Continuing Personal Financial Literacy Into Middle School
Posted on September 29, 2008
Last week, I discussed a game I first introduced two years ago; one that parents could use to teach their children financial responsibility. In that article, I suggested that the state fund a pilot program to explore incorporating the Magic Money Game into the school curriculum for all students. With a mandate from the legislature to teach Personal Financial Literacy, this could be a great opportunity to start in kindergarten or first grade and continue the education through high school. The game revolves around treating school as a child’s job, paying them for attendance and performance and then helping them manage the money they earn. Imagine the learning opportunities this game could provide. As with real jobs, it could be used to teach children that they get paid for the days they attend school (work), but not for the days they miss school. In the elementary years, only the basics need be stressed; long-term saving, other savings for special purchases and pocket change for spur of the moment spending. Small pay raises could be implemented annually for passing grades or exceptional performance. Small fines or docked pay could be the consequences for unacceptable behavior.
As the children get older and earn more money, they could be introduced to our capitalistic system. In middle school they could take turns operating a small store where they could use their “own” money to pay for pencils, paper or other needed school supplies. Slowly they could learn how businesses work and why they need to make a profit to stay in business.
The coins they received in elementary school could be switched to bills when the children reach middle school. Eventually the money in the “Savings” containers could be used to open savings accounts with a bank or at the school. As they continue making deposits, they could watch their savings grow and be taught about earning interest on their money. They could look forward to their monthly statements and track their progress.
The effects of credit could be introduced. Loaning them a week or two week’s pay to buy something they want today and then withholding future pay until the loan is repaid could be a valuable lesson. In real life, isn’t that what happens? You repay loans with payments taken from tomorrow’s income. What a valuable lesson if children could learn that buying on credit means they will have to give up part of their income until the loan is repaid…with interest. Many adults still haven’t learned this lesson.
Graduation from elementary to middle school could be treated as a promotion and coupled with a big pay raise. Whatever they’ve been “earning” in elementary school playing the Magic Money Game might be doubled when they enter middle school. Children moving from the nurturing environment of elementary school to hallways filled with raging hormones in middle school can be as traumatic as their first day of school was. It’s much like the apprehension that comes with a new job or big promotion as an adult, so it should be rewarded accordingly.
As mentioned last week, it’s not the amount of money, but the principle that’s important. Whatever a student has been receiving in elementary school, doubling this amount equates to a big raise, but it’s important that the children continue to receive guidance on the proper allocation of the money. By middle school, they are old enough to understand the concept of charitable giving, so encourage them to set aside part of their income for church, civic or other charitable organizations.
Change the savings for “toys” in elementary school to “special purchases” in middle school. With more discretionary funds to spend, expect the children to make some foolish purchases. Within reason, let them make their financial mistakes and suffer the consequences. There’s no better teacher than a bad experience.
As their long-term savings continue to grow, young people will be able to learn the effects of investing for the future. Teachers and parents can talk all they want about retirement savings, but at this age, in their minds, they’re never going to get old. At least they will be learning how saving a little each week for a long time can add up to significant money. This could also be a good time to explain that these savings will continue to grow as long as they are in school, but they will have to graduate high school in order to get the money. Explain that it’s like Social Security; you pay in all you life, but you have to reach retirement age to get it.
The money being put into the “special purchases” savings can be used to help them understand the concept of saving for more expensive items instead of financing them. This will allow the children to experience the excitement and anticipation that comes as they get closer and closer to being able to make that “special purchase.” Contrast the euphoric feelings that come with finally having saved enough to make a purchase with the dismal feelings that come with doing without while repaying a loan. The difference is dramatic. This experience can be invaluable in later years when students get their first credit card.
Next week we will continue with ways the game can be used to prepare high school students for college and the workplace. In the brief space allotted to this column, all I can do is touch the high spots. Naturally, a curriculum based on this concept would be much more in depth. Lessons that would keep students excited and learning meaningful Personal Financial Literacy wouldn’t need to take more than a few minutes each week.
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You are absolutely right, not only should financial education begin in elementary school, it should continue through middle school and into high school. We teach math every year, right? We teach foreign languages every year. It takes years to master a concept, and financial literacy isn’t any different.