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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
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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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 http://studentcenter.ja.org/.

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)

Hi my name is Laura and I live in South Florida. It would seem that finding an absolutely no cost fundraising program that is online can solve a multitudes of needs for your school, non-profit groups, music clubs, sports teams, etc.

I read posts here on your blog and was extremely touched especially by the teacher who wrote about
caring so much for students that teachers give up to 50% of their income and actually adopt children when parents pass away or perhaps abandon.

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I feel honored to be able to share what we do at ShopForStudents.com. Shop on our unique online store and share our website with your Supporters for a super great ongoing fundraiser. I visualize our fundraiser adding the money you truly need day in and day out. Teachers are truly America's selfless army.

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How about a HUGE 15% back on EVERY order placed 24/7, 365 days a year. In addition we donate an additional up to 2.5% back directly to teachers to pay for wnat ever is needed in the classroom.

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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: http://goodbank.info/w/index.php?title=Main_Page

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!

Pamela D. Pitts's picture
Anonymous (not verified)

I agree that we need to do a better job of improving students' financial awareness and money management skills. I am a financial literacy entrepreneur and I have developed a financial wellness tool. Please see http://www.butterflyfinancialllc.com/Press_Release_Final.pdf.

This tool was discussed recently on the Comic Book Page podcast. The link to the podcast is http://www.comicbookpage.com/Podcast/. If you go to episode 101 and minute marker 42:20 you will be able to listen to an 8 minute discussion regarding the tool.

Just trying to make a difference in the area of financial literacy.

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