The new school year is right around the corner, and we here at NGPF want to know what the hot topics in personal finance are. Help us by taking this quick survey, which should give us a good idea of our 2015-2016 (16 already?!?) content area priorities. Take this survey and be entered in a drawing for a $50 Amazon gift card.
This video (start around the 3:00 mark) about the burgeoning field of neuroeconomics has implications for how we should think about investing. This video will help answer such questions as:
- Why do our brains often find patterns that don’t exist and how can that impact our investment decisions? Provides good example of the frequency with which we check our stocks/investments impacts our decision-making.
- How can we overcome our brains which encode information in terms of reference points, which may be suboptimal when it comes to investment portfolios?
- When can emotions be useful in decision-making?
- How can we use visualization to slow our decision-making process?
You know what technology you utilize in the classroom and how often you deploy it. But, you may be wondering how the personal finance teacher down the hall, down the road, or across the country uses tech. Thankfully, our July Flash Survey tells you precisely that. Check it out below, and then use the comments section to tell us whether you’re surprised by the results.
Answer: Based on recent research, students feel more prepared if they have a checking account prior to college:
In fact, a recent survey of 42,000 first-year college students found that the earlier teenagers had access to credit cards, the less prepared they felt for managing their own money in college. Those who had checking accounts, by contrast, were “markedly more prepared” to handle their finances than those who were unbanked before college, according to the study conducted by education technology company EverFi and sponsored by financial services company Higher One.
Might be a good class opener to have students discuss pros/cons of each product. The more experience students have with both products, the richer the discussion will be.
According to this research study which I unearthed from 2014, more financially knowledgeable workers have higher returns on their 401(k) balances. While not all that surprising, the research was able to quantify how much that knowledge was actually worth. It also provides a set of five questions that they used to measure financial knowledge that you could use to test your students.
Here’s their summary:
We show that more financially knowledgeable employees are also significantly more likely to hold stocks in their 401(k) plan portfolios. They can also anticipate significantly higher expected excess returns, which over a 30-year working career could build a retirement fund 25% larger than that of their less-knowledgeable peers. Their investment portfolios are also somewhat more volatile, exposing them to slightly more idiosyncratic risk.
I highlighted the key insight from their research. So, what do we need to teach students about investing so they can be knowledgeable and generate that larger 401(k) nest egg?
- Over the long run, stocks outperform bonds and cash so having a higher stock allocation will lead to higher returns
- The further you are from retirement (for example, while you are in your 20s), you
Today, NGPF is proud to announce that we’ve been accepted as a partner of the national Jump$tart Coalition. Jump$tart is a national organization “of organizations that share a common interest in supporting financial literacy, through financial education, for our nation’s youth.”
This BusinessInsider article might be a useful activity to try in your classroom for a few weeks or even a month. Challenge your students with debit and/or credit cards to put them away and only use cash for a period of time. Probably best for them to estimate their weekly expenses and then take out that amount at the beginning of the week. While they spend, they should also be sure to collect receipts so they can track their spending. The research is well documented that we spend less when use cash instead of plastic.
Rather than tell your students about this research, why not let them experience it and then reflect on what they learned? You might also want to join your students and report back to them on your experience also.