Last year, I asked in high schools should require money management classes. My point of view is that such classes should be optional and/or lessons in personal finance can be incorporated into other classes throughout middle school and high school. Not everyone agrees with me, however, considering the state of financial distress many in this country face.

A commenter wrote in to describe his experience with a specific money management curriculum called Real Money, Real World, part of the Your Money NOW program sponsored by the Ohio Treasurer of State.

Schools can devote as little as 90 minutes or as much as a grading period to the program.

It works like this: Students get jobs and salaries based on their current GPA (the higher your GPA, the better paying job you get). Several booths are set-up with different signs relating life events. Students go to each to add children, housing, entertainment, cars, etc into their budget. At the end, they have to have a balanced budget.

I helped out at one of these events at my local high school and it was great to see these kids doing the math and complaining how much kids cost or how they can’t buy the clothes they want because their job doesn’t allow it.

The program sounds like a good start. I particularly like this resource: a description of the savings you could experience [pdf] by maintaining a credit score of 680 rather than 580.

I wrote earlier about the JumpStart Coalition’s highlight of the Citi Curriculum for children in kindergarten through young adults. I thought this curriculum had excellent suggestions for teaching students of a variety of ages about basic tenets of money management. Janet Bodnar, an author and seminar leader, thinks these lessons have too many details.

I am reminded of Austrian emperor Joseph II who criticized one of Mozart’s operas for having “too many notes.” (Yes, the quotation is historically accurate, it’s not just from the movie Amadeus.) There seems to be an underestimation of the human brain—more commonly of the teen-aged human brain—and the belief that too much information can be a hindrance to sound decision making.

Sometimes, yes. Bodnar suggests focusing on the big picture and basics, which is fine if what you’re teaching is the truth. But you have to provide supporting facts, as well. Catchphrases and rules of thumb may make things easier to teach, but they show that you don’t respect the mental capacity of the person you’re talking with. Citing statistics is one example, which Bodnar does in her article:

For instance, let kids know that people who use credit cards spend more compared with those who use cash or checks. One study found that customers at fast-food restaurants spend 50% more when they pay with plastic rather than cash, says Baylor University marketing professor James A. Roberts, who studies credit usage.

Statistics are meaningless without details. In this case, we have no information about how the one study was conducted. Notice that this clearly says “one” study. “One” other study may show the opposite. Did this survey test a representative population? Were the same individuals used in the study in two situations, once with cash and once with credit, or were separate population samples used for the cash and credit groups? What other differences were there between the two groups? How were independent variables controlled? How are we sure of a cause-effect relationship between the method of payment and amount spent?

These may sound like boring details, but they make all the difference in understanding what the statistics truly mean.

Focus on the big picture and the basics, backing it up with personal experiences like Janet Bodnar suggests, but if you really want to teach, it’s going to take more than misleading statistics and four-word platitudes. JumpStart Coalition suggests allowing your teenager to see your credit report. Boring to a teenager? Yes. This is probably not the best way to illustrate the importance of good credit. Have them sit in on your meeting with a mortgage broker or bank as you apply for a loan. Boring to a teenager? Maybe, but more educational. Then show them the credit report as an explanation for why the mortgage interest will cost thousands more over 30 years than it could with a clean history.

What Teens Need to Know About Credit [Kiplinger]
Image credit: MR “O”