by Dawn Casey-Rowe
- Participation in the H&R Block Budget Challenge must be facilitated by a classroom teacher at an accredited high school or home study program. Educators may visit hrbds.org to register their classrooms. Class creation closes one week prior to the simulation start date and for this round the deadline to create your class is January 7th, with rolling class creations through February 4th.
- Budget Challenge is open to students 14 years of age or older, enrolled full-time in grades nine through 12 with teachers who have registered them. Students may play one simulation per semester (Fall and Spring) but they are only eligible for prizing on their first attempt. Home school students may play one simulation per school year.
Why We Need Financial Literacy Resources For Teachers
“That’s crazy!” my juniors said. “How do you get $410,000 in student loan debt?”
“You go to an expensive school, defer your debt, go to grad school, file for forbearance, and the interest keeps going up…” I explain the concept of compounding interest straight from the Financial Literacy 101 Playbook.
We read a recent article in the New York Times where a teacher accrued nearly a half-million in student loan debt. This is serious. Bankruptcy is not an option with student loans. These loans follow a person forever–taxes refunds can be confiscated, wages garnished. The woman in the article would have to pay $2700/month for the next 30 years to dig out of this debt, a true tragedy.
That’s an uncollectable situation with devastating consequences. It’s the student loan equivalent of the America’s housing crisis. Some of my students were victims of that situation. They understand the analogy.
This woman was an intelligent, educated woman who overborrowed–like a great deal of the nation. This speaks to my point–any one of us can fall into this trap. Even me. I’m in my fourth decade in life. I’ve made all the makes and I knew better. That’s why I teach financial literacy. Financial literacy is a critical component of success in life, yet often it’s not in the curriculum.
“Miss, why is this the first time we’re hearing about this?” my seniors asked last year. I was teaching a Consumer Economics class I unofficially subtitled “How I Got My Butt Kicked So You Don’t Have To.” In addition to teaching the traditional financial literacy cannon–loans, debt, interest rates, taxes, savings, good purchasing habits, I taught a hefty dose of entrepreneurship.
It’s not the outrageous financial situations that bury us–it’s the temptation to press forward a little too much ignoring the red flags. We have the illusion we’ll be able to fix things later on. Adults do this–that’s why it’s critical to teach kids young and continue to practice good habits ourselves.
I’ve overextended a hundred times in my past. I’ve given gifts I couldn’t afford using credit cards–completely justifiable. I’ve charged up thousands of dollars in credit card debt filling my classroom with the basics school didn’t supply–again, seems logical. Only a small fraction of this is tax deductible, unlike when I am consulting and I can write off the kitchen sink.
I’ve used the equity in a house to save and bootstrap a business. This is one of the top entries on the Top Ten “Don’t Do It!” list–yet I did it. I cashed out the 401K from my first career to pay down college debt. This is also a giant no-no.
“But wait! There’s more!” I’ve done it all, and every single thing seemed reasonable at the time. People bury themselves slowly. Companies do it as well. Financial literacy is about learning discipline and developing the skills of analysis and evaluation in order to take appropriate risks and actions to plan for the future you want to have.
I’m older and wiser now, but I wish some of these lessons had sunk in earlier, so I tell honest stories to students. Those stories matter. They give students a glimpse of what real people deal with in the adult and business worlds. My students don’t know about risk assessment, being properly insured, how to compare savings and lending institutions, and how to use an ATM card, the hidden charges in buying or renting a primary residence.
“Why is the bank charging me these $25 fees?” asked one kid. He didn’t know he had to put the money into the bank prior to using the ATM, and just because the post didn’t hit the ledger instantly that didn’t mean that same money could be spent twice. On the flip side of the equation was a junior who had his own business at age 12. He started mowing lawns, bought a beat up truck and more equipment at 16, and started hiring his friends.
“You have a real business,” I said. He was complaining about bad employees and saying he was going to sell one of his three boats since gas was expensive. That kid is a successful businessman today. It’s never too young to start on the road to financial success–kids have the power of their passions and the reach of the internet in their hands. With a little guidance and financial literacy finesse, they can make money before they even graduate.
Some financial literacy topics seem too obvious to have to teach, but in my experience they’re not. It’s never too young to teach the basics–as well as the more sophisticated elements–of financial literacy. One lesson that surprises students–and adults alike–is my class on “How Couponing Can Lose You Money.”
It seems counter-intuitive, I know, but it’s the truth–many a seasoned adult falls into the trap of overbuying or buying unnecessary things in the face of a doorbusting sale. When factoring in the opportunity cost of running around to get to the sales and realizing that half the “nearly free” things wouldn’t have been on the list to begin with–it’s a huge net loss. I’ve done it.
I’ve filled up bags of products I don’t use, felt victorious, then donated them to charity. That seems like a no-brainer until I look at the value of my time. If I just wrote out a check for that amount, I’d have come out way ahead–and it would have been tax deductible.
I teach students not only how to buy a car then to evaluate whether it’s better to drive it into the ground or have a reasonable loan with a newer car without repairs. I show them the value of their credit score, and why I–with a score at the top of the range–might get better deals than them if they don’t nurture this number. I teach them how to fix their scores if they get it wrong right out of the gate.
I didn’t even get to the concept of insurance yet–this cripples adults, too. According to Professor Eric Johnson’s study in this shocking New York Times feature Why Consumers Often Err in Choosing Health Plans, only 21% of Americans could effectively choose the best insurance value given a set of plans to choose from and hypothetical set of medical costs.
These comparisons are life skills that can make or break a person. Financial literacy has never been more critical than today, especially given that technology allows us to act immediately upon impulse. We can buy on line, bank 24/7, and become victims to phishing and fraud schemes very easily. The things we usually think of when we discuss financial literacy topics are only the tip of today’s iceberg.
I don’t want students to navigate life blundering through the same mistakes I made in my early adulthood. I want them to imagine success now and know the steps they’ll take to achieve their goals. This, again, is not always intuitive. Some students come from financially literate families, but many do not. Even for financially literate families, our landscape is changing.
Many of today’s grandparents had one job with a pension. My parents’ generation had a few jobs with a pension. My generation tends to have three to four careers. Experts say my students will have to piece together skills leading to as many as seven careers. Many will be entrepreneurs, freelancers, and trendsetters. That’s an additional set of financial literacy requirements right there.
How do you budget your money when you might earn a lot now but have a dry spell for months? How do you pitch for funding for your startup? How do you design, build, and release a product at the lowest possible cost? How can you make money with zero startup costs? These are questions for today’s student that go well beyond our usual topics–ones many are likely to encounter.
The United States desperately needs to teach financial literacy as a core course. Until we do, however, some companies like H&R Block are trying to address this deficit.
Financial Literacy Resources For Teachers
Because 50% of high school seniors lacked basic levels of financial literacy, H&R Block partnered with several national organizations, including DECA–noted for excellence in teaching high school entrepreneurship–to design the Dollars and Sense program, which includes an extremely informative blog, classroom resources.
They also have created what might be the most fun resource of all, The H&R Block Budget Challenge, where classrooms can sign up for an online budgeting simulation that replicates the budget challenges of real life–bill paying, expenses, and responsible fiscal management. Top performing students in each segment can win $20,000 to $100,000 in college scholarships. Teachers can sign up classes to take part in these challenges, but even if you’re in a situation where that’s not possible, the resources on this site will help you start that conversation with teens and young adults.
Do your part and teach your children and students financial literacy. It can be layered over and integrated with any core area or any family experience. Decades down the road, they will be the next generation of successes, having avoided some of the landmines in the field of real-world finances.
This is a sponsored post on behalf of We Are Teachers and H&R Block. They wanted us to write about financial literacy and let you know about the challenge. The rest are our own ideas and recommendations.
Why We Need Financial Literacy Resources For Teachers