Of all the things we’re taught in school, why are we not taught how to handle our personal finances? Take a tour of one author’s proposed Personal Finance 101 course.
by Keida-Ann Borgella
Some friends and I were talking about the U.S. educational system and how we aren’t taught some of the more basic and practical aspects of life, one of them being personal finance. Think about it: what did you really learn in high school about personal finance? Why aren’t we taught about money from an early age? We learn countless irrelevant subjects that most of us, if tested, would fail today, but when it comes to a subject that would stick with us for a lifetime, there isn’t a mention of it anywhere that I could see in high school.
So what would a Personal Finance 101, 201, 301 and 401 class look like? This week, we’ll address the different levels and what should be taught in these classes. A personal finance curriculum if you will. Feel free to add your own suggestions in the comments area.
Personal Finance 101 Curriculum Overview
Ideally, this would start in ninth grade (first year of high school if not sooner), and we’d start off with the basics
1. Attitudes About Money
Assignment: Students will be asked to write a short essay describing their attitudes about money. What have you learned thus far about money and its meaning to your life? Do you work for it? Do you have free access to it? Do you save it, or do you spend it? What does money mean to you? Be sure to indicate specifically what your parents have taught you about money so far. Personal finance is personal, so there is no wrong answer!
2. Your Paycheck: FICA, Medicare, State Tax, Local Tax and Federal Tax
- What are they, where do they go and why do they get paid before you do?
Assignment: Research your federal, state and local tax rates and familiarize yourself with the following sample paycheck:
3. Budgeting and Cash Flow
- Budgeting Basics: Create a budget based on paycheck pictured above
- Tracking Your Spending
- Pay Yourself First (Savings)
Assignment: Create a budget based on paycheck pictured above. Students will be assigned different life scenarios based on the CASHFLOW 101 board game by Robert Kiyosaki and will write a reflective essay on the importance of budgeting and saving money wisely.
4. Savings and Investing
- Importance of Saving: Set It And Forget It; Making It Automatic
- Saving For a Big Ticket Items (Car, Shopping Spree, etc.)
- Emergency Funds
- Compound Interest Is Your Friend: Make Her Work For You!
- High-Yield and Other Types of Savings Accounts
- Using Webware To Track and Achieve Your Savings and Investing Goals: Yodlee, Mint, Rudder, Quicken Online/Mobile, PocketSmith, et al.
Assignment: Identify the top five high-yield savings accounts based on interest rates, and obtain the permission of your parent or guardian to open one in your name. Then, based on your fictional paycheck and life scenario assigned in previous classes, detail your monthly expenses and determine how much you’ll need to save in an emergency fund.
5. Credit and Debt
- Credit Basics: What is Credit?
- Avoiding the Credit Trap
- What Do APR, Interest Rate, Billing Cycle and Universal Default Mean to You?
- Your FICO Score and How it Shapes Your Financial Life
- Debt-To-Income Ratio: How Much Is Too Much?
Assignment: Write a reflective essay on appropriate uses for a credit card. Create a case detailing an item you really want to purchase; however, you are six days until your next paycheck, and it’s now or never. Write down the pros and cons of purchasing the item now using a credit card instead of later using cash. Please be thoughtful in your answers.
How’d I do? What would you add to the first year of a Personal Finance 101 class for high school students?