5 classroom tips to nudge financial knowledge to behavior

My friend Dan Kadlec pointed out in this recent piece that "A growing body of research suggests that money reminders tweeted, texted, emailed or otherwise delivered through social media fall on receptive eyes." Kadlec also noted "A study led by Barbara O’Neill at the Rutgers Co-operative Extension found that Twitter and Facebook messages to adults raised awareness about money issues even if they didn’t always lead to behavioral change."

AmericaSaves are believers as well. This month they heavily promoted their "Pledge to Save" text messaging service. So let's incorporate these techniques into our pedagogy.

1. Remind101 is a safe way for teachers to text message students and stay in touch with parents, and it's free! For the past couple of weeks I have sent a daily text message encouraging my students to set a savings goals, set up a savings account, and regularly contribute to a savings account (ideally through a direct deposit).

2. Calendar reminders in their phones should be incorporated whenever possible. As an example, all of us should check our credit reports once a year for free at annualcreditreport.com. Have the students set a yearly reminder to do so beginning on their 18th birthdays. Another example is to set reminders for key FASFA tasks on important dates as you introduce the students to the student aid process.

3. Parent checklists with resources for students and parents to explore together at home are a great way to share leading edge resources like the CFPB's Paying For College.

4. Classroom Twitter accounts can be used to send encouraging texts to save, links to valuable resources, and financial tips that are relevant to students now. If you would like a few ideas, here is my classroom Twitter account. We also have our own website and Pinterest page.

5. Student Twitter and other social media accounts can be utilized as resources to connect students with where to turn when they have questions after they graduate. For example, when we were working through the consumer protection unit, I encouraged students to follow the FTC, CFPB, and Ohio Attorney General. This, of course, was after the students utilized the resources on the government websites to deepen their understanding of the content.

One empowering personal finance lesson in five bullet points

Here is one empowering personal finance lesson in five bullet points.

• At companies that use automatic enrollment, an average of 83% of workers are saving. 
• On average, only 11% of workers are adequately contributing to their 401(k)'s.
• The preceding data clearly illustrates that most workers only save for retirement if the enrollment process and the saving process is both automatic. 
• The #1 cause of financial distress for low to moderate income Americans is a lack of emergency savings. 
• Teachers cannot control whether companies establish automatic enrollments but we can teach students to utilize direct deposits to appropriately contribute to their savings, retirement, and checking accounts.

Below I copied and pasted the lesson I use to teach my students to utilize direct deposits. Click here for the accompanying resources on my online classroom.

*****

WE JUST LEARNED how to write a financial plan for a long-term, intermediate-term, and short-term financial goal.

WHY THIS MATTERS TO YOU NOW: There is no other time in your life that is easier to save, and is easier to get into the habit of saving than now. This matters to you because research indicates that:
• The #1 cause of financial distress for low to moderate income Americans is a lack of emergency savings.
• At companies that use automatic enrollment, an average of 83% of workers are saving.
• On average, only 11% of workers are adequately contributing to their 401(k)'s.
This means that most workers only save for retirement if the enrollment process and the saving process is both automatic.

The goal of this lesson if for you to use a direct deposit to appropriately contribute to your savings, checking, and retirement accounts as soon as you get a job. 

1. WATCH this Marshmallow study video.

2. WRITE further notes as the instructor reviews key vocabulary:
• Instant gratification - An unwillingness to give up something now in return for something later
• Delayed gratification - A willingness to give up something now in return for something later
• Saving – To put money aside for future use.
• Direct deposits – A deposit of money straight from the source into a bank account, by electronic funds transfer. Note – the instructor will either distribute or project what a Direct Deposit enrollment form looks like.

3. RESPOND to the following questions in a classroom discussion.
• IDENTIFY which children from the video represented behavior that exhibited instant gratification
• IDENTIFY which children represented behavior that exhibited delayed gratification
• EXPLAIN what the marshmallow study has to do with saving.
• EXPLAIN how a direct deposit guarantees you “pay yourself first”.
• EXPLAIN why you believe it is important to “pay yourself first” with a direct deposit.

4. LISTEN as the instructor reviews the highlights from the article entitled “Decision Fatigue”.

5. READ “Utilize Direct Deposits” and RESPOND to the questions below based on the article.

a. IDENTIFY three advantages to direct deposits

b. In four sentences EXPLAIN what is needed to setup a direct deposit with your employer. (You may need to visit the hyperlinks in the article for this)

ASSESSMENT (20 points)
Option a: In one paragraph, JUSTIFY setting up a direct deposit. Main idea (10 points), at least two supporting details (5 points each)

Option b: Using PowerPoint or Prezi, JUSTIFY setting up a direct deposit. Support your justification with two supporting details. Use five slides to ILLUSTRATE your position.

Option c: Bring in proof you have already established a direct deposit (split deposit) from your job into checking, savings, retirement (if retirement is an option)

Homework: REFLECT on the choices you make, and what you can do to make better choices. Developing the three character traits focused on in this course will help bridge the gap between understanding and behavior. The character traits are “grit”, “self control”, and “resilience”.

If you finish any assignment early, CLICK HERE to select an anchor activity. SELECT the activity based on what is interesting to you, what can further challenge you, or what can extend your learning.

If you would like extend your learning experience outside of the classroom:
• Follow @TeenDollars on Twitter
• Follow @TeenDolares on Twitter (for Spanish speaking students)
• Follow TeenDollars on Instagram
• Visit our TeenDollars website
• Follow TeenDollars on Pinterest

TOMORROW WE WILL LEARN to consider opportunity costs when making financial choices.

President's Advisory Council on Financial Capability Report Released

I have the honor of serving on the Working Committee (Money As You Learn) for the President's Advisory Council on Financial Capability. The project provides optional resources that integrate important personal finance concepts into mathematics and English language arts classes. It is up to the classroom teachers to determine what text(s) from our list is best for their students, and I believe the classroom teacher is clearly the best positioned professional to make that determination.

Here is the first paragraph about Money As You Learn from the report on page 26.

"The President’s Advisory Council on Financial Capability calls for a new initiative – Money as You Learn -- to integrate important aspects personal finance into English language arts and mathematics teaching as well as into other classes and afterschool programs, in order to reach more students throughout their schooling. This approach can strengthen learning of those subjects as well as expose all students to knowledge and skills they need to become financially capable young adults. At the same time, the Council continues to urge states and school districts to also provide high quality personal finance classes for their students."

The particular information pertaining to the integration of personal finance concepts into English language arts and mathematics classes is on pages 13, and 26-31.

Click here to read the report. Click here to visit the President's Advisory Council on Financial Capability Resource Center.

My 30 favorite financial education games

Andrew Miller and I worked together on the recent post for Edutopia "Games to Teach Financial Literacy".

The purpose of the post was to highlight 3 prized of my 30 favorite game and scenario based learning programs. These games were hyperlinked at the conclusion of the Edutopia post.

Click here to explore the different games and simulations.

There are four primary reasons I believe games and simulations are effective learning strategies to integrate into each unit of instruction.

• Makes financial education engaging, fun, and interactive.*
• Links education more directly to action-taking by embedding offers and opportunities for real-world actions in games.* 
• Serves as ideal activities on days prior to holidays or breaks that are often more challenging to engage students in traditional lessons.
• Kids play them on their own time, and on their own free will. 

*Click here for the research that supports my opinion. 

Total compensation calculator

My students have a tough time wrapping their minds around the value of health care, vacation days, employer retirement contributions, etc. All of us know this is an important compensation consideration when comparing job opportunities. I just stumbled across a really good financial calculator I am going to incorporate in one of my lessons on careers and incomes.

Click here to explore the financial calculator.

Utilize Direct Deposits

I was honored to write the post "Utilize Direct Deposits" for America Saves during America Saves Week. Here is the article...

Americans have a tough time saving. Nearly a third of Americans have zero savings, and around half have less than three months of emergency savings. Equally daunting is how little Americans contribute to 401(k)’s. Dr. Hensley of the National Foundation for Financial Education pointed out in this alarming video that only 11 percent of individuals with a 401(k) are putting enough money away to meet their retirement needs.

The goal of this article is to provide the content and behavioral tips necessary to save.

Understand yourself and how to overcome your own savings obstacles
Saving can be exhausting if you allow it to be. As John Tierney points out in Decision Fatigue, we draw from a chemical in our brain to feed our willpower each time we make a choice. The more frequently we surround ourselves with things we really want and choices we have to make, the more we draw from this chemical. Do not make saving another draining choice you have to make, make saving automatic.

The Marshmallow study best illustrated the challenges we innately face to delay gratification, and the latest Marshmallow study is digging into the particular challenges people face who have had previous experiences that punished them for waiting, complicating the problem even further. We have seen how hard it is for people to pass the test. Do not put yourself through the torture of delaying gratification, make saving automatic.

Become a member of a Bank, Credit Union, or Matched-Savings Program
Find a bank or credit union that offers the lowest fees, or better yet prize-linked savings programs. Do not concern yourself with the interest you are going to earn on your savings account. Rates are low and are likely to stay that way for a while. So, your interest won't add up to much if you do not have a lot of money. What can add up are fees - - so comparison-shop for financial institutions that offer the lowest possible fees.

Another option is matched savings programs such as Earn, who also provide additional support services designed to help low-wage families.

Make saving automatic with a Direct Deposit
A Direct Deposit electronically deposits funds directly into a bank account as a form of payment. This past Bankrate article explains how Direct Deposits work, and dives into further advantages. To be clear, only establishing a direct deposit into your checking account isn’t going to help you much. Work with your HR manager and your financial institution to setup a second and a third direct deposit into your savings account and retirement account. This is sometimes referred to as “split deposits”. Make sure there is no additional fee for setting up or using a Direct Deposit service.

In this research Mindy Hernandez of Innovation@cfed provides behavioral insight on the decision making process“…often the decision we make is not about the ‘optimal choice’ but the one that requires the least amount of effort – the one on the path of least resistance. Defaults are the option you get if you do nothing at all, and they are extremely ‘sticky,’ meaning you are not likely to change the decision (or lack thereof) once it is done…” In other words, by saving first with a direct deposit it would be harder not to save.

The positive results of setting a savings goal and reaching it by making saving automatic is confirmed with research over and over again. According to research reported here by the Electronic Payments Association, 93 percent of employed adults who use split deposit contribute to their savings every month. Conversely, of employed adults who do not use split deposit, 23 percent contribute nothing to their savings.

Make investing automatic with a Direct Deposit
This quality resource on the Department of Labor website empowers employees with useful information about retirement plans, and the power of compound interest. Here is the example the DOL used to illustrate the importance of beginning to invest for retirement at a young age:

“A 20 year old who saves $1,000 a year for 11 years in a row, then stops but leaves it there to earn 7% interest, will have $168,514 at age 65.

However, a 30 year old who starts saving $1,000 a year for 35 years, also earning 7% will have only $147,913 at age 65. Even though the 30 year old has put in more money for more years, it has less time to earn that compound interest.”

In other words, fully match your employer’s 401(k) or 403(b) contribution and do so electronically with a split deposit as soon as you get a job. Make sure there is no additional fee for setting up or using a Direct Deposit service.

America Saves Week is February 25-March 2nd. Now is a great time to pledge or repledge to save. By pledging to save you will commit to a simple savings plan and goal. Research tells us that regardless of income you are more likely to spend less than you earn, save for emergencies, and save for retirement if you have a savings plan.

Set a savings goal, take the pledge, and remember that Direct Deposits matter.

When changing your mind can cost you over 100K

Regardless of what I do or the resources I use, I get the same question from some students. "How am I supposed to know what I want to do for a career?" It's a fair question, I didn't know what I wanted to do when I was in high school. A matter of fact, it wasn't later in my life until I found my passion and chose to return to school and become a teacher.

I will begin the unit with the video above. I will follow the video and a subsequent short discussion up with an activity correlated with the article "There's More to Life Than Being Happy". The article was inspired by the thoughts of Viktor Frankl, a prominent psychiatrist and neurologist who survived a Nazi concentration camp. I will also have the students participate in an activity correlated to the article "Why You'll Never Be Able to Keep Up With the Joneses", written by psychologist and behavioral finance expert Dr. Crosby.

I will transition into a project based learning activity. To briefly summarize, I will begin by having the students take a number of student-led interest inventory and career connection assessments on the Ohio Career Information System (OCIS) website. After that, the students will research careers that the assessments identify as a good fit, and careers they are interested in not identified by the assessment tools. I will have them use this entry point or this entry point to the Bureau of Labor and Statistics website for them to do their research. They will also have to conduct an interview with someone from a career field they are interested in, and for extra credit can shadow someone in the workforce.

We also have one of the best guidance departments you could ever hope for. Between the two of them they have 70 years of experience with the energy of teenagers. 

It would be helpful if students had some sort of work experience. Many of my students who want to work cannot for various reasons. I believe this makes it harder for the kids to know what they want to do, or not do, because many do not have any practical working experience. Even if their teenage job has nothing to do with the career they are interested in, they have at least experienced what it is like to have a job.

I understand people change their careers quite frequently throughout their lives, and we are preparing some students for careers that do not exist. I use the video in this post to illustrate this point to my students. But this doesn't mean we should just wish our graduating seniors who are matriculating to college good luck and ignore our growing student debt crisis.

This is a very expensive problem for any students who are going to take on any student debt. I do the best I can in our unit on credit and debt using these resources to help prepare students to make a wise and informed student debt choice. But this doesn't help all that much if it takes them six years to graduate because they keep changing their major. It can cost students thousands of dollars in additional coursework when they change their majors two or three years into college.

I am wide open for any pedagogy or resource suggestions to help my students find the right career connection for them.