Reach Your Students With Financial Literacy

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There is no doubt that it is important for young people to learn about personal finances. Only 21 states required a financial literacy course for high school students in 2020, according to the Council for Economic Education. But there’s another reason to incorporate financial literacy into your teaching – it can also help keep students engaged.

Using relevant examples in the classroom “can bring your students to life,” said KC Rakow, CPA, Ph.D., assistant professor at Loyola University in Chicago. For example, many students use loans to finance their studies. Getting them involved in the topic of student loans can be an effective way to teach them the importance of paying off debt and the time value of money, he said.

It may be tempting to assume that accounting and business students have a more advanced understanding of personal finance than their counterparts in other disciplines, but that’s not always the case, said accounting professor Dan Royer, CPA, Ed.D. He teaches financial literacy, a compulsory course for all students at Ball State University in Muncie, Indiana. When it comes to existing knowledge of financial literacy, students come into his classroom in very different places, he said. But they all leave better prepared for their future. Royer once asked a student to contact after his class to tell him that he was considering a minor or even a major in finance after learning financial literacy.

Rakow, Royer, and other educators shared these tips for introducing financial literacy concepts into your lessons:

Focus on real life scenarios. It is helpful to find topics that your students might see translate into their own lives. For example, Royer talks about his sister-in-law, who is usually financially savvy. After trying Starbucks for the first time, however, she developed an expensive habit. She ultimately succeeded by buying her own coffee machine. With several cafes on the Ball State campus, Royer’s students can relate to history.

“This is just one example that goes with a topic that we discuss very early on: the importance of knowing where your money is going,” he said.

Meanwhile, Ann Boyd Davis, CPA, CGMA, Ph.D., covers another topic in her accounting courses that may be of critical importance to future CPAs, although easily overlooked by students.

The associate professor of accounting at Tennessee Tech University in Cookeville, Tennessee, discusses the possible cost of becoming a partner in a CPA firm. Buying into a business can require a large loan, so it’s important for students to understand related financial literacy concepts. These concepts become more real when students can see how they might affect their future.

Follow the news. Similarly, Royer and Rakow both use hot topics to initiate discussions about financial literacy. For example, many students were interested in the market manipulation that occurred earlier this year when day traders pushed up GameStop and AMC stock prices, Rakow said. Some students thought that they could also get rich overnight. Rakow used the incident as a way to discuss the investment with his classes, encouraging students to approach it with caution.

“I tell them if we were all good at predicting the market, we wouldn’t be in this classroom,” he said.

Associate it with the curriculum. Davis and her colleague Alma D. Hales, Ph.D., associate professor of finance, made financial literacy part of the curriculum by creating a one-hour college-wide course. In this course, students from 23 majors learned the basics of financial statements, ratio analysis, time value of money, and credit scores.

Rakow incorporates financial literacy into his accounting courses when the concepts overlap with the courses.

For mortgages, this could be where the category covers long-term debt. When he talks about budgeting in his management class, it’s a good time to talk about personal budgets, he explained.

Another topic Royer and Rakow like to introduce is retirement. While it may seem like a long time ago to students, faculty feel it’s important to discuss it early on. Rakow often brings up the subject when discussing pensions. Davis agrees that teaching students to prepare for retirement is helpful. “I think it’s never too young to start letting students think about retirement and how to get there,” she said.

Have fun. Royer uses an interactive learning platform to interview his students on topics related to financial literacy. Ask lighter questions, such as multiple choice: “Which historical figure has been caught in a Ponzi scheme?” During their discussion of fraud – keep students in tune, he said. Ahead of the pandemic, he also encouraged small group discussions, followed by polls, to interrupt his lessons and make his class as engaging as possible.

Ball State also partners with a local credit union that provides resources, including podcasts, on practical financial literacy topics. Students may be instructed to listen and then respond to the topic.

Ideally, young people would start learning about financial literacy well before college. It’s part of the inspiration behind Money Maker $ pace, a program created by Davis and Hales. In the initial session, Kindergarten to Grade 3 kids got jobs, where they earned play money to spend, save, or donate to charity – after paying taxes, of course. Children could choose from several careers, each incorporating their own fun activity. Architects built with blocks, while chemists made mud.

“I think it’s powerful to instill this idea in young children: that ‘I’m going to work, and what I earn, I have to think about saving, spending and sharing.’ We need the three legs for the stool to stand up, ”she said.

Students from Davis and Hales of Tennessee Tech helped run the program, working with their College of Education counterparts to break down complex concepts of financial literacy for children. Some got extra credit and some got hours of service for Beta Alpha Psi, an honorary organization for finance and accounting students. Davis and Hales hope to expand the program in the future.

Megan Hart is a Wisconsin-based freelance writer. To comment on this article or suggest an idea for another article, contact Courtney Vien, a JofA editor-in-chief at [email protected]


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