Solutions That Work

Posted by Kendall on 17 August 2009 | 0 Comments

I want to spend a little time talking with you about solutions that work, as opposed to solutions that, uh...don’t...work. Solutions for financial literacy, that is. You’ve probably had the chance to review text books, DVDs, online materials, workbooks, free stuff, expensive stuff -- there’s lots of stuff claiming to teach your students about money. 

As a teacher, your resources, opportunities and time to impact their lives is limited. You, of course, have no desire to squander it.

Whether you’re just starting, or you’re a financial veteran, this article will prepare you to discern between solutions that work, and those that...well...don’t. It will provide insight into programs that do little more than dispense information and those that effectively promote change. I’ll address principles of a successful curriculum that will empower you to properly “tool up.”

Teach Habits Over Knowledge

When you choose a credit card, do you stress about its interest rate? I know it’s a personal question, but it’s illustrative of a problem many have. While governments bicker over how and when credit card companies ought to disclose what and why, shouldn’t we be asking ourselves: What does it matter if I pay on time?

Sometimes I find myself committing this error with my savings accounts. “If I move my money here to get this new high rate, I could make more...” Meanwhile I’m standing in line buying an unnecessary product that completely offsets any savings I gain from moving accounts. True, I’m buying the product with newly found cash, but then what’s the point of the savings account?

Your financial curriculum should teach habits over knowledge. Technical discussions on obtaining credit, debt management, and investing are important -- and we must have them -- but they are secondary to learning responsible behavior. An effective financial curriculum must first and foremost teach students to 1) make wise spending decisions, and 2) continually save.

It’s one thing to tell students about good behavior. It’s entirely different when you help them practice. A few scholars are beginning to question the effectiveness of financial literacy in education in general. I believe one probable cause is our over-emphasis on knowledge and not practice. Consider using a program that is online, interactive, and allows them to work through real-life scenarios.

Make Sure You’re Curriculum Is Instantly Relevant

Biology teachers enjoy a strange luxury. They’re don’t carry the burden of articulating why biology is relevant to middle and high school students. Undoubtedly, curious students ask their teachers to explain the why’s and the what’s of life. “What does biology have to do with me?”

“For you to appreciate life.”

“To expand your mind.”

“Sure. You just keep telling yourself that,” the student replies. Biology (fortunately) is a discipline in which we don’t all need proficiency. Managing money, however, is a lesson we all must learn -- preferably sooner rather than later. Articulating why financial literacy is relevant to students is a heavy burden. And you bear that burden.

With regard to biology: a little maturity turns curiosity about life and evolution to a pleasure rather than a chore. Unfortunately, consequences await those who lack the brainpower to appreciate matters of money. You must ensure that your curriculum is instantly relevant to your students’ lives.

Teach Correct Principles

Can I demonstrate this with an example from my own life?

What would your students tell you about the stock market, if you asked them today? Some might say you buy and sell stock there. Some might say their parents dabble in it. Some even may say it’s a place where smart people get rich.

When I was in high school, we made the stock market into a game. The rules worked like this:

1. Each student belonged to a team.
2. Each team was given $10,000 in play money.
3. Your team had eight weeks to buy and sell on the NYSE.
4. The team with the most money won.

Well, students aren’t stupid. We recognized instantly that “buy and hold” was not a winning strategy. There were only eight weeks to become famous, and that took aggressive action. On the first day, most of us did little more than get our feet wet. “Let’s not lose all our money before we know how to do this right.” After reconvening as a class to discuss results, most of us didn’t have much to show.

Of course, one smart alec stumbled upon a key observation early on. He noticed that when you want lots of money fast, it matters not how expensive your stock is, but rather by how much it changes. Furthermore, he found that high priced stocks tend to move slowly percentage-wise, while low priced stocks experience enormous percentage gains. His team had pulled ahead.

That smart alec taught us our first lesson in risk management: higher risk accompanies higher gains. Not to be outdone, my team jumped on board. We were learning that winners in the “stock market game” took the highest risks available.

We also learned that knowledge was power. What if the other teams discovered your secret stock pick? How do we get to it first? We asked our parents for recommendations. We competed to find the most obscure stocks we could find -- stocks nobody else would know about. These are real-life conundrums that real traders experience each and every day.

In the end, my team finished second or third place (I can’t remember). The winners moved on to a regional competition. As I went off to college, the fact that my team ended profitably imprinted the experience on my mind. I’d forgotten whether the other teams had fared as well as I, but that was no matter.

While at college, I decided to try trading in real life. I applied the same principles that I learned from class: 1) to win, you must make money fast and furiously and 2) riskier is always better. I don’t even need to tell you the rest of the story. Suffice it to say, I lost over half my investments in four months.

The high school game taught me some brutal realities about the stock market. Did it, however, teach me how to win in the “game” of life? Absolutely not. You must honestly ask yourself: Are your resources teaching students that life is truly risky? Are the tools you’ve chosen helping them appreciate long-term gains? Is your curriculum unwittingly glamorizing behavior that leads to financial ruin?

Conclusion

Remember: habits over knowledge, instant relevance, and correct principles. There are financial programs that are all or none of these things. Look at what you have. Are your tools too technical? Do they fail to engage your students? You may need to mix and match materials. Just don’t forget that in all your mixing and matching, you’re making an impact on your students’ lives, and time is short.