Monthly Archives: August 2014

Prepaid Debit Cards: A Primer

I thought it was time to learn more about prepaid debit cards and understand why they are one of the fastest growing financial products.  Here goes:

  • The elevator pitch:  “With all of the functionality of a debit card, but prohibiting consumers from spending more than they load on the card, this product provides a convenient financial service with significant benefits and control.”  (Huffington Post, TD Bank SVP)

Continue reading

Developing Financially Savvy Students: Comparing the Credit Card Comparison Sites

WSJ out with article earlier this week about inherent conflicts of interest with credit card comparison sites.  When your largest source of revenue comes from the products you are trying to compare, you better have a Chinese wall between advertising and editorial.  Well, surprise, surprise, that Chinese Wall disappears when revenue pressures hit.  

Over the past year, the mutually beneficial relationship between a number of card issuers and comparison sites has turned icy, with heated conversations between the parties, banks cutting off ties with some sites and, in one case, a lawsuit.  Interviews with a dozen card-comparison sites reveal that as card-issuer pressure ramps up—with increased requests for sites to delete or change some information—most sites are giving in to their demands. Continue reading

What’s New in Financial Literacy?

  • Behavioral finance experts weigh in on how to change those bad money habits (The Week):

    “A more promising solution to fight the urge for instant gratification? Take advantage of technology to keep you in check.

    “More and more financial service providers are offering simple tools for tracking and controlling spending with alerts, customizable spending limits and the like,” Zinman says. Some credit card companies will even send you an alert each time you use your card — reminding you how much you’ve spent so far, and how much closer today’s purchase will get you to your limit for the month.”

Continue reading

What Do Students Need to Know About the FAFSA?

Like an author writing a book, a curriculum developer also starts their process with that all too intimidating “blank sheet of paper.”  That is one of my favorite aspects of helping build out NextGen’s Personal Finance curriculum.  I usually start the process by thinking “what are the most important takeaways that students should have after completing this lesson on….” So, knee-deep in the Paying for College unit, I thought that given its importance, FAFSA deserved it’s own lesson.  

Here are the key questions, I hope students can answer after completing this lesson… Continue reading

Lesson Idea: Mutual Fund Advertising

The objective of this lesson is threefold:

  • Teach students about tactics that mutual funds use to sell their product
  • Expose students to language of investing through ads and investment research
  • Students learn to discern marketing tactics from performance of the product

Activity 1:  Students take a few minutes to review the two print ads and one TV ad.  Ask them to hone in on the key marketing message for each ad.  How is the advertiser trying to sell you on their product?  Discuss with a neighbor before discussing as a class. Continue reading

The Changing Nature of Investing: How Should We Rethink Teaching Our Students?

I tweeted about this earlier but thought it was worth a broader discussion as I thought about how best to teach students about investing.  This statistic from a Morningstar caught my attention:  

John Rekenthaler stated in a post that indices are dominating fund sales. Some 68%—or $284 billion—of net US mutual fund sales for the 2014 fiscal year were exchange-traded funds and passive while only 32% were active funds.

“The post-2008 pursuit of index funds was no mere infatuation,” Rekenthaler wrote. “Passive investing is now the mainstream approach.” 

Diving deeper there has been a plethora of recent articles about active management’s underperformance: Continue reading

Lesson Idea: Should Your Students Get A Credit Card In College (or sooner)?

One great way to tackle this important question is to have students prepare for a class debate.  It would be best to have students research the position that are naturally opposed to.  So, if they think they want a credit card in college, have them research reasons why they should NOT get a credit card.  

How to get students more excited about this project?  Based on current law, they will likely not be able to get a credit card until they are 21 UNLESS they can convince their parents to co-sign their credit card application.  This debate will be helpful in both bolstering the argument on why they should get a card and also prepare them for objections they may get from their parents.  

Here are some articles/videos that you can assign groups of students to prepare for the debate:

Continue reading