Financial Literacy: Making Sense of Dollars and Cents | Edutopia
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WHAT WORKS IN EDUCATION The George Lucas Educational Foundation

Financial Literacy: Making Sense of Dollars and Cents

The economic crisis signals that schools need to get in the business of teaching money matters.
By Edutopia
Edutopia Team
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Credit: Wesley Bedrosian

Every day, headlines bring us troubling news of our increasingly fragile and faltering economy. The largest collapse of financial institutions since the Great Depression ricochets across the globe, as investors, politicians, and homeowners scramble to make ends meet over expanding chasms of debt.

When the economy rides and stumbles on $700 billion promises -- and pocket money vanishes with a few clicks of a mouse -- it becomes increasingly urgent to teach young people the basic survival skills of personal finance. It is today's students who will pay for yesterday's poor choices. Their journey through a slowing economy will be greatly enhanced by learning how to spend wisely, maintain good credit, and take out safe, reasonable loans.

In this special report, Edutopia has gathered a variety of insights and tools on financial education that will equip your students for the years ahead. From student entrepreneurship to student-run credit union branches, the topics in this collection of articles and other resources cover hands-on activities and real-world projects in economics, money management, and business skills. Here's hoping little Fannie Mae and Freddie Mac -- with some early lessons learned -- won't repeat their parents' mistakes.

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Zoe Weil's picture
Anonymous (not verified)

I fully agree that young people need to become financially literate. School ought to provide education that includes the acquisition of skills, and I believe one of the contributing factors to our current economic collapse is the lack of financial literacy among our population. We have all been schooled in math, science, literature, and social studies, but few of us have been schooled in basic economic knowledge and personal financial responsibility.

But financial literacy isn't enough. While it's crucial that we educate the next generation to understand that what they spend money on influences their future economic stability, it's also critical that they understand that their spending represents their vote for the world they want to see. It's all well and good to teach youth not to buy an SUV on credit that they may be unable to pay back, but we also need to raise their awareness of the effects of an SUV on the environment. Along with understanding the consequences of spending their money at the school cafeteria on lots of sodas, burgers, and candy (rather than eating fewer calories and bringing lunch from home so they can save money for more important future purchases) we need to educate students to understand the consequences of such food purchases on their health, other species, and the environment. Along with helping youth to realize the value of thrift for their future success rather than strive to buy endless expensive brand name clothes and shoes, we also need to teach them how to analyze advertising to free themselves from the insidious influences of commercial messages as well as to help them understand the consequences of outsourced, made-in-overseas-sweatshop products on other people and the environment.

In other words, let's not stop with personal financial literacy; let's make sure our students understand how our choices about spending effect everyone: ourselves, other people, other species, and the earth.


Zoe Weil, President, Institute for Humane Education

Vanessa Posada's picture
Anonymous (not verified)

If you are interested in teaching your kids about working with money responsibly, Junior Achievement has a great free site. You should check it out

Jason's picture
Anonymous (not verified)

Finances and money management are so neglected by traditional education. It's appalling. These are real life skills. It's no wonder many college graduates can't manage their own money. Hopefully this will help the education system get with the program.

Rick Zapata's picture
Anonymous (not verified)

In Alabama, the Cooperative Extension System has a budgeting program that is taught in the High Schools called Reality Check. Students are assigned 1. A family status 2. an occupation 3. education level 4. monthly income. They then budget the money they have for the month at the different booths. They have to buy food and clothing, pay for day care, buy a car or house and insurance. It is amazing to see how they spend money when it is theirs and not their parents. It is one of the programs that changes behaviors immediately and can be easily measured for impacts. Most parents do not teach their children how to budget because they themselves do not budget. We produce a budget calendar to help the parents. One change at a time

Laura Shifrin Feldman       's picture
Anonymous (not verified)

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Bruce Cahan's picture
Anonymous (not verified)

The notion of financial literacy consists of three parts:
1) Basic Personal Finance
2) The Meaning of Money & financial transactions, as defined by the impacts they cause
3) The ancient traditions, faith-based beliefs and indigenous cultural norms of generating and exchanging money.

Today, schools foster banking industry preparatory and defensive measures through a small effort at the first of these literacy skills. Explaining how to use a credit card (or not), what a FICO score is or how information from the bank implies your "financial worth" is as neanderthal an approach to seeing and leveraging one's place in the global financial system, as using an abacus would be to stock trading.

To be effective, to be empowering, all three parts of social financial literacy must be accessible, and the skills to use these semantic layers of meaning and interpretation must be practiced and rewarded. Of course having a cadre of high transparency banks, through which to see money's movements, would help.

Our GoodBank(TM) project aims to explore and incubate such skills, tools and the content to make meaning of the money, created through banks.

For more information, please feel free to visit our project wiki:

Alex 's picture
Anonymous (not verified)

We do a "FAIR"n job at preparing students for college. Whether it is a 2 year school, or a 4 year school, they will be able to succede with the skills that are provided. (Best case scenario)

As far as financial literacy is concenrned, when I went to school, they covered a brief section on stocks, bank accounts, and basic measurement.

What was lacking from my school, and many others was the lack of preparedness for educational loans. No where did my guidance office, or mathematics teachers even venture to scratch the surface before I signed on the dotted line. This is something that all students need to be aware of before they make the decision to go to school, and so many get mislead, or no direction other than "sign here". This may be an area that needs to be addressed especially for students who are considering furthering their education.

KARRIEM's picture
Anonymous (not verified)

The latest PBS documentary "The Ascent Of Money" is an excelent overview of the evolution of money and it's relationship to historical events. It also has a curriculum attached that is thourough. It includes activities and video clips to download.

Check you local PBS affiliate for more information.

Karen's picture
Anonymous (not verified)

As in other classrooms around the country, instructional time is a coveted commodity. Our district curriculum does not include a financial literacy program. I do feel it is necessary, especially for children at an age where they may begin to start earning money, to have tools with which to manage their funds. I teach 6th grade at an elementary school in Port Orchard, Washington. Not having a huge amount of time to allot to this type of literacy, I decided to implement a classroom economy system and tie it to my behavior management plan. This is the 6th year I have used such a plan and it works wonderfully. In layman's terms, if a student is naughty, they pay me, if they are good, I pay them. There are many important details, too many to list here, that make the system run smoothly, but a few aspects of its success are:
1. Students each have a check book (vinyl covers and registers donated from my bank)
2. Checks are non-negotiable, of course, as real tender, but they resemble real checks, are imprinted with a unique account number and the student's name, etc. Students learn and become very skilled at filling out a check and keeping accurate records in their registers.
3. Students pay desk and locker rent, earn fines for late work, tardiness (when appropriate), note passing, etc. Fines are associated with undesirable behaviors on a case to case basis.
4. "Paychecks" are issued for weekly jobs, refunds of desk rent for tidiness, bonus pay for random acts of kindness, exceptional work and/or behavior.
5. We have a class bank that fluctuates throughout the week to encourage teamwork. We deposit large chunks for class compliments, efficient transitions, etc.
6. Students get real life computation application on a daily basis. Students have a solid understanding of vocabulary like debit, credit, overdraft, interest bearing, etc.
7. We conduct a "Student Store" where students can choose to be small business owners. They apply for a business license, hire employees and make a profit from selling goods and services to their classmates.
8. Students can "shop" at Student Store with their calculated budget.

What began as a vision to manage behavior has really turned into an emergent financial literacy program that is catching in other classrooms of my school.

Christine Stebbing's picture
Anonymous (not verified)

Let me preface this with saying that I wish the current recession would have never happened and everyone was rolling along with their jobs, homes and retirement funds.

That said, I believe that this is an important opportunity to teach students of all ages about financial responsibility, both personally and globally. This year I took the time to talk to my students about what a recession is and why the world is going through one. They had heard the word hundreds of times and had no idea what it meant. Unfortauntely, because of the community I teach in, I have a feeling a lot of their parents weren't necessarily sure what a recession actually is. We also discussed different sorts of spendings, different spending styles and how to protect they can work on saving money for the future.

We have a responsibility to educate our students about financial issues so that when they're in charge of the world they can learn from our mistakes!

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