As adults and as educators, we are all aware of the importance of teaching financial literacy to today’s crop of students. Even if time isn’t necessarily allocated for financial literacy lessons throughout the day, especially considering how many of us were short-changed in that area as kids, we understand how imperative it is that we educate today’s children to a much greater degree than we were at their age.
In service of that goal, our blog today will hone in on that very idea and discuss a few ways that we at Explorer Hop believe you, as an educator, can incorporate or include financial literacy lessons in your classroom.
Let’s get started.
Leverage time off at the end of a class to teach risk versus reward. In finance, although likely most crucial in the area of investing, risk, reward, and the balance of those two principles is a vital consideration for anyone wanting to see their money grow.
How much of your hard-earned money are you going to invest in [blank] stock in the hopes that it turns into eventual profit? Are you going to invest your money into a significantly less volatile space like Apple or employ the old adage “go big or go home” in your decision to invest in cryptocurrency and hope for potentially higher rewards?
Those are both questions that regular, everyday people battle with consistently, which typifies why risk versus reward is such an important lesson in financial literacy.
Here is a simple way to teach this concept to your students. Suggest to your class that they can have the opportunity to earn five minutes of time taken off the end of the school day early in the week (say, on a Tuesday) if they correctly answer a question you pose. Before posing the question though, indicate that answering the question incorrectly will mean that they, for instance, have to stay in class right until the bell rings for the following two Fridays. Without explicitly turning this time into a financial literacy lesson, this exercise will begin teaching your students about the balance between risk and reward. Your students will have to weigh if they want to risk the negative possibility against the potential reward of time off at the end of class and make a decision, much like they will later on in life from a financial perspective as they learn how to invest. Ask for a vote, and proceed whichever way the majority of your class votes. Repeat this exercise as much as desired to continue integrating this key financial literacy lesson in your classroom.
This exercise is simple. Ask your students for some expensive items that they look forward to buying in the future. As they list off somewhere between five and ten items, find their average cost online. Then, get your students to hypothesize how much these five or ten items might cost, off the top of their heads. The goal of this exercise, once they give you their ideas of how much the things they desire – like a house, a particular car, a boat etc. – cost, is to give them an idea of how many paychecks it would take to save up for that item.
Let’s say, for instance, that you use the 50/30/20 budgeting rule popularized by U.S. Senator Elizabeth Warren as your starting point, meaning that you spend 30% of your post-tax income from every paycheck on “wants”. Find the hourly salary of the average job in your province/city/state/country and explain to your students that on that salary, it would take [blank] number of weeks or [blank] number of paychecks to save up for [blank] item. This activity will work to give your students a reality check with respect to how long it takes to reasonably save up for the products and items they desire because it is both impossible and unwise to spend all your money on these “wants”. Hopefully, this also provides your students with some real perspective on just how much money it takes to buy the trip to Disney World they want to go on or the fancy car they want to drive, allowing them to better understand the principles and importance of saving and budgeting your money.
Use extra recess time as a means by which to teach your students about income tax and income tax refunds. We all hate it as adults, but it’s a necessary evil we all encounter: tax season. Understanding how taxes work and how to do our taxes is important in adult life, but it should also be something we pass on knowledge about to today’s students. Now, we aren’t saying you should be doing your taxes in class and having your students watch but here is a way you can use extra recess time to teach your students about income tax and tax refunds.
Start with a self-discerned income tax percentage. For illustrative purposes, we’ll use 20%. Every day for two weeks, give your students the opportunity to earn or “win” extra recess time for the day – say, five minutes – by answering a question you give them. If they win the time on a particular day, give them the five minutes initially and then take back one minute as “income tax”. That’s not where the activity ends for that day, though. Suggest that they can choose, if they want, to give back more of the time they “won” now, for a potential reward on the final day of the two-week period. Continue this exercise for two weeks, continuing to take one minute off of every five they win as “tax”. If they don’t ever give back more of the time over the course of two weeks, explain to them the concept of income tax and how you, as the “government” of the class, were able to do this.
However, if they do choose to give you extra time back throughout the period, give all the extra accumulated time back to them on the final day of the two weeks as an “income tax refund”. Anything beyond the 20% figure, which you are already collecting by removing one minute from every five minutes they win over time, can be given back to your students on the second Friday as a “refund” and this will help teach your class a little bit about how income taxes work over a period of time. All told, this could be a fun and engaging way for you, as an educator, to integrate this very important financial literacy lesson into your everyday classroom.
That’s all for now, folks. We hope that you are able to implement some of these strategies in your classroom because we truly believe in the ideas presented above.
Are you looking for more resources for yourself as an educator after reading this blog? Check out Explorer Hop’s Global Educator’s Circle, where we connect educators from all over the world to help each other grow. With benefits including free training and financial literacy workshops for teachers, we believe our Global Educator’s Circle is a great resource for you.
We wish you the best of luck with shaping the minds of our next generation of young minds and leaders!