Monthly Archives: January 2015


What’s New in Schools?

Scanning the headlines to find out what high schools are up to when it comes to personal finance education:

  • Students at Marion HIgh School (Virginia) participated in a checking account simulation recently (SWVA Today):

“The Financial Literacy Project—Your Checking Account, sponsored by Bank of Marion, is a simulation is designed to teach the skills necessary to maintain a checking account. Students first learn about checking account basics and then actually write checks, make deposits and reconcile their accounts using the forms provided. The materials not only teach an important aspect of money management, but also correct bad habits that may otherwise persist throughout adult life.

  • Conrad High School (TX) recently opened a student-run bank that only takes “Conrad dollars (KERA News)”:

Teachers hand out “Conrad cash” to students who have done well on an assignment or met a goal. And they use that cash to buy snacks or other items at the school store.  “One of our goals is to make the cash on campus worth a little bit more money, have more value to it,” Gilbert says. “And also offer incentives as far as earning interest.”

  • High school juniors and seniors in Ohio experienced the real world through a
By |January 30th, 2015|Personal Finance, Schools In News|

New Product: Would You Use A Peer-to-Peer Payment App?

The peer-to-peer payment space has exploded of late.  One of the fastest growing companies in the space is a company called Venmo (Want to know how to find out about apps like this?; ask your college-aged relatives or children).

This Investopedia article provides a good description of these new financial apps that high school and college students will be using (if they don’t use them already).  Still wondering about the use case?

Want to split the restaurant bill among friends but don’t have spare change? Or want to pay your share of rent to the roommate, but don’t want the hassles of writing a check or doing an online transfer? Dare to think beyond the standard card, check, or cash payments? Welcome to app-based peer-to-peer payment technologies that make life easier for quick payments to trusted friends, businesses, and even strangers in close proximity. Venmo, with its tagline “Share Payments,” is currently leading the race with rapid growth, while other players are trying to catch up.

Wondering who the competitors are (hint:  it’s crowded)?:

  • Google Wallet is the closest competitor to Venmo, as it has plans to link Google Wallet to Gmail. However, it does not (and possibly will not) have an iOS

Question of the Day: What’s The Biggest Money Mistake You Ever Made?

Part of personal finance is having good habits (think budgeting, paying yourself first, comparison shopping for all purchases, etc.) but part of it is also avoiding financial disasters (think credit card debt and onerous student loan balances).

I am back in the classroom this week.  Just before class started, a student approached me to say he had incurred a checking fee this week (we are on the checking unit).  When asked for more details, he described how he had used his debit card one time too many and his account had fallen below the minimum balance threshold.  That was a perfect coda to the lesson on managing a checking account and the importance of tracking transactions and account balances.  I also thought this presented a great opportunity to make students aware of their ability to set up text alerts so that they would be notified at crucial points (e.g., balance falls below a certain level).  To which, this specific student said, “Oh ya, I got that text but just skipped right over it….”

Back to the Question of the Day.  Discussions are a great way to have peers teach each other.  If you can create the right environment in the classroom, this could be

By |January 30th, 2015|Activity, Behavioral Finance, Personal Finance, Question of the Day|

Question of the Day: At What Age Can I Get A Credit Card?

Some students come into class having heard that responsible use of a credit card can help build their credit history.  Their first question is often along the lines of “So, when can I get a credit card and start building that history?”

Here’s a quick answer and a resource to get a more detailed and nuanced answer:

  • If you are between 18-21, you CAN NOT get your own credit card, unless you can prove to the credit card companies that you have a source of income significant enough to pay back charges on the card, or can convince your parents to co-sign the account (which makes them jointly responsible and can affect their credit scores if you don’t pay on time!).
  • You can become an authorized user on your parents’ card accounts (even if you are a minor).  Here are a few caveats:
    • If your parents have a positive credit history, this will help you, but if they don’t, their negative credit history will impact you in a negative way!  An ideal account to be an authorized user:  one with long history, no late payments and not bumping up against the credit limit (low utilization in industry parlance)
    • Not all credit card companies will report

It’s FAFSA Season: How Many Questions Are Asked On the FAFSA?

Answer:  Up to 108.

This four minute audio from explains efforts in place to simplify the process down to 2 questions (in case you were wondering, those questions would be about family income and household size).  As for advice to impart to your students, the early bird gets the worm, so file it early:

A recent report from Edvisors, a publisher of student aid information, says students who file their FAFSA in the first three months of the year get more than twice as much grant aid, on average, as those who wait longer.

Question of the Day: What’s the Cost of that Debit Card Swipe To Your Local Grocer?

Answer (from The Guardian):  21 cents/transaction (down from 44 cents in 2010).

This may seem like a trivial amount but think of the volume ($1.4 trillion, see if students capture the error in the article).  Those so-called interchange fees represented about $16 billion in fees that banks received annually from retailers, who presumably passed that cost on to consumers.

So, what’s the problem with the fee being reduced to $0.21 (which by the way, the Supreme Court ruled cannot be raised)?  

You guessed it.  The banks saw a multi-billion dollar source of fees reduced and obviously need to make it up elsewhere:

Banks have been lobbying relentlessly, but in the meantime they have found a more effective method: taking the difference out of consumers’ bank accounts. Is it a coincidence that since the passage of the Durbin amendment, banks have boosted the size of the balance required to qualify for free checking? Monthly account maintenance fees – and all other kinds of bank fees – have also soared.

So, next time you curse that monthly account fee that you pay your bank for the privilege of having a checking account, know that it probably has something to do with that

By |January 28th, 2015|Checking Accounts, Current Events, Debit Cards, Question of the Day|

Chart: Why Do Millenials Switch Checking Accounts?

A good chart to use while discussing the factors that are important (hint:  consumers don’t like fees!) in selecting a checking account (from the Financial Brand):  



Check out the NGPF Lesson:  Beware of Checking Fees

Activity Idea: Student Loan Repayment

This is a topic that I dreaded trying to teach.  When you look at the changing regulatory environment, the alphabet soup involved (IBR, ICR, PYE, etc.), the myriad repayment options (6 at last count) and the math calculations, it can seem a tad overwhelming.

And then along comes this tool (The Student Loan Repayment Calculator), which manages to make this issue of student loan repayment much more approachable (Full disclosure:  I do have some qualms with their assumption of 5% annual income growth).  So, why teach this to high school students?…one way to discourage them from overdoing student debt is for them to understand: 1) Student loans actually need to be repaid (recent study found 28% of freshmen didn’t know they had a student loan)  2)  Taking on lots of debt will impact their post-college lifestyle, which is where this calculator comes in.

I created a simple example using average debt load and salary information to see what the calculator told me:

Click on “Calculate Results” and voila, here