Wednesday, February 3, 2010

Strangers in the classroom

I regularly receive e-mails from people who recognize the terrible need for improving financial literacy among young people. Most of the people who write say they want to volunteer their time and teach financial literacy in high school. I am very impressed by how strongly people feel about financial literacy and I have been thinking of ways of harnessing that willingness to help and the generosity of volunteers. Financial literacy is much in need of promoters and organizers. It is a very important issue and we need to work for it.

While I want to encourage everyone to get involved with the schools, I am reluctant to recommend that individual volunteers teach financial literacy in schools, for three main reasons.

1. Contrary to popular belief, it is very hard to teach. I have been at Dartmouth for eighteen years now and I can tell you that every year I have to do a lot of preparation to be able to stand in front of my students and engage them. The first day of class normally ends with a room full of students with baseball caps expertly placed so that I can’t tell whether they are listening or are sound asleep, and a few anxious faces who have been checking their watches for the last 61 minutes of the 65-minute class, and who exit the classroom faster than Speedy Gonzales. And these are the economics students who have elected to be in these classes! It takes a while to filter through the stone faces beyond the first row, and even after years of grueling practice, I barely manage to get through the first half of the term without witnessing a decimated class. It does help to have an Italian mamma instinct, to be armed with limitless patience and unbounded optimism, and to be able to resist the temptation to hang myself from the maple tree outside the window after explaining a concept five different ways and realizing that it is still unclear. If somebody thinks they can just show up in the classroom and teach, I can assure you, it hardly works this way. If you want to teach, you have to be prepared to be trained or the students will “train” you (meaning you will feel like a train has run over you by the end of the class).

2. Individuals seem to have many different ideas about how to approach the instruction of financial literacy. As I have mentioned in previous blogs, financial literacy is a topic grounded in economic and finance theory and it should be taught accordingly. But what I often hear suggested are topics like how to balance a checkbook or how to buy stocks. We need to stay away from these narrow “how to” lessons of financial literacy, as the objective here is to prepare people to understand and navigate a world of complex and changing financial markets. We can’t just tell students how to get from point A to point B; we need to teach them to use a compass. This is no small task and in my view we need a curriculum that teaches the fundamental principals that combine to make one financially literate. Such curriculum development is best done at the national level; inflation does not decrease the value of money differently in Vermont than it does in California or Texas. And while Vermont is much colder than the southern states, it does not freeze how prices work. Once we have developed such a curriculum, there might be a way to engage volunteers in the instruction of it.

3. It’s not always clear how well qualified individuals are to teach financial literacy. In several cases, I have found that college freshmen have set up web pages to teach financial literacy and are eager to go to high schools to offer some classes, even though they may have taken only one introductory course in economics. This is the curse of economics. I have found that many people feel very confident about their views of how the economy works even if they have never read an economics textbook. In other cases, I’ve gotten the impression that people are intent on delivering wisdom and strong values acquired over many years of experience. On the one hand, I am very attracted by the passion that this topic engenders, on the other hand, the dissemination of a sound and consistent knowledge base should be our first priority.

I do not want to discourage anyone who is interested in the pursuit of improving financial literacy in schools. Quite the opposite! Please be involved; do not let the school in your own district not pursue financial literacy, not teach these courses! But perhaps the best role is to be an “ambassador of financial literacy”; be an advocate for financial literacy without going directly to the blackboard. We normally do not let strangers into the classroom, in any course, not just financial literacy. In my view, teaching financial literacy requires a deep knowledge of economics, solid training, and a fair dose of humility. My students would also say that a thick Italian accent helps keeps you awake, but in this case, even that might not be enough!


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Frances said...

I would like to give a little hope to those who want to teach financial literacy. Through the Extension Service programs, I have been able to teach an excellent program called Real Money, Real World. This program is based on research and can be adapted for local costs. It also brings together community members to participate in a "reality" setting of spending a monthly paycheck.

Teaching in a classroom is a challenge that should be for those people who have experience teaching youth or you will find yourselves with a very bored classroom. On top of that, what we as adults understand and experience about money is absolutely different than a child's perspective - even into the teen years. I have found that different school communities, family, and culture beliefs about money make it even more challenging to teach what you think is the most important thing.

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LVTfan said...

The first thing our young people need to understand, imho, is why land increases in value, and what the implications of that fact are for society. They are huge, and we ignore them at our peril.

If that seems like an odd point, it is only because it has been missing from the economics curriculum -- undergraduate and graduate -- for nearly 100 years. Ignorance of these matters has led to a lot of magical thinking, even from people who are well educated.

The textbook for this could be Henry George's landmark book on political economy, "Progress & Poverty." Economics texts mention it, and find no fault with it, but then pick themselves up and move blithely on, unmoved by what they've just presented. (P&P is online in a modern abridgment at and and as MP3's at

I'd also want students to learn about compound interest and net present values, and the many and various implications of these for their adult lives -- that compound interest can work for them, or against them, but it ought not to be ignored. This presents an excellent way to teach them to create spreadsheets. They ought to learn what a car loan looks like, as well as a student loan, a mortgage with and without PMI, credit card debt and payday loan debt.

They ought to become familiar with the Self-Sufficiency Standard studies, preferably for their own state or one with which they have some personal familiarity, and then with the income data for that state, and the state tax codes.

Next, they ought to learn how to fill out a federal and a state tax return, and play with a spreadsheet enough to see whether the much-vaunted tax deductions related to home ownership are relevant in their state and in one from the opposite end of the red-blue spectrum.

Finally, their financial education ought to include full exposure to the concentration of wealth and income in America. They need to know that the top net worth decile holds 71.5% of the net worth (2007 SCF), and the top decile of income recipients has over 47% of the before-tax income. Teaching this in a community college or public urban high school is likely to present different challenges from those facing one teaching it at an Ivy League university -- but I don't envy either teacher!

Pauline said...

I would recommend that people who want to volunteer to help young people understand money better get in touch with Junior Achievement ( JA has a proven track record of improving students' understanding of money, business, and the economy.

JA uses businesspeople as volunteers in the classroom, and gives them the resources they need to teach an effective lesson, appropriate to the grade level. The classroom teacher is there the whole time to deal with questions, problems, or unruly students.

I've been a JA volunteer for four years, presenting a set of six session on Global Trade in a sixth grade classroom each February/March. (I'm in the middle of it right now.) The material I cover isn't about financial literacy per se, but it's part of the larger picture, together with what JA teaches in younger and older grades.

I think JA is one of the best programs out there for teaching students the real-world knowledge they need about business and money.


This is an interestsing challenge and read about it alot. Some is demographics and the way different cultures view money and money management.People go to seminars and generally "feel better" about their finances but do not apply it any better than some one that has not. Part I feel is motivation and a lack of direction and goal setting. Also is the "keeping up with the Jones" theory. I live in southern california and this is definatly an issue.I love your part on needing a compass to navigate.I am a certified Credit Counselor, I help people with their unsecured debt.mainly credit cards which is a cancer to people's finances.I found alot of people do not see the big picture until it is too late.If I can afford min payments i am o.k.Part is pride, i feel it is not about needing help but being smarter with money and getting beyond compound interest.I use a financial dashboard instead of a compass.The Financial Dashboard is a tool designed to track your total Debt Obligations, Asset Values, and Net Worth by date range and dollar value so you can see how your financial picture is unfolding as it happens. The only true measurement of our wealth, or lack of it, is defined by our Net Worth, therefore if you truly want to improve your finances it is mission critical that you remain acutely aware of what YOUR net worth is, so you can begin to move it in the direction you want it to go - up! The Financial Dashboard is the tool to measure your progress toward or away from that objective.Finally I motivate people to interact with their finances by paying them. Money motivates huh? get paid to be make smart financial choices.Also issue a budget relative to their income and a lot of other benfits @ movemynetworth/johnny either way we have a national crisis and together we could rectify this situation keep up the good work
I wish the best,johnny davi

Vernon said...

I would like to agree with Frances' comments and provide some hope. I am writing from the other side of the pond from the UK. I teach Financial Capability (we used to call it Financial Literacy) in all sorts of settings including schools. The UK is generally behind the US in financial education but in recent years a lot more interest and government money has been invested as we begin to recognise the wider benefits to the community of better financial understanding and informed decision making relating to finances. Using a variety of teaching methods, taking account of different learning styles and having some teacher training (pedagogy) as well as specialist subject knowledge is helpful. But keep optimistic and remaining hopeful. We have an organisation inthe (pfeg) which provides schools teachers with the resources and tools for them to be able to deliver basic financial education themselves. Regards Vernon Fuller Financial Capability Tutor

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