Monthly Archives: November 2014

Question of the Day: How Much Money Do You Need to Be Happy?

This might be an interesting question to pose to your students who may/may not have a context to answer it.  Another way of posing the question is to ask what “things” they think they need to be happy and estimate the cost of those items.  I predict you get a wide range of answers; from “not much” to millions of dollars.  This question provides a good introduction to the concepts of understanding needs and wants (see NGPF lesson here) and also the extremely tenuous link between money and happiness.

So, what does research say to this question?

  • CNN survey came up with a median of $80,000 (CNN):

When asked how much would do the trick, just over half of people surveyed in CNNMoney’s American Dream poll said it would take less than $100,000.  Nearly a quarter of the people who took the poll, conducted by ORC International, said between $50,000 and $74,999 would work.

  • Princeton research found a number close to $75,000 and differentiates between life satisifaction and happiness (Kahneman and Deaton):

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Question of the Day: Why Don’t People Give More?

In light of my recent post about generosity at the check-out line and the upcoming Thanksgiving holiday, this NY Times column caught me eye as it asked that basic question.   Might be a good question to ask your students, “Since giving to others makes us feel good, why don’t people do it?” or even ask them what percentage of people give way 2% or more of their income?

Here is the stat that stood out from the research findings:  More than 85% donate less than 2% of their income so only 15% give away more than 2% of their income.  Why is that?  The research comes up with a few explanations: Continue reading

Activity Idea: What is Financial Innovation?

The pace of financial innovation has quickened which makes it all the more imperative that we teach students how to assess the new products being launched everyday.   I like to ask my college-aged nieces and nephews what they are using since young adults tend to be the early adopters for such services.  That is how I found out about Venmo, which is a mobile payment system which my nephew was raving about.

What better way to engage students in this topic then to have them conduct research on financial innovation by doing a “deep-dive” on a new financial product that is relevant to them.  This deep-dive can include online research, using the app (if the innovation is indeed an app), student/parent surveys, interviews with company management…you get the idea.  The end product will be a five minute presentation that:  1)  Introduces the product  2)  Highlights its product features  3)  Identifies its benefits  4)  Identifies its shortcomings/concerns 5)  Thumbs up/down on the product:  would they recommend to a friend.

So, where to turn for examples of financial innovation?  Here are a few articles that should be helpful in giving students some ideas about the “hottest” financial innovations today: Continue reading

Activity idea: Teaching Students to Be Savvy

Consumer Reports published their Naughty and Nice List for 2014.  It called out companies who had run-ins with regulators due to practices that can be best be described as anti-consumer:  Here’s a sample:

Hearthware Inc./NuWave

Hearthware markets the popular NuWave infrared oven, sold primarily by infomercial (but also at stores such as Walmart and Bed Bath & Beyond). The company has an F rating from the Better Business Bureau for misleading consumers regarding exorbitant shipping fees. We checked out the site and discovered that shipping fees can exceed some of the accessories themselves.

Activity idea:  Have students conduct online research of one of the companies that appear on the Naughty List and document/provide evidence of the practice being cited OR have students do research on their own to identify their own “naughty” companies.  Hint:  Doing a Google search on “consumer fraud” is a good starting place.

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Check out the NGPF Lesson on Scams, Frauds and Identity Theft

Financial Literacy: In the Schools

Round-up of activities happening around the United States:

  • Students in Eau Claire, WI area participated in Real Life Academy recently (WEAU.com):

Kristan Motszko with the Eau Claire Area School District says no matter how much money students make when they are older they are still going to have to deal with money.  “I don’t think our financial literacy problem is going away, if anything statistics show it’s getting worse. More and more Americans are living pay check to pay check,” said Motszko.

  • Econ teacher, Pat Curran at Mandarin High School (FL) noted how technology has increased the importance of financial literacy (WJCT.org)

“I think it has become more important over time because the financial literacy has gotten more complex,” he said. “Technology is making financial institutions much faster because of the technology, knowledge is power. If the kids are not prepared when they walk into a bank, if they haven’t done their research, it makes it more difficult for them to make an intelligent decision.”

  • Hmmm…what’s wrong about this comment that I saw in a news article?  Teacher in front of class saying “How many of you have heard of Sallie Mae?  Us older people have.  Sallie Mae helps pay for college.”

My correction:  Sallie Mae lends you money so you can pay for college.  You need to REPAY those loans and before you borrow for them you should look at federal loans first.  I hope this was covered too…

  • Manchester (NJ) high school students teach elementary school students basic money lessons (Patch.com)
  • Elon University student teaches local high school students important financial lessons (The Pendulum)

“This isn’t like a lecture. It’s coming from a much younger voice,” he said. “That’s the most important thing. They can associate with us at a much greater level.”  The program emphasizes the value of a college degree by providing students with a breakdown of average starting salaries of those with a high school degree, community college degree and four-year college degree. Students then contextualize these numbers by exploring their own current household budget and spending patterns–an activity Zimpelman said demonstrates how furthering their education will truly impact their financial future.

  • Purdue University instructor notes how students have changed over the years (Purdue Exponent):

Having taught at Purdue for 20 years, Chakravarty notes a distinct change in the student population – and a positive one at that.  “In my own world here at Purdue, we do see a marked difference of preparedness of students as they float through the process over the years,” he said. “Our students come to class nowadays better prepared and better informed … (compared to what) you used to see even 10 or 15 years back.”

Chakravarty said he builds on students’ basic understanding by instilling a sense of offense and defense when it comes to themes like consumer credit, insurance and retirement.  “I sort of break it down into an offense (and) defense framework, so I say you need both offense and defense to come out ahead in this game of life we are playing,” he said.

Case Study: Millionaire or Not?

The story appeared a month ago and I read it, scratched my head, wondered if it was true and moved on.  The headline “A 27-year-old millionaire reveals how he built his wealth” made for effective “click bait” given the public’s fascination with millionaires (check out my list of best selling personal finance books and you get the idea).  Well, it turns out it wasn’t true.  I thought it might be fun to have your students play forensic accountants to see if they could find the errors in the story.  This case study is a good one because it incorporates concepts such as investing, net worth, mortgages, rental property, savings rates and “you can’t always believe what you read.”

Here is a summary of the financial facts presented: Continue reading

Video Resources: Credit Cards

Given the popularity of video among high school/college students, I will start featuring informative and short videos that are timely too.  Videos also serve as a great way for students to get familiar with financial product “lingo.”  This week the videos below deal with the right time to give kids a credit card, Apple Pay and technology changes coming to address security shortcomings with credit cards.

  • Checking and credit cards for teens (WAVY.com, 4.5 minutes)

Your teenager may think they’re responsible enough for a checking account, or perhaps a credit or debit card too, but is it a good idea? Lewis Smith from BayPort Credit Union discussed how to help your teenager get a smart start with money management, and shared some of his personal experiences.

  • Pitfalls of getting credit card for a child (CBS, 1.25 minutes)

But a question that will almost always come up when shopping and spending money with a teenager is this: What is the right age or time for a student to get their first credit card?

  • What is safer?  Apple Pay or credit cards? (Denver 7 News, 2.5 minutes):

Continue reading