How can students learn to make informed decisions when it comes to saving money, using credit cards and taking on college debt?
In recognition of America Saves Week, we?ve put together a toolbox of activities to help students learn essential lessons about personal finance in these three areas.
For each, we start with tips from ?Money As You Grow,? a Web site created by the President?s Advisory Council on Financial Capability to provide children and families with straightforward financial advice. We then follow the tips in each category with classroom activities and related Times articles that can help students go further.
Saving Money
?Money As You Grow? Advice:
- You should save at least a dime for every dollar you receive.
- The sooner you save, the faster your money can grow from compound interest.
- Your first paycheck may seem smaller than expected since money is taken out for taxes.
Classroom Activities and Related Times Articles:
1. Calculate Compound Interest. Read ?Investing: Money Plus (Lots of) Time Equals Excitement?, and then complete your own compound interest activity. Test out some numbers using this compound interest calculator, which explains the math involved, or this investor?s calculator. Or, use the formula for compound interest, A = P(1+(r/n))nt, to do your own calculations. What did you notice about the power of compound interest? Why does compound interest encourage people to save as early as possible?
2. Debate the Value of Saving. Read the discussion in ?Why Aren?t You Saving Money??, a Room for Debate feature, and then write your own response related to teenagers. You should address the questions: Why don?t more teenagers save money? Why should they start saving, even if it?s only a little money at a time? You may want to refer to the compound interest activity above for additional background.
3. Try Cutting Back. Read ?Cutting Back (but Not on Coffee!) To Save Money?, and then use the reviewed Web site to try your own cutting-back activity. How much money would you save if you stopped buying __________ every week? Is your weekly purchase worth the price in the long run?
4. Advise First-Time Job Holders. Read ?A Primer for Young People Starting Their First Job?, and then turn Mr. Lieber?s advice into a poster, pamphlet or social media campaign instructing teenagers and 20-somethings on how to navigate the confusing world of health insurance, taxes and retirement plans.
5. Teach Preschoolers About Money. Read ?Too Young for Finance? Think Again.? and have students create their own children?s books, fairy tales or dramatic sketches to teach preschoolers about personal finance based on the principles explained in the article: save, spend, share and earn.
6. Identify Your Own Attitudes Toward Money. We recently asked students, ?What Have Your Parents Taught You About Money?? Read our questions and post your response to think about the lessons and attitudes you?ve learned, directly or indirectly. How do you think these attitudes play out in your financial decisions now? Which are helpful and which do you think may be harmful to your long-term fiscal health? Why?
7. Just For Fun: Try your hand at our Student Crossword on Financial Literacy.
Credit Cards and Other Credit Tools
?Money As You Grow? Advice:
- Using a credit card is like taking out a loan; if you don?t pay your bill in full every month, you?ll be charged interest and owe more than you originally spent.
- You should avoid using credit cards to buy things you can?t afford to pay for with cash.
- You should use a credit card only if you can pay off the money owed in full each month.
Classroom Activities and Related Times Articles:
1. Warn Consumers. Read ?Credit Cards and What You Need To Know? and then design a warning poster or label that advertises the potential dangers of using a credit card irresponsibly.
2. Do the Math. Read ?Impatient? It May Be Hurting Your Credit Score? and then calculate the risks of buying something you cannot afford with a credit card. For example, think of a big-ticket item, whether it?s a new iPad, fancy clothing or a new car, and imagine purchasing that product with an imaginary credit card. Then do the math using a credit card repayment calculator. How long will it take to pay off your credit card balance for that one item if you only pay the minimum balance every month? How much additional money will you pay in interest?
3. Learn About Credit Scores. Read ?Perfect 10? Never Mind That. Ask Her for Her Credit Score.? Then, do research to find out what a credit score is, how financial decisions affect your score, and why it matters.
To answer these questions you might learn about the basics here, at the MoneyUnder30 site, then continue by reading about credit scores in The Times. After you finish your research, discuss your findings with the class and consider the premise reported in the article: Should a credit score affect decisions about love and marriage? Why or why not?
The Cost of College
?Money As You Grow? Advice:
- When comparing colleges, be sure to consider how much each school would cost you.
Classroom Activities and Related Times Articles:
1. Calculate the Cost of College. Read ?A New Way To Compare College Costs Online? and ?Clarity and Confusion From Tuition Calculators.? Then compare the costs of two or more colleges using the colleges? own online calculators. What were the results? Were you surprised? Also, how would you rate the different calculators? Were they clear and easy to use?
To go further, you might choose ideas from the many listed in the Learning Network lesson plan, ?When College May Not Be Worth the Cost: Examining Student Loan Debt.?
2. Write a Personal Essay. George Edwards is a senior in high school in New York City, and he shares his own concerns about the high cost of a college education in an essay for the Learning Network. Write your own personal essay about your anxieties about going to college, including being able to pay for it, and share any helpful advice you have learned. (If you?re eligible, the Your Money column is extending An Invitation for High School Seniors to Write About Finances until April 1, 2013. Alternatively, you may want to answer our Student Opinion question, ?What Investment Are You Willing to Make to Get Your Dream Job??.)
3. Compare Colleges. Read ?Generation Hobbled by the Soaring Cost of College? and ?Battling College Costs, a Paycheck at a Time?, two articles in the ?Degrees of Debt? series that examines the implications of soaring college costs and the indebtedness of students and their families. Then visit the government?s college scorecard Web site, which allows you to compare different schools based on graduation rates, average cost, loan default rates and median borrowing levels. You can search schools based on name, location or degree, among other criteria. Choose colleges that interest you, or ones that are near your home, and make a chart comparing their scores. Which school has the highest graduation rate or the lowest loan default rate, for example?
4. Make a Plan to Pay for College. Read questions and answers in The Choice Blog?s six-post series about FAFSA, the Free Application for Federal Student Aid, and its five-post series about scholarships. Then visit the studentaid.ed.gov Web site, which gives users tools to research loans, scholarships and grants. Compare colleges that interest you, and write a preliminary plan that explains how you plan to pay for college.
How do you teach financial literacy? Tell us below!
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