If you were designing a course in Consumer Math

[Joan.of.the.Arch]

If you were helping to design a very focused course in Consumer Math with the goal that the adults be better equipped to make good money decisions for themselves (including not being cheated or cheating themselves!), what are some of the things you would want covered? Let's say the course is for high schoolers.

[cptacek]

How to figure how much interest you would pay for different interest rates and different terms. And actually go to a bank to get loan terms and have them read the contracts and figure out the formulas from there.

How to create an amortization table in a spreadsheet. And how to figure out how much they save on a loan if they add extra to the principal payments.

How to figure out a per unit cost and convert between the two (per lb vs. per oz) so they can compare two items to see which is cheaper.

How to figure out if it is worth paying $x amount for a bundle of long distance minutes or just pay $.0y cents per minute and where the break even point is. (If you talk for an hour and 16 minutes, it is cheaper to buy the bundle...or even unlimited...but if you talk for less than that, it is cheaper to buy it by the minute, for example.)

How to figure out the effective income tax rate for different incomes. Make them graph out what they would actually pay so they can see how the slope changes when you cross the thresholds. Add variables like different write-off amounts. And teach them the difference between a tax deduction and a tax credit (with actual dollar amounts.)

I'll try to think of more...

[Like2Plan]

How about a unit in credit cards and the sneaky ways CC companies lure consumers into big debts they can't possibly pay off in a month and then have to pay high rates of interest until (and if) they ever get caught up. (Pinocchio and Pleasure Island would be great illustrations, eh?)

How about banks who advance folks money and then hit them with high overdraft fees on their checking account?

How about a unit on how to never write a check that bounces? You could include the following techniques:

1. Maintain a minimum balance in your account equal to your biggest monthly bill.
2. Always record your transactions-- Use software such as Quicken where you can program your repeat transactions using scheduled transactions.
3. Figure out how much cash you will need for the week and only make 1 ATM withdraw per week. (And Record it! Use scheduled transactions, if possible)
4. Always reconcile your account with your monthly statement.
5. Use a credit card for all your day to day transactions (do not charge anymore than you can pay off when the bill comes in).
6. As a last line of defense, get overdraft protection.
7. Understand the fees involved with the account.
8. Find out the policy for when deposited funds are available to be spent.
9. Check and see if you qualify to join a Credit Union that may have cheaper fees and may offer overdraft protection from your savings account or linked to your CC for free.

How about a unit on identity theft and how to protect yourself from it (as much as possible).

Then, a unit on saving money and the different categories of saving. Start with an emergency fund and start saving for retirement from day 1 (and the benefits of a Roth and establishing it ASAP). How to calculate your rate of return.

[Like2Plan]

Another unit could be on borrowing money. How to establish good credit. Good reasons to borrow money vs bad reasons to borrow money.

[cptacek]

Are you teaching Math or are you teaching Finances? That may help focus the suggestions.

[Joan.of.the.Arch]

I'm not teaching either one. Often I see here wishes that our schools did more to teach kids personal finances. Just thought I'd like to see some more specific conversation on it.

I, too, think it is probably a good idea to teach at least a few targeted things, both the concepts and the math. It is hard for me to see how kids get out of high school supposedly having had at least ten years of math, yet still choose(?) to not do the math involved in everyday life to get the better outcomes for themselves. Is it math phobia? Is it failure to recognize that, "Yes, here is one of those real life problems that they were always telling me I would need math for ?" I think the math of grade school should be sufficient, but for some reason, it does always seem to "take." Maybe a very focused class in the high school years would have impact.

[KellyB]

I would want to see How to Budget/Build a Spending Plan.
The Importance of Savign 10% (or more) of everything you ever make. Showing young folks how compound interest can work in their favor is a huge incentive for them. (Call the class "Get Rich Slowly - How you can be a Millionaire". Personal Finance basics - Building an Emergency Fund, Staying out of Debt, and setting financial goals for short, medium, and long term.

Boy, I sure wish there was a class like this somewhere I could send my 16 year old to! (He certainly won't listen to sage advice from his dear mother, but maybe from someone else...)

[jIM_Ohio]

Originally Posted by Joan.of.the.Arch

If you were helping to design a very focused course in Consumer Math with the goal that the adults be better equipped to make good money decisions for themselves (including not being cheated or cheating themselves!), what are some of the things you would want covered? Let's say the course is for high schoolers.

risk and return need to be foremost discussions- issue 1a).

implying people should know a 10% return is EXCELLENT and the risk to get that return is this.

larger returns than 10% suggest the risk is higher... private businesses, scams, gambling

and compounding interest needs to be goal 1b)- both compounding in a positive sense (interest and earnings on investments) and compounding in a negative sense (how credit card debt will add up).

[cptacek]

I think it is because there are too many commercials, barbie dolls, and TEACHERS that say "Yeah, I know. Math is hard. It sucks. Be we have to do it." (One of my sister's 5th grade teachers said that to her whole class, and I was BEYOND p'o'ed about it!) That just turns people off and gives them permissions to not think about it.

I also think that kids get too stuck on NUMBERS and not on the process of doing the problem. I taught College Algebra when I was in grad school, and I would give them worksheets on things like factoring. I would just switch numbers and they would have 10 questions that were the EXACT SAME problem except the numbers were different, and they still couldn't do all of them correctly. If you can do one, you should be able to do all the others.

Another thing is that some people are emotional thinkers (or emotional "non"-thinkers) vs. logical thinkers. The emotional thinkers tend to do what feels right, or what they have convinced themselves or someone else has convinced them to believe, instead of evaluating it with cold facts. (see this thread for an example of how plain in your face numbers are ignored because the other person "believes" something will work:
Mortgage Programs
)

[InDebtInDC]

Finance is an abstract concept that some people understand almost innately while others struggle just to grasp the fundamental concepts.

I'm not sure if high school kids understand money, but it wouldn't hurt to teach them some of the basic concepts in finance so they'll have an appreciation when they do start seeing money.

To be honest, I've always excelled at math because my thoughts are very sequential and logical. I know most people's mind works randomly and it's hard for them to manipulate abstract concepts.

I don't see why you can't teach them basic accounting and finance concepts on the high school level. The math itself is very simple compared to multivariable calculus.

[Coleroo]

I've always thought that basic money princeples should be taught in every grade through school.... i realized after high school (where i completed calculus 2) that i knew squat about banking and personal finance!!!

I think they should teach credit card rates, borrowing "good vs bad debt", interest return over time relative to the high schoolers age, debits & credits, basic accounting in relation to personal income management, the principles of saving money over time, and even tax realities for different types of accounts.