Scoring a financial education

Transcription

1 NET GAIN Scoring points for yor financial ftre AS SEEN IN USA TODAY MARCH 25, 2005 Scoring a financial edcation Colleges, high schools place more emphasis on money matters By Mindy Fetterman USA TODAY Lee Melchionni, 21, plays basketball for Dke. His father, Gary, played basketball for Dke. His ncle, Bill, played basketball for Villanova, the Philadelphia 76ers and the Nets when they were in New York. Bt Lee isn't conting on basketball to pay his rent for life. In fact, even thogh the NCAA tornament is nderway and Dke as sal is a contender, the jnior economics major took time from shooting hoops this week to discss the importance of learning abot how to manage yor money. "My athletic times are getting shorter," he says. "I'm definitely thinking abot opportnities for the ftre." Melchionni is one of abot 500 stdent-athletes across the contry who have participated in a series of seminars co-sponsored by the NCAA and The Hartford Financial Services Grop. They are aimed at teaching the basics of managing money. Good thing, too. More than one-third of 1,000 NCAA athletes srveyed said they expect to be millionaires. The seminars are part of a growing movement toward personal financial edcation on college campses and in high schools. With talk of an "ownership" society and the possibility that yong people may have more control over their Social Secrity throgh personal retirement acconts, the estion is: Are kids ready? Probably not. "How are people going to plan for their own retirements when or srveys show that 40% of adlts don't know what an annity is?" asks Robert Dvall, president of the National Concil on Economic Edcation. (An annity is a contract that promises to pay yo a certain amont of money every year for a large initial investment. If yo die before the annity's term is p, yo lose whatever is left. If yo live longer than yor money holds ot, the insrance company still has to keep paying yo.) Do yo think a college kid knows that? An early edcation By Anne Ryan, USA TODAY High school teacher: Donald Zabelin says today s stdents really don t know mch abot money. Bt some states now reire stdents to take economics and/or personal financial planning corses to gradate from high school. Seven states reire a personal finance corse p from for in 2002, according to the NCEE, which lobbies states to inclde Reprinted with permission. All rights reser ved.

2 AS SEEN IN USA TODAY MARCH 25, 2005 personal finance and economics in grades K-12. Fifteen states reire economics, p from 13 in Last year, at least a third of all high school gradates had taken a class in economics becase the for largest states California, Texas, New York and Florida reire it. At the same time, 38 states have standards for personal finance edcation, p from 21 in Almost all states have standards for economics. To have a standard means the state's legislatre has declared the sbject an important one that shold be taght, althogh it is not reired. Still, most kids start college or go to work after high school with only rdimentary nderstanding of things sch as savings acconts, credit cards, the stock market, saving for retirement or getting a car loan. "We all know yong people are getting inndated with credit card offers at college," says Joanne Dempsey, president of the Illinois Concil on Economic Edcation. "It's 'Get a free T-shirt! Sign on the line!' Yo can spend $2,000 withot realizing someone has to pay for all this." Yong people may be woeflly nprepared for taking charge of their own money, mch less their retirement, says Donald Zabelin, who teaches consmer edcation at Commnity High School in West Chicago. When he asks his jniors and seniors abot money matters, he gets a lot of blank stares. "They really don't know mch," he says. "A handfl may pick something p from their parents. Bt for most families, money is a topic that can be pt aside becase there are more important things to talk abot." Patricia Tomich agrees. Her stdents at Notre Dame High School for Girls in Chicago come from working-class families, many of whom "live paycheck to paycheck," she says. "We give them confidence as yong women to go ot in the world and say, 'I'm not jst going to spend, spend, spend.' There are other ways to go." Zabelin and Tomich teach everything from how to write a check to concepts sch as investing in the stock market and bying stocks on margin. A team from Zabelin's class last year won the national Capitol Hill Challenge, a stock market game rn by the Fondation for Investor Edcation (FIE), a grop spported by the secrities indstry. Tomich won the 3M Innovative Economic Edcator Award in 2004 for her classroom project in which kids create a bdget for an imaginary salary of $1,500 a month, team p with a partner and try to find an affordable apartment in Chicago. They interview landlords and write a roommate contract. "By the time they're finished, some kids remark, 'I'm not moving ot, never!' " she said in an . Many states don t reire finance corses A small-bt-growing nmber of states are reiring corses in economics and/or personal finance for gradation from high school. States reiring economic corses: 15 STATE ECONOMICS COURSE REQUIRED GRADE LEVEL Alabama Economics High school California Economics High school Florida Economics High school Georgia Principles of economics/bsiness High school Idaho Economics High school Kentcky Part of social stdies All levels Loisiana Free enterprise High school New Hampshire Economics High school New Mexico Government/economics High school New York Economics/enterprise system/finance High school North Carolina Civics and economics High school Soth Carolina Economics High school Soth Dakota Economics High school Tennessee Economics, bsiness economics High school Texas Economics High school States reiring personal finance corses: 7 STATES PERSONAL FINANCE COURSE REQUIRED GRADE LEVEL Alabama Citizenship Jnior high Georgia Part of social stdies K-8 Part of economics High school Idaho Economics High school Illinois Consmer edcation High school Kentcky Part of social stdies, practical living All levels New York Economics/enterprise system/finance High school Utah General financial literacy High school Sorce: National Concil on Economic Edcation Reprinted with permission. All rights reser ved.

3 AS SEEN IN USA TODAY MARCH 25, 2005 Financial edcation shold begin in elementary school, says Kathy Floyd, exective director of the Stock Market Game for the FIE. "If stdents don't have parents who have a history of nderstanding these things, and yo jst hand them (retirement) acconts, they are going to be lost," she says. "Completely lost." Helping yor kids There are things yo can do to help yor kids start thinking abot money, how to spend it and save it, say those who are teaching personal finance. Start with yor school. Isses sch as compond interest, credit card debt and savings acconts can be taght in elementary school as part of math or social stdies. Find ot what's being taght or not and lobby that personal finance be inclded. "High school is really too late," says Floyd. "A lot of this shold be taght in elementary school." Get help on the Web. Grops sch as the JmpStart Coalition ( Yong Money ( and the American Yoth Policy Form ( provide games, brochres and books aimed at kids and yong adlts. Start savings acconts for yor children. Have them pt some of their allowance or money they earn from jobs babysitting or ctting lawns into it each week. Let them save for something they want to by. That will teach not only savings bt delayed gratification a togh lesson. "The sooner yo take kids to the bank and show them how to set p a bank accont, the better," says Zabelin. "We sed to make a big deal ot of going to the bank, bying a Savings Bond and ptting it into the safedeposit box. It was a cool thing to do." Play the Stock Market Game at Yo can play it as an individal or in a grop sch as a classroom. There's a $10 registration fee. Millions of stdents have played since the game began in the late 1970s. Do an inventory of brand-name prodcts in yor hose. Then by a stock and watch what happens to it. "We have the girls inventory what they're wearing right now, what makep, shoes, etc.," says Tomich. "It srprises them that they can invest in the companies that make the prodcts they se." Peter Lynch made a fortne for Fidelity mtal fnd investors and himself in the 1980s by advocating that yo "by what yo know." His kids wore Nikes. He boght Nike stock. Kids who love ipods might by a share of Apple Compter. Or kids who love Disney World might by a share of Disney. Following a favorite "We follow the stocks to see what news has broken that might make the stock very poplar for the moment," says Zabelin. "It gets kids thinking." One of his stdents, Kirsten Chase,19, won a national essay contest last year by writing abot how the media inflence stock prices. Now a freshman at Calvin College in Grand Rapids, Mich., Chase says she "focsed on Wal-Mart and how different things like news stories and new prodcts for Easter made the company more profitable. I showed how the media can make more people want to invest or not invest." And she says she learned: "Sometimes it's better to invest when the stock is down becase it's a reptable company and yo know it'll do well eventally." Good lesson. Reprinted with permission. All rights reser ved.

4 Scoring a financial edcation Objectives: Stdents will: h read and discss a USA TODAY article on financial edcation. h research for financial careers sing the Department of Labor s Occpational Otlook Handbook. h complete a graphic organizer that compares the responsibilities of for financial professionals to those of individal workers and consmers. Concepts: h ownership society h lifelong learning h credit h stocks Preparation: h acconting h marketing h earnings h career otlook 1. Review the Department of Labor s Occpational Otlook Handbook at (Stdents will be sing the site to complete the attached graphic organizer.) If yor stdents do not have Internet access, print ot the information on the following careers: controller, consltant (financial analyst), marketing manager, loan officer. Copy one set of handots for each stdent or pair. 2. Pre-reading: Ask stdents: Why is it becoming increasingly important for Americans to nderstand all aspects of personal finance? Who is responsible for teaching stdents financial skills parents, schools or the government? At what age shold financial edcation begin? Explain yor reasoning. Activity at a glance: h Grade level: 9-12 h Sbjects: Bsiness, careers, economics, personal finance, langage arts research h Estimated time for this activity: mintes Materials: h Reading: Scoring a financial edcation h Copy of discssion estions and activity h Graphic organizer, Becoming a financial professional h Internet access for individals or pairs. Or, copies of relevant pages from the Brea of Labor Statistic s Occpational Otlook Handbook. 3. Distribte the article, Scoring a financial edcation. Have stdents read the story silently. As a class, discss the estions on the following page. 4. Follow the instrctions listed nder Activity on the next page. NET GAIN SCORING POINTS FOR YOUR FINANCIAL FUTURE

5 Scoring a financial edcation Discssion: According to the article, more than one-third of 1,000 srveyed NCAA athletes believe they will become millionaires. In yor opinion, is this a realistic financial goal? Is Dke University basketball player Lee Melchionni banking on his athletic skills? Why are colleges and high schools becoming more interested in providing stdents with personal financial edcation? What will happen to those who are nedcated abot personal finance if the U.S. becomes an ownership society? Does yor state reire economics or personal finance corses to gradate? If not, do yo think it shold? If yo charged $2,000 on a credit card, and didn t have the money to pay yor bill, what exactly wold happen? Do yo think yong people are woeflly nprepared for taking charge of their own money? What does it mean to live paycheck to paycheck? How can parents help their kids develop solid personal financial skills? What stocks wold yo by if yo followed investor Peter Lynch s advice? Activity: Ask stdents how they can edcate themselves abot financial isses, other than by taking classes. Next, ask them whom they might conslt for financial advice. Then, tell stdents that in this exercise, they will be exploring the roles of different financial professionals. After all, these professionals make the same types of decisions for companies that individals make for themselves and their families. Pls, as stdents research careers in bsiness, they may identify a few that interest them. Distribte the graphic organizers, and review the directions with stdents. Then, direct individals or pairs to the Occpational Otlook Handbook at Or, give each stdent or pair a copy of the information yo downloaded from the Handbook. After, share and discss answers to the estions listed beneath the graphic organizer. Additional resorces: h Goodpayer.com offers a handbook entitled Learn Now or Pay Later that helps yong adlts nderstand the basics of credit and debt. The book is available as a PDF at The booklet also provides tips on choosing a checking accont, writing a check, preventing identify theft and other personal finance topics. To order a copy, call h As the article states, the JmpStart Coalition (www. jmpstart.org), YongMoney ( and the American Yoth Policy Form ( provide games, brochres, lessons and books abot personal finance, careers and related topics. Activity extensions: h According to the Naismith Memorial Basketball Hall of Fame, there are approximately 545,000 high school basketball players, 4620 Division I college basketball players and 360 NBA players. Ask stdents to create a graphic that answers the following estions: What percentage of high school players earn spots on Division 1 teams? What percentage of high school players advance to the NBA? What are the odds that a high school basketball player will eventally make millions in the pros? h Direct stdents to the USA TODAY Edcation homepage at Next, click on Career Qest nder Career Edcation. Then, select Career Qest Worksheets, and click on the page entitled, Fast, slow. How do yo know? Use the worksheet and the Occpational Otlook Handbook to help stdents explore careers that sit their skills and interests.

6 Becoming a financial professional Directions: Yo can edcate yorself abot the financial isses yo may confront in the ftre by learning abot careers in the financial indstry. After all, financial professionals make the same type of decisions for companies that individals make for themselves and their families. Pls, as yo research careers in bsiness, yo may learn how to prse those that interest yo. The Department of Labor s Occpational Otlook Handbook provides crrent data on hndreds of careers. Visit the site at or read the handots provided by yor teacher. Next, fill in the reired information abot each of the jobs in the chart below. Then, explain why an individal needs some of the skills this professional provides. For example, a corporation s real estate officer is responsible for finding locations, negotiating leases and assessing properties. Individals who are looking for a place to live mst also research locations, nderstand and agree to leases and decide whether or not an apartment or home is worth its price. After completing the graphic organizer, which is contined on the next page, answer the estions listed beneath it. Financial professional CONTROLLER Role: Responsibilities: Edcation/training needed: Median annal Job Otlook: CONSULTANT (Financial analyst/personal finance advisor) Role: Responsibilities: Edcation/training needed: Median annal Job Otlook: Personal applications When do individals need the skills this profession reires? When do individals need the skills this profession reires? NET GAIN SCORING POINTS FOR YOUR FINANCIAL FUTURE

7 Financial professional MARKETING MANAGER Role: Edcation/training needed: Median annal LOAN OFFICER Job Otlook: Role: Responsibilities: Edcation/training needed: Median annal Job Otlook: Personal applications When do individals need the skills this profession reires? When do individals need the skills this profession reires? What other roles do individals play (e.g., risk manager, bdget analyst) as they manage their personal finances? Briefly describe each. If yo were developing the crriclm for a year-long corse on personal finance, what 10 topics wold yo cover? Why? NET GAIN SCORING POINTS FOR YOUR FINANCIAL FUTURE