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Videos: What Was Considered Good Financial Advice In the 1940s and 50s?

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Put this in the category of “not so current events.” Something about my impending birthday has me getting nostalgic for the “good ole days.” I stumbled across this trove of videos from the 1940s which would have been the financial advice that my teenage Mom would have been given. Here are some of the highlights that I thought you would enjoy (with questions):

  • Keeping a Budget: Your Thrift Habits (it’s 10 minutes long, but the first five minutes will give you plenty to discuss):
    • How was Ralph able to buy his camera?
    • What was the budget method that worked for Ralph (full disclosure: this was how I kept track of my newspaper route revenues)?  How did he track his progress toward saving for his camera?
    • Is it easy to make a budget work? Why or why not?
    • What are Jack’s sources of income?
    • What are Jack’s regular expenses? irregular expenses?
    • Why did Jack find it difficult to save?
    • What would be on your list of “Watch these expenses?”
    • Identify an item that you would like to save for and break it down to how much you need to save per week.
By |January 23rd, 2017|Budgeting, Checking Accounts, Investing, Savings, Stocks, Video Resource|

NGPF Product Launch: NGPF Releases Revamped Savings Unit

I am so proud of the NGPF team (Jessica, Sonia, Laura, Ren, Sid and Niko) that has worked feverishly to deliver a revamped Saving Unit that we released tonight. Why do we continue to revamp our lessons? The short answer can be found in our culture of continuous improvement as we are always looking for ways to make our lessons stronger (your feedback is critical in this process). Here is the longer answer: 

Let Them Tell Stories Too…

download (3)As educators, we know the power of storytelling in the personal finance classroom. What better way to bring an abstract or dry topic like compound interest to life than to explain how $10,000 you invested in your IRA in your 20s was now worth $30,000 today due to gains in the stock market compounded over many years. There is even research that shows that student recall concepts better when told as a story as compared to a lecture (from Bryant and Harris):

The use of storytelling allows lecturers to engage students in a dynamic and enthusiastic way while encouraging students to develop a higher order of thinking and recollection. Storytelling allows the lecturer to show their interest in the material and in the students. Lectures can utilize the art of storytelling to communicate expertise and transfer information. This paper empirically examines the effectiveness of storytelling as a means of increasing student intrigue and recollection. We find that students recall a statistically significant 6.5% more of the storytelling lecture than those students who were exposed to the text book lecture.

Yet the focus when we talk about stories is usually on the teacher and yet…students have their stories and advice to share also. I was reminded of that today at Eastside College Prep., where we are beginning our 6-week course with the senior class. The discussion was about savings and why it can be so difficult to save. A student shared how she had a weak spot for her “hobbies” which she described in further detail with one word: shoes. I dug a bit deeper to understand more about her habits and she proceeded to say something along the lines of this:

Question: How Much Do Banks Earn From Overdraft Charges?

Answer: Billions!

Happy New Year! Welcome back to school. I know that banking tends to be a unit that many of you teach early in the semester so this data should prove particularly timely. I have posted on this topic several times but have some new data to report about the three largest U.S. banks and their fees from overdraft charges (from Financial Times, subscription required):

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This quarterly data on the three largest banks shows how fees tend to grow over the course of the year as evidenced by the quarterly data from 2015. So, back to the question about how much they are charging for overdrafts…Let’s make the math easy and say $400mm per quarter or $1.6 billion a year for each of the three banks totaling $4.8 billion for the three of them combined. Some other nuggets from the FT article:

Question: What Percentage of Millennials Write Checks?

This one surprised me. Maybe we should continue to teach check-writing after all!

Answer (from Qualtrics survey): 42%

What’s Changed in Personal Finance Since 2001?

I received an email from a personal finance curriculum in my inbox this morning (nothing unusual here, I get a lot of them:). The provider was encouraging their educators to update their curriculum since they had heard some were still using their 2001 edition (Remember Friends? That was the top TV show in 2001). Yikes! Quick digression, ok, let’s call it a commercial: Since NGPF makes all of its content available online, we make real-time updates when circumstances change, such as when the FAFSA becomes available three months earlier.

I thought it would be interesting to think about how the financial services industry has changed since 2001. In other words, what are students missing if they are being taught from a 2001 edition?

What Do You (and Your Students) Need to Know About Behavioral Finance?

download-4If you have some time over the holidays, I recommend this 39 minute FT podcast (The Psychology Behind What We Do With Our Money) and accompanying paper: The Psychology and Neuroscience of Financial Decision Making. Why is this worth your time? It provides an fascinating summary of the latest experiments being run to help us understand why we make the money decisions that we do.

Here were some of the interesting tidbits (numbers refer to footnotes cited in the paper):

Chart: How Do People Pay For Things (By Age)?

New Federal Reserve of San Francisco report is chock-full of graphs about payment preferences gathered from their 2015 Diary of Consumer Payment Choice. With so many graphs to choose from, I thought this one could kick-start a great discussion:

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Just to orient you as to what is being measured here, this graph focuses on the number of transactions rather than the actual value. So, while the percentage of cash transactions might seem high, most of these transactions were for small dollar amounts.

Here is the accompanying text from the report: