IBJNews

New Indiana law requires schools to teach financial acumen

Back to TopCommentsE-mailPrintBookmark and Share

Back in 1977, as a high school junior, Indiana Superintendent of Public Instruction Tony Bennett lost his shirt in the stock market. He remembers the lesson well to this day.

Fortunately, there was no real money involved. For two weeks, Bennett played a game his history teacher called “Panic,” simulating the stock market crash of 1929 and the subsequent Great Depression. In it, each student started from the same financial position, then engineered trades every day. Computers were still bulky and rare in classrooms back then, so the juniors practiced their math skills calculating their returns by hand.

“I went broke,” Bennett laughed.

Today, Bennett is leading a similar effort that will soon be incorporated into the lessons of every elementary and high school in the state. This spring, the Legislature passed Public Law 154, which requires public schools, charter schools and accredited nonpublic schools to provide instruction in personal financial responsibility to students in grades six through 12 under standards adopted by the state board of education.

Bennett’s in charge of establishing those standards. He hopes to get the job done by year’s end. His goal: Incorporate financial responsibility into the classroom via real-world example. Bennett wants to see money management concepts embedded across the curriculum.

“What better way to teach multi-column mathematics than to balance a checkbook? It’s a great lesson,” he said. “What better way to teach kids to add and subtract than using a financial transaction?”

Bennett

Bennett wants students, on the day of their high school graduation, to be able to understand the impact of compound interest. They should know how credit cards work, which of their actions will lead to strong credit scores, the difference between fixed-rate and adjustable loans, and much more. Such lessons are always important, Bennett said, but never more so than in the worst recession since the Great Depression.

“We have to make our next generation of consumers better credit consumers,” Bennett said. “Better money managers in general.”

Financial advisers have long hoped for something like Public Law 154.

Dave Williams, president of Noblesville-based RDW Financial Group, wishes this type of education had been standard for the baby boomers and their parents. Many were never taught fundamentals, like the difference between stocks and bonds, or the concept of price inflation, said Williams, who this month was named Advisor of the Year by trade magazine Senior Market Advisor.

“I’m surprised today at the number of 50-year-olds I meet who really don’t understand what a mutual fund or ETF is,” Williams said. “By the end of high school, you should know the concepts of budgeting and saving for the future. So by the time they hit college, they know if they borrow, there’s a consequence.”

These days, Williams said, everybody needs a working knowledge of money and how to preserve and grow it. The complex modern world requires everyone to understand concepts like medical insurance co-payments, debt management, investment risk and tax deferment.

Even adults sometimes struggle with such subjects. Williams said he finds the best way to explain them is via tangible anecdote. He talks about insurance by way of examples from the nursing home. He explains the difference between accumulating wealth in one’s working years and harvesting distributions in retirement by way of poker and bridge. Both involve decks of cards, but each requires an entirely different approach.

“The best way I’ve found to teach people about money is through storytelling,” Williams said. “Make it relatable. Show how something will happen so everyone can relate in one shape or form.”

Some schools have been following Williams’ advice for years.

Nancy Campbell, department chairwoman for Family and Consumer Sciences at Walker Career Center at Warren Central High School, said the types of classes taught at Warren Central once were called “vocational,” like welding in shop or cooking in home economics. But today’s lessons cover personal budgeting, the pros and cons of different bank accounts, car insurance, and the seven financial habits of highly effective teen-agers.

Perhaps the most difficult concept for today’s student to grasp, Campbell said, is the idea of deferred results. Modern kids, used to the ubiquity and instant response of cell phones and the Internet, don’t understand that uncleared checks mean they have less money to spend than their online bank balances show. Delayed transactions and interest make no sense to them.

To make such concepts concrete, Campbell employs lessons much like Bennett’s game of “Panic” back in 1977. She asks students to analyze their cell phone bills, for example, or walks them through the many, many expenses connected to raising an infant.

“It’s eye-opening for anyone when they budget out where their money is actually being spent,” Campbell said.

As helpful as classroom lessons may be, kids learn their biggest financial lessons at home.

Denise Musick, who teaches Family Consumer Science at Southport High School, has seen students increasingly ask real-world questions based on somber subjects like bankruptcy and foreclosure. Musick said she can tell the queries are often inspired by financial troubles at home.

And unfortunately, many parents aren’t terrific financial role models. Some try to shield their kids from money woes by avoiding the discussion. Others preach the right philosophy, but practice something else with the household budget.

“So many things we’ll teach them in financial literacy they’ll say, ‘My mom and dad don’t do that. They don’t pay it off every month.’” Musick said. “When they see their parents pull out the credit card every time, they may not be talking to them, but the kids are observing the behavior of their parents.”•

ADVERTISEMENT

  • This new law may be the most significant addition to educating our youth since the computer entered the classroom. I have been concerned about the obvious need for basic financial education. Thank you Indiana Legislature for such a law and thanks to IBJ for reporting it.
  • This concept is right on the money. I absolutely agree 100%. Kids need to know the basic fundamentals of check book balancing; the understanding of credit card interest and how much you really pay back when you don't pay off the credit cards each month; the concept of spending only if you have the money; and the value of establishing credit in a correct way. Thank you for pushing this issue!

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Now if he'd just stay there...

  2. Daniel - what about the many US citizens who do NOT follow what the Bible teaches? The Hindus, Jews, Muslims and others who are all American citizens entitled to all rights as Americans?? This issue has NOTHING to do with "What the Bible says..." Keep all Churches separate from State! Pence's ongoing idiocy continues to make Indiana look like a backwards, homophobic state in the eyes of our nation. Can't we move on to bigger issues - like educating our kids?

  3. 1. IBJ should link to the referenced report. We are in the age of electronic media...not sharing information is lazy. Here is a link http://www.in.gov/gov/files/Blue_Ribbon_Panel_Report_July_9_2014.pdf 2. The article should provide more clarity about the make-up of this panel. The commenters are making this item out to be partisan, it does not appear the panel is partisan. Here is a list of the panel which appears to be balanced with different SME to add different perspectives http://www.in.gov/activecalendar/EventList.aspx?view=EventDetails&eventidn=138116?formation_id=189603 3. It suggests a by-pass, I do not see where this report suggests another "loop". 4. Henry, based on your kneejerk reaction, we would be better off if you moved to another state unless your post was meant as sarcasm in which case I say Well Done. 5. The article and report actually indicates need to improve rail and port infrastructure in direct contradiction to Shayla commentary. Specifically, recommendation is to consider passenger rail projects... 6. People have a voice with their elected officials. These are suggestions and do not represent "crony capitalism", etc. The report needs to be analyzed and the legislature can decide on priorities and spending. Don't like it, then vote in a new legislature but quit artificially creating issues where there are none! People need to sift through the politics and provide constructive criticism to the process rather than making uninformed comments in a public forum based on misinformation. IBJ should work harder to correct the record in these forums when blatant errors or misrepresentations are made.

  4. Joe ... Marriage is defined in the Bible ... it is mentioned in the Bible often. Marriage is not mentioned once in the US or Indiana Constitution ...

  5. Daniel - Educate me please: what does the Bible have to do with laws? If the government wasn't in the business of marriage to begin with, then it wouldn't have to "define" marriage at all. Marriage could be left as a personal, religious, or otherwise unregulated action, with no ties to taxes, legal status, etc. Then people could marry whomever they want, and all this silliness would go away. Remember to vote Libertarian in November.

ADVERTISEMENT