parents should teach this...given that most adults (many of whom also are parents) are drowning in debt, they may not be the best teachers/models for this subject.
05.14.09
I think this idea is great. But in my high school a lot of students would rather use their electives to take AP classes for college credit. I also think that things like investing are so far away from high school student that this might be able to be more advanced and worthwhile as a freshman college class. College is often the first time students are on their own and when these things really start to matter. Although teaching it in high school would be ideal, I think students would get more out of it in college. Great post though, I completely agree that this is something that the education system should pay more attention to.
06.18.09
i have to take this class next year as a sophomore, i hope it helps
08.20.09
One thing I recommend for people to learn personal finance is through Rich Dad's Cashflow 101 board game. Don't overlook it' just a game. Cashflow game is very entertaining and it can really teache you all the fundamental about money in order to increase your financial IQ. Things like cashflow, balance sheet, and income statement are all taught in the game.
01.18.10
money is mostly common sense. It should be taught to children by their parents.
12.23.10
Well, personal finance management is a really important theme to be discussed in the high school, though, the task is not fulfilling properly, I think, as most of young people have to learn how to deal with their personal finances by themselves. However, as for me, it would be much better, on one hand, if people find out about this through their experience. Though, on the other hand, they should have some basic knowledge to do this themselves. So, it's really important to teach students how to manage their finances, at least the basic features, otherwise, they can get into trouble using some financial services, like unsecured personal loans for bad credit, for example.
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