Education in personal finance is on a tear — and there’s a payoff
Education in personal finance is on a tear — and there’s a payoff
Financial literacy seems to be on its way to becoming a standard part of K through 12 education. Seven states passed laws or made regulatory changes this year requiring courses in the subject, according to a count by the Council for Economic Education, bringing the total to 30.
In the Commonwealth of Virginia, a law requiring the course was passed back in 2005. At a recent econ and personal finance class at Hayfield Secondary School in Alexandria, outside of Washington, D.C., students are learning about entrepreneurship, starting with some history.
“Who was the first American woman to be a self-made millionaire?” asked teacher Sharon Paul.
The answer is Madam C. J. Walker, the daughter of formerly enslaved people who marketed her own hair products more than a century ago.
Throughout the course, Paul also teaches about investing, financing a home, scholarships and college loans. She used to teach math, but made the switch to econ and personal finance a decade ago.
“I love it because they need it,” Paul said. “And they know they need it.”
There’s research that shows students who take courses in financial education make smarter decisions about money.
“If a student decides to go to college and take out loans, they tend to take out more public versus private loans, which are typically lower interest,” said Christopher Caltabiano, chief program officer at the Council for Economic Education.
They also tend to have higher credit scores and are less likely to default on all sorts of loans.
“Financial literacy today is like reading and writing. You need that basic knowledge to be able to understand the world around you and make good decisions,” said Annamaria Lusardi, a senior fellow at the Stanford Institute for Economic Policy Research.
At Hayfield Secondary, junior Furqan Shah said the class has given him a better understanding of financial aid.
“We got a full view of how much college really is. It’s a lot of money,” said Shah.
For the entrepreneurship lesson, the students are tasked with launching imaginary businesses selling cupcakes. It’s meant to get students thinking like entrepreneurs and to teach them about the economic concept known as factors of production — all the resources that go into creating a good or service. At the end, they’ll present their businesses to the class.
“So basically you need to convince us — the class, future possible investors — to give you some more money,” said teacher Sharon Paul.
To start, they have a budget of $80,000. They have to decide what to spend it on: extra large refrigerator or a smaller one for half the price? How many employees should they hire, and when will they work?
One group debated their store’s hours. “So, 8 a.m. is our opening time,” said senior Ajanae Massenburg.
Another member of her team suggested closing at 8 p.m. “Mmm, that’s a long day,” replied Massenburg. “Girl, have you ever worked an 8-to-8 shift?”
Massenburg had a summer job working at a fast food restaurant. She said that — along with her financial literacy class — has given her a sense of how businesses work.
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