Establishing A Young Person’s Financial Awareness

It is consistently amazing – and somewhat disheartening as well – to see how little our youth today know about basic financial matters.  Few really understand what things like “inflation” and “interest” really mean, much less know the meanings of things printed on a stock market page.  This is disheartening when we realize that in no short period of time they will be expected not only to manage their own personal financial concerns but also to make decisions as voters on issues that will affect the entire community and nation.

A teacher was noted for trying to rectify this situation recently.  Instead of boring his class with all the terminology and words, coupled with the mathematics and formulae, he had each student put aside a certain amount of their lunch money each day in a special account.  Then he had class members vote on whether to save it in a regular savings account, buy a bond or shares of stock.  They also were required to select ways to spend money – either using straight cash, a debit card, or a credit account.  Some were assigned to join savings or credit unions, others used credit or debit cards.  Some used Groupons to make purchases from PacSun websites, often at significant savings.  Others were required to pay for items at full price.  Certain students were designated “bankers” and “loan managers” who kept track of the amounts paid and owed through the semester.  Each day one group reported on the status of their “savings” – this was kept in a class record.

After less than a month, students became aware of how much they were paying for the privilege of using credit.  They also learned how easy it was to fall behind if they depended exclusively upon a set income and a fixed interest rate from a savings or checking account.  And they were astounded to learn how much many people were paying for short-term loans and became far more sensitive to the struggles their parents endured for things like paying for the gas they used every day.  Understanding the stock market took longer, but they became interested when they saw how daily lives were affected by small changes that occurred with little fanfare.  It was good to see the increased awareness resulting from a brief exposure to the world of finance.