Teaching Personal Finance & the Stock Market

Challenge

Introduction (Scary details) Part I:  Introduction to Stock Market Challenge  (Brett)  4:30 to

5:15 Part II:  What is Financial Literacy  (Bill)  5:15 to 5:30 Part III:  Learning, Earning, Investing (Earning)  (Bill)  5:30 to 5:50 Dinner Part III: Learning, Earning, Investing (Building Wealth) 6: 10to 6:40 Part IV: Watch out for Resources 6:40 to 7:00 (Bill) Part IV:  More Resources (Brett)  7:00 to 7:45 Part V:  Learning, Earning, Investing (Research)  (Bill)  7:45 to 8:10 Part VI:  Conclusion

Today

INTRODUCTION

FINRA Investor Education Foundation, 2013 National survey of adults

Current Situation

INTRODUCTION

Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow? (More than $102)

Nation: 75% Correct, 13% Incorrect, 11% Did Not Know

Florida: 72% Correct, 15% Incorrect, 11% Did Not Know

Current Situation

INTRODUCTION

Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account? (Less than today)

Nation: 61% Correct, 17% Incorrect, 20% Did Not Know

Florida: 57% Correct, 21% Incorrect, 20% Did Not Know

Current Situation

INTRODUCTION

Buying a single company's stock usually provides a safer return than a stock mutual fund. (False)

Nation: 48% Correct, 9% Incorrect, 42% Did Not Know

Florida: 46% Correct, 9% Incorrect, 43% Did Not Know

Current Situation

INTRODUCTION

FINRA: Do you think financial education should be taught in schools?◦ 89% said yes ◦ 5% said no ◦ 6% did not know /no answer

Financial Literacy Important

STANDARDS

Undertook project of writing standards

Council for Economic Education

STANDARDS

Why Were They Written?

To connect personal finance to basic economics uses choice, trade-offs, incentives, markets and other

economic concepts to discuss personal finance

To focus on economic decision-making for personal finance not simple recommendations

To use examples of financial decisions people face in their daily lives.

STANDARDS

What Are the Standards?

A concise document that explains what students in the schools should know about personal finance and how to use that knowledge

The content is organized and described in the form of standards, which are important topics in personal finance.

STANDARDS

Financial Literacy Standards

1. Earning an Income

2. Buying Goods and Services

3. Saving

4. Using Credit

5. Financial Investing

6. Protecting and Insuring

STANDARDS

Guide

STANDARDS

Guide

STANDARDS

Guide

STANDARDS

Guide

STANDARDS

Guide

STANDARDS

Guide

STANDARDS

1. Earning an Income

Income for most people is determined by the market value of their labor, paid as wages and salaries. People can increase their income and job opportunities by choosing to acquire more education, work experience, and job skills. The decision to undertake an activity that increases income or job opportunities is affected by the expected benefits and costs of such an activity. Income also is obtained from other sources such as interest, rents, capital gains, dividends and profits.

STANDARDS

1. Earning an Income

Income for most people is determined by the market value of their labor, paid as wages and salaries. People can increase their income and job opportunities by choosing to acquire more education, work experience, and job skills. The decision to undertake an activity that increases income or job opportunities is affected by the expected benefits and costs of such an activity. Income also is obtained from other sources such as interest, rents, capital gains, dividends and profits.

STANDARDS

2. Buying Goods and Services

People cannot buy or make all the goods and services they want; as a result, people choose to buy some goods and services and not buy others. People can improve their economic well-being by making informed decisions, which entails collecting information, planning, and budgeting.

STANDARDS

2. Buying Goods and Services

People cannot buy or make all the goods and services they want; as a result, people choose to buy some goods and services and not buy others. People can improve their economic well-being by making informed decisions, which entails collecting information, planning, and budgeting.

STANDARDS

3. Saving

Saving is the part of income not spent on goods or services today or paid in taxes. People save for different reasons during the course of their lives. People make different choices about how they save and how much they save. Time, interest rates and inflation affect the value of savings.

STANDARDS

3. Saving

Saving is the part of income not spent on goods or services today or paid in taxes. People save for different reasons during the course of their lives. People make different choices about how they save and how much they save. Time, interest rates and inflation affect the value of savings.

STANDARDS

4. Using Credit

Credit allows people to purchase goods and services that they can use today and pay for those goods and services in the future with interest. People choose among different credit options that have different costs. Lenders approve or deny applications for loans based on an evaluation of the borrower’s past credit history and expected ability to pay in the future. Higher-risk borrowers are charged higher interest rates; lower risk borrowers are charged lower interest rates.

STANDARDS

4. Using Credit

Credit allows people to purchase goods and services that they can use today and pay for those goods and services in the future with interest. People choose among different credit options that have different costs. Lenders approve or deny applications for loans based on an evaluation of the borrower’s past credit history and expected ability to pay in the future. Higher-risk borrowers are charged higher interest rates; lower risk borrowers are charged lower interest rates.

STANDARDS

5. Financial Investing

Financial investment is the purchase of financial assets to increase income or wealth in the future. People who save have many choices when making financial investments because these investments have different risks and expected rates of return. Investments with higher expected rates of return tend to have greater risk. Diversification of investment among a number of choices can lower investment risk.

STANDARDS

5. Financial Investing

Financial investment is the purchase of financial assets to increase income or wealth in the future. People who save have many choices when making financial investments because these investments have different risks and expected rates of return. Investments with higher expected rates of return tend to have greater risk. Diversification of investment among a number of choices can lower investment risk.

STANDARDS

6. Protecting and Insuring

People make choices to protect themselves from the financial risk of lost income, assets, health, or identity. They can choose to accept risk, reduce risk, or transfer the risk to others. Insurance allows people to transfer risk by paying a smaller price now to avoid the possibility of a larger loss later. The price of insurance is influenced by an individual’s behavior.

STANDARDS

6. Protecting and Insuring

People make choices to protect themselves from the financial risk of lost income, assets, health, or identity. They can choose to accept risk, reduce risk, or transfer the risk to others. Insurance allows people to transfer risk by paying a smaller price now to avoid the possibility of a larger loss later. The price of insurance is influenced by an individual’s behavior.

STANDARDS

Benchmarks

The benchmarks describe in detail what students should know about a standard and how to use or apply that knowledge.

144 benchmarks (average of 24 a standard)

Within a standard, they are sorted for what should be completed by 4th, 8th, and 12th grades

STANDARDS

Distribution of Benchmarks by Financial Literacy StandardBenchmarks

Standards 4th 8th 12th Total

1. Earning an Income 9 11 8 28

2. Buying Goods and Services 7 6 7 20

3. Saving 6 9 8 23

4. Credit 4 8 13 25

5. Financial Investing 2 7 13 22

6. Protecting and Insuring 4 8 14 26

Total 32 49 63 144

STANDARDS

Designed to be evergreen◦ No factual knowledge

Deposits insured up to $250,000◦ Mechanics not specifically addressed

How to buy a stock How to write a check

Designed to provide deep understanding

Key Things to Remember

STANDARDS

Conclusions on Standards

Oh, my. It would seem that word has gotten out that

financial literacy will have to be taught… You will be inundated with materials!

(Disclosure: I do workshops with materials.)

How do I judge?

1. Consider the Source for Conflicts of Interest and Qualifications

◦ Who is the author(s)?◦ What are their qualifications as an expert in

financial literacy topics?◦ What are their qualifications as an educator?◦ Is the author(s) affiliated with any group? ◦ Does the group have inherent biases in how

information is presented?

How do I judge?

2. Examine the Content for Accuracy, Completeness, as well as Biases

◦ Does the curriculum meet standards?◦ Is the factual knowledge presented in the

materials accurate?◦ Does the curriculum advocate a particular

financial strategy?◦ Does the material promote independent decision

making?

How do I judge?

3. Review the Pedagogy◦ Does the material use a variety of pedagogies? ◦ Address a variety of learning styles?◦ Is the curriculum designed for the appropriate

grade level or audience?◦ Are the pedagogies age-appropriate?◦ Does the author make an effort to provide

stimulating and real-life examples?

How do I judge?

3. Review the Pedagogy◦ Does the material use a variety of pedagogies? ◦ Address a variety of learning styles?◦ Is the curriculum designed for the appropriate

grade level or audience?◦ Are the pedagogies age-appropriate?◦ Does the author make an effort to provide

stimulating and real-life examples?

How do I judge?

4. Look for Assessment◦ Does the curriculum come with appropriate

assessment mechanisms?◦ Do the assessment mechanisms test various

cognitive levels?

How do I judge?

5. Find the Evidence of Effectiveness◦ Does the curriculum result in a change in student

knowledge?◦ Does the curriculum result in a change in student

attitudes?◦ Does the curriculum result in a change in student

behavior?◦ Does the curriculum increase the teacher’s

confidence in delivering content by providing appropriate background?

How do I judge?

CCSS.ELA-Literacy.RH.6-8.8 Distinguish among fact, opinion, and reasoned judgment in a text.

CCSS.ELA-Literacy.RH.9-10.8 Assess the extent to which the reasoning and evidence in a text support the author’s claims.

Student Assignment!

Thank you!