Teaching Personal Finance to Teens

Financial literacy is one of the most applicable and important concepts that we teach teens, but so often it gets thrown in at the last minute (or worse, thrown OUT!).

After trying to develop a better strategy for teaching consumer math and personal finance, I found my favorite method -- one huge "Financial Fun Day."

This is an awesome way to pack all the material into one day, and the great thing is that when it is all covered together in one day, the flow allows for it to actually be more relevant. 

The students make decisions and put together a whole "life" of choices.  They can choose a home to buy or rent, get a car, and look at insurance plans. 

The financial day can include lessons on mortgages, interest, budgeting, credit, taxes, and so much more. 

My FAVORITE thing about this is that you can combine two (or more) grade levels!!

The actual math skills required for most of the personal finance /consumer math concepts are limited to decimals, percents, and exponents.  A 7th grader can do most of the math work, but the material is incredibly applicable to a high school senior as well.

This means that you can cancel classes for one full morning, pull all your students together, and run through it all at once.  The day is really enjoyable for them, but the huge bonus for you is that then, you only have to do the unit every two years!

Here's how to make it work (Be sure to download the vocabulary printable in the "TIPS" section!):

Start with Education

Let students decide whether they will go to college.  This then leads perfectly into salary and pay.  Remind students that if they choose college, they'll have student loans, but will earn a higher salary. 

I like to have a "financial planning sheet" travel through the whole day with students, so they can record everything in one place.  This helps them to create a budget at the end.

After making college decisions and calculating loan payments, each student grabs a paycheck from the appropriate stack, depending on whether he/she has a degree.

Use Stations to Keep the Day Fun & Interesting

This is especially easy if you recruit a few adults to help out.  Parents are great, or if you combined a few classes, use the extra teachers, since a few periods of the class day are cancelled.

Let the kids flow through each step of building a financial "life" in small groups.

They learn a little about how things work at each station, and then make a decision for themselves.  They record the cost of each decision on their planning sheet.

For example, at the "Banking" station, I have students learn about simple and compound interest, since this is required coursework.  Then, they learn a little about saving and checking accounts.  I have them put together a checkbook that they will use to pay bills later on.

The big favorite for the kids is picking out a vehicle and deciding whether to buy new, buy used, or lease -- so fun!  The girls love the little hippie bus, and of course a lot of kids pick a muddy jeep.

I decided to separate into two 'phases" -- the kids go through the first 4, then once they have a checkbook and have chosen a home and vehicle, they will have what they need go through the next 4.

Here's how I broke it all up:

Stations 1 through 4 can be done in any order. Then, once those decisions have been made, students can cycle through Stations 5 through 8.

Bring it All Together

At the end of the day, the kids review their financial planning sheets and put together a monthly budget.   Then, they can even do a simplified version of taxes. 

Tips for Teaching Personal Finance (whether or not you choose to Try a One-Day Structure)

1.  Enlist parent help.  Parents are a GREAT resource for this type of unit.  At this age, parents do not often come in to school to help out, but this is the perfect opportunity, because the math content is not complicated, and they DO know this material.  It is great to have more adults in the room, so that more students can get one-on-one help.  Set up an environment in which parents and students can chat about making smart financial decisions.  The adults can share their own valuable experiences with loans, credit, mortgage, pay withheld, and budgeting.  They know how insurance works and how to improve credit.

2.   Emphasize vocabulary.  It's important that students know what the terms mean.  These words are not at all familiar to them:  mortgage, compound interest, credit score, premium, principle, deductible..... The terminology is a big part of why students find this unit complicated.  If you can clear up the vocabulary, you will give them a huge advantage.  I chose to do this by having kids carry a "vocabulary recording sheet" around for the full day.  I copied it onto the back of the "financial planning sheet" so they could fill in each term as they encountered it throughout the day.  I also put together a vocabulary crossword to help review the terms.

The crossword can be used as a quiz or review at the end of your personal finance unit. 

Click the image to download the file.

3.  Have students keep a folder that is only for all of their consumer math paperwork.  It is nice to keep it totally separate.  You can then decide to do one lesson per month if you want to spread it throughout the entire year.  Or, if you do one big financial fun day, try having them carry a clipboard that will keep everything in one place.  They will have to keep track of the paycheck, car and home choices, financial planning sheet, vocabulary page, and more.  Either way, you will want them to have everything accessible when you go back to put together a budget, do tax forms, etc.

4.  Combine classes.  This is a great way to get two grade levels working together.  Make groups that are a mix of students from different grades.  If you decide to offer stations, just make sure that you have duplicates of each table.  This way, kids can go to any "copy" of that station table and stay spread out while still hitting all the same areas in the same amount of time.  Ideally, you can schedule time in the library, auditorium, or gym... somewhere that you can have enough space for everyone.  This way, you can knock it all out in one day and make financial literacy a bi-annual event.  (or even every three years if you can combine three grades!)

5.  Allow re-thinking.  Let students go back and change decisions.  When it comes down to budget-making time, there are always those few kids who wayyyyy over-spent.  Encourage them to go back and select a different car, or cut back some of the video games in their "fun stuff" budget.  This is part of the learning process.  The opposite will also be true.  Talk with the kids who have money left over and ask them how they intend to spend it.  Maybe they would like to increase contributions towards retirement?  These conversations are key to helping the students really understand smart financial decisions and budgeting.

6.  Take advantage of the stand-alone nature of these lessons.  If you cover just the basics, then any additional worksheets, application problems, or follow-up practice can be saved for later.  This is ideal for your emergency sub kit.  No matter where you are in your curriculum, you can then pull out a financial worksheet later and have your students review and apply all the consumer math concepts that they learned.

I also like the students to carry around a booklet that applies each concept as they travel through the stations.  All the pieces fit together really well this way, whether it is done as a one-day stations setup or as a standard unit within math class periods.

I've put together a ton of worksheets, extensions, and applications.

If you are interested in the full Financial Literacy / Consumer Math Unit, check it out here.

Helpful Websites

This first one is wonderful for working with credit cards.  Students can quickly enter the details of their debt and the online calculator will determine how long it will take to pay it off.  It's sure to open their eyes --
http://www.bankrate.com/calculators/credit-cards/credit-card-payoff-calculator.aspx

The second one is especially awesome for Texas teachers.  One of the TEKS math standards for personal finance is to determine how your family budget compares to what it would be in another city nearby.  This site is a great one to meet that criteria -- http://www.epi.org/resources/budget/

P.S. - If you ARE a Texas middle school teacher, you might really go crazy over my financial unit, because I set it up so that it covers ALL the TEKS personal finance standards for BOTH 7th and 8th grade!! (yay!)

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