My First Paycheck - Now What?

In Preparing students for real-world financial success, Lisa Nielsen states,

“Students often begin pursuing employment as early as high school, but they are not taught best practices when it comes to managing their money.”

Many people I talk to don’t realize this until we are discussing it. Then we talk about how we learned or when we were taught. Many were taught by their parents but now with so many children living in single parent homes or being brought up by grandparents, I think this real life skill is falling by the way side. I learned a hard lesson about credit cards when I graduated from college and maxed out my new credit card. No one taught me how credit cards worked and my parents never had one so they couldn’t teach me. I was thrilled that I was able to get something that my parents didn’t. Luckily, when I got married, my husband had more money sense than I did and got my finances on track.

Here are some skills that I think we need to teach our students. These can be incorporated in lessons for reading, math, social studies, social skills, and/or career preparation.

1. Bank Accounts - how to open up checking and savings accounts, what bank fees are involved, how to balance the accounts, withdrawing and depositing money, penalties

2. Banks/Credit Unions/Rent to Own/Check Cashing Companies - Look at the different types and compare

3. Loans - loan applications, fees, final payoffs, interest payments

4. Health insurance - benefits, costs, comparison shopping

5. Car insurance - benefits, costs, comparison shopping

6. Credit cards - reviewing statements, annual fees, interest charges, other fees

7. Pensions/Retirement - how does the system work

8. Taxes - state, federal, sales

9. Buying a Car - comparison shopping, taxes, maintenance costs, other costs

10. Renting an Apartment/House - comparison shopping, fees, utilities, deposit, maintenance

11. Buying a House - costs, fees, different types of loans, interest, final payoff

12. Budgeting - How to set up a budget, look at expenses and income

These are just some of the things I wish someone had taught me so I didn’t have to learn the hard way. I believe by learning these things, students will be more successful in life. What other financial life skills do you think students need to learn before they leave school? Please share.

Image: 'Dollar in Piggy Bank'
http://www.flickr.com/photos/59937401@N07/5857027687
Found on flickrcc.net

Balancing and Analyzing

Thanks to Kyle Dunning for sharing this great graphic with me called: College in America (see the graphic below). I found all of the statistics very interesting to see but a couple of them really bothered me more than the others.

· 1 out of 5 students fail to properly balance a checkbook.

· 1 out of 2 students fail to correctly analyze prose like news editorials.

It always bothers me when people can’t seem to manage their money. I have seen too many people get in trouble because they can’t balance a checkbook or manage their money. I hope by the time our students get into college, they will know how to use a checkbook and the scoop about credit cards. I mean, how many of us get tons of credit card applications in the mail every day? This flash tends to excite students who do not have any money. Every year, I spend a couple of weeks and we practice carefully on how to use a checkbook for our class. They take their class salary (which they get every week) and deposit it into their checking account. They write out checks for pencils, paper, breaks for water/restroom, passes to the library, time on the computer etc. Once they get used to using it and feel comfortable with it, I stop doing direct instruction on it. At the end of every month, they have to balance the checkbook and make sure that it matches the bank statement that I have (I enter their amounts in a spreadsheet at the end of every week). This is a great habit for them to get into and they learn the importance of doing this.

As for news editorials, my students think that the “squeaky wheel” must be telling the truth. They need to learn how to take this information and analyze it. This is so important especially around election time. Too many times we are teaching our students to conform and fit the mold, that we forget to teach them to think. They need to figure out what they believe in and why they believe this way. “Just because” and “they say so” is not a good enough reason. I think debates on pros and cons would help students learn how to back up their opinions. The school system needs to work on this skill more than it does. If it doesn’t, when these students get into positions of power and hold our future in their hands, we will be in big trouble.

Please look below and the graphic and enjoy! Thanks again Kyle!

Source: Online Colleges and Universities

What statistics stand out for you and what does it say to you?

Posted on the Successful Teaching Blog by loonyhiker (successfulteaching at gmail dot com).

Unwanted Teenage Pregnancies

Now before you roll your eyes and move to another post, this is not a discussion about the pros and cons of abortion so don’t worry. I’m not going to get into that discussion.

According to the U.S. Teenage Pregnancy Statistics: National and State Trends and Trends by Race and Ethnicity, each year, almost 750,000 teenage women aged 15–19 become pregnant. In 2003, women age 14 and under, there were 17,340 total pregnancies.

I believe that we as a society are too accepting of this situation. When I was growing up, if a girl got pregnant, other students whispered about it and it was a major scandal. Pregnant girls were not even allowed in regular schools which tended to discourage the desire to get pregnant. Now, being pregnant is nothing major for students. It is accepted by students, parents, schools, and most of society. Sure, lots of adults think it is an outrage but they still shrug their shoulders and forget about it.

Many of my students saw getting pregnant as a status symbol. They felt more grown up then their peers. The girls got a lot of attention from friends and teachers and the boys would brag about how many children they have fathered. Since many of my students were on welfare already, there was no need to discuss child support. In fact, I had one student’s parent tell me that one more child actually helped them get more money each month.

I had a fourteen year old girl in my class who was pregnant. She was too tired to do her homework each night, she needed to eat in my class (which is against the rules) because she was nauseous all of the time, she slept in my class because she was tired, and she was moody and disrespectful at times because of her hormones. Of course when she suffered the consequences for her actions, she became irate and told me how unfair I was. According to her, I was supposed to allow her to break all of the rules because she was pregnant. I told her that she made these choices and would have to suffer the consequences and that I would stand fast to the rules. At this time, she told me that she didn’t make any choices and that she was just pregnant. I explained that when she chose to have sex, getting pregnant was a consequence of her actions. Since she made that choice, she still had to follow my rules. Eventually she went to a Teen Parent program until she had her child. Then she returned to my class.

Now I’m not sure there is anything we can do about this whole situation but I think we need to bring it out more in discussions and topics. Since teaching about birth control, sex, and abstinence is usually frowned upon in schools, maybe we need to discuss pregnancies and the pitfalls for teenagers. We need to discuss the cost of having a child and raising a child. I’m not sure that anyone ever really sits the students down and talks to them about this.

I did a really fun and enlightening activity that really opened my students’ eyes. It took a couple of weeks to complete but it was well worth the time.

First, I had them decide if they were going to get married and how many children they were going to have.

Then we began to find out how much it would cost for them to have the lifestyle they desired. I had them go through the newspaper to find a house that they would like to live in. I had a realtor talk to my students and help them figure out what their monthly payments might be. They also had to find out how much homeowner’s insurance would cost for this house.

Using the newspaper, they also found a car they wanted to buy and drive. An insurance agent helped them figure out how much their insurance would cost for that car.

Then we wrote out a monthly budget for their desired lifestyle. We had to estimate some costs and even had to call the power company to find out the cost for their house. They added in food for the whole family, clothing for the whole family, gas for their car(s), and recreation for the whole family also.

Now I know this was a pretty rough budget but it still gave them an idea of what their expenses would be like if they lived they way they wanted to live. Many still didn’t have a problem with the monthly amount they needed because they couldn’t relate it to real life.

The next step was for them to find a career they would probably have and find out the yearly salary. They broke this down into monthly wages. They then learned about federal and state taxes as well as social security that are taken from their wages. This was a shock to them! That is when it hit that their check did not cover their desired lifestyle!

Then they were allowed to adjust the number of people in their family (namely the number of children), and recalculate food, clothing, and recreation amounts. When that really didn’t impact the budget enough, they looked for other houses and cars. Finally one girl said, “I’m going to be living in a cardboard box, unmarried, with no children!” That is all I can afford if I don’t finish school and get a good job!” Bingo! The light bulb was turned on!

Another activity we have done was to figure out the cost of having a child and raising it until it turns 18. We added in hospital costs, new baby costs, diapers, baby food, baby furniture and then clothing and food as the baby grew up. That was another enlightening activity.

I believe we need to do a better job of educating our students about pregnancies and the consequences later in raising these children. I don’t want to talk about the morality of getting pregnant or not but would rather show them the financial impact on their lives. I felt I was very successful with these activities in order to do this.

Do you do anything to enlighten the students about this situation? If so, please share.

Original image: 'pregnant silhouette' http://www.flickr.com/photos/18773952@N00/144905384 by: mahalie stackpole