This year, NGPF took our show on the road and taught personal finance workshops in several local schools. These experiences included a 3 day workshop at the Nueva School (San Mateo), a four session workshop at Castilleja school (Palo Alto), seven sessions with an AVID classroom at Mountain View High School (Mountain View) and our intensive 6 week workshop at Eastside Prep (East Palo Alto). In this post, I will share my experiences at the Castilleja School, an all-girls school just down the road from our office.
Given the time constraints (only 4 sessions), I modified our recently released 8-Hour Workshop and focused on Paying for & Budgeting During College, Understanding Debt & Credit, Why Credit Scores Matter and finishing with a Crash Course in Investing.
In each of the sessions, the girls engaged with the content and asked many great questions. Here were some of my highlights:
- Students identifying that they needed to make extra room in their budget to allow for their love of clothes
- A lengthy discussion between two girls about the price of boba tea (and whether the additional cost for tapioca balls or fruit jelly was a want or need!)
- A student-initiated debate focusing on whether you need to pay your parents back if they cover the cost of your trip to San Diego (from San Francisco)? This debate had no definitive outcome – with one student creating her own budget spreadsheet to allow her to calculate the amount she needed to provide to her parents each week, with the other student declaring that she would not be paying her parents back, and as such, her strategy was to not raise the topic with them!
Our lesson on Investing also generated a lot of discussion and student-questions. Here are my key takeaways from implementing our recently released Crash Course in Investing lesson:
- Students are excited and intrigued about the stock market, but are unsure of their own knowledge or even what is meant by the term “stock market.”
- Specifically highlighting and discussing what compound interest is in the ANALYZE: Saving for Retirement (Graph I) is a MUST! Students understood the concept of Susan investing $50,000 and it growing to $602,070 by age 65, but they missed that $50,000 was the ONLY money that she invested – with the additional growth coming from the mighty power of compounding returns. This graph is a great example of why you should invest as early as possible.
- Our discussion about the similarities and differences between stocks and bonds was revealing for students. They understood and appreciated the idea that both mutual and index funds allow them to target particular interests or passions through their investing. I believe this to be a key motivator to encourage students to invest – many students gravitated toward this concept of investing for social impact.
- Seeing real-time how the stock price of Starbucks changes (literally, when I was in mid-sentence!) was powerful – and sparked a conversation about why and how individual stock prices change. In addition to this, the static image of the S&P 500 we provide in the Stocks, Bonds & Mutual Funds (slide 6) is predominately green as the prices of most stocks in the index had positive gains in the last 12 months. When I clicked the real-time S&P 500 heat map on Friday morning, most of the screen was varying shades of red as most stocks had a negative return. This sparked a great discussion of the short-term and long-term factors that influence the price of the entire stock market and how difficult it is to predict price movements moment to moment. This highlights the importance of investing for the long-term and having an investment strategy that isn’t impacted by the daily fluctuations.
- Working through the ROLEPLAY: Sign Up for a 401(k) activity allowed students to envisage their dreams for their retirement. They started the activity by completing a risk tolerance profile which assisted them in deciding their allocation of stocks and bonds. Many selected Target Date Funds for their 401(k) investment. As we dug deeper into these funds, we observed that the Target Date Funds of 2055, 2060 and 2065 are, at this stage, all essentially the same. In other words, they each had an aggressive investment strategy with a heavy allocation to stocks since the target dates for retirement are 38-48 years away. We discussed that students looking to minimize their risk would choose an Target Date Fund with an earlier date (e.g., 2030) and those who wanted to increase their risk would choose a fund with a later date (e.g, 2080).
In closing, what struck me most when implementing NGPF’s Crash Course in Investing lesson and more generally when teaching personal finance is the value of focusing on student analysis and decision making. Building in time and space for students to analyze, critique, question and discuss allows them to gain a deeper understanding of how to apply their knowledge when faced with financial situations in their lives. Making informed real-world decisions is exactly what we’re aiming for here at NGPF!