Why Financial Literacy is Vitally Important for High School Students
September 24, 2024
September 24, 2024
By Alice Stocks
During the winter of 2009, while monitoring study hall, my professional life changed. My department chair asked if there was a class not currently on the schedule that I ‘d be interested in teaching and I immediately said, “Yes!” I’d been thinking about conversations I’d had with some of the study hall students concerning life after graduation and saw that they were completely unprepared for the financial responsibilities of living independently. Teaching them financial lessons would help prepare them for their future. However, I couldn’t give assignments in study hall; after all, it was for working on missing assignments or getting additional assistance.
So, I had an answer for my department chair: I wanted to teach Economics and Personal Finance, a course focused on important life skills students can apply immediately.
Each school year, I tell students that they are already savvy consumers; they just may not have learned the terminology to match their actions. I explain that this class is foundational to understanding how the world operates, because it covers the principles that govern markets, trade, and the allocation of resources. It provides insights into how economies grow and develop, and the impact of government policies on economic health. Personal finance, on the other hand, equips people with practical skills to manage their own financial lives, such as budgeting, saving, investing, credit management, and retirement planning. In my classroom, I strive to make these subjects relatable and engaging. By connecting theoretical concepts to real-world applications, I help students appreciate the relevance of what they are learning.
To start on a strong note, I like to teach a lesson on opportunity cost on the first day of class. I ask, “What would you be doing if you had not come to school?” As students respond, I tell them that what they could have been doing is called “opportunity cost,” which becomes their first vocabulary word. I explain that whatever they gave up was the opportunity cost, which is the next best alternative, and that what they would have done was not as important as an education. I always get pushback from a few: some tell me they come to school because they had no choice, others say their parents made them come, while still others say it’s the law. I explain they always have a choice even if they do not like the options.
We then look at the six-step process to the economic way of thinking:
Understanding potential outcomes helps in making better choices, and asking, “What would you be doing if you had not come to school?” gives students a quick introduction to the concept of cost-benefit analysis. This allows them to see how quickly they can weigh potential benefits and costs of different choices, and how it helps them to reach a rational decision with long-term implications. I show them “If I come to school,” I will gain knowledge and skills, receive better job opportunities, and earn a higher income, all while socializing with my friends. Not attending school also has consequences: “I could be placed on punishment, have my privileges revoked, and fail. This would not allow me to graduate and without a high school diploma I would be unable to get a job that will support my future of living independently.”
Just like that, I have their attention. This approach not only enhances their understanding but also empowers them to make informed financial decisions. It is at this point that I say, “All decisions are economic decisions, not just monetary ones.”
To extend their knowledge, I encourage students to go home and share what they’re learning in class with the adults in their lives. My hope is that this will also help the adults who may be struggling with their own finances. When I first started teaching the course, a student was excited to share that she taught her mother how to write a check and how to use the checkbook register. Her mother had never written a check and did not have a checking account prior to the check-writing lesson, but she established an account after talking with her daughter. In addition, one of my seniors was convinced she was banking with 7-Eleven because that is where she cashed her checks. It took me the entire year to convince her to establish a checking account. Then, one day before the end of the year, she came to me and showed me her checkbook. I was so proud, and I told her as much. It was very rewarding knowing that I played a part in her financial growth and maturity.
Practical, real-world skills are invaluable assets that empower students to handle unexpected situations with confidence and efficiency. Two of my students from different classes got into a fender-bender in the student parking lot after we completed the insurance unit, and because they knew exactly what needed to be done, they handled the situation like seasoned professionals. I was very impressed and praised them for applying what they’d learned. Another student knew what to do when she and her family returned from a weekend getaway to find that a pipe had burst and flooded the inside of their home. Her parents were amazed that she knew what steps to take and what to tell the insurance company to resolve the problem.
In our classes, we discuss financial planning and how critical it is for success and independence, along with the advantages and disadvantages of credit and how to use it responsibly. Understanding credit and debt management is one of the most crucial aspects of personal finance. Many students are unaware of how credit works and the long-term consequences of mismanaging debt. By educating them on these topics, I can help them avoid common financial pitfalls. Each year, I have at least two or three students who do not understand that the money they charge on a credit card is not free money. The look on their faces is priceless once they realize they must pay it back. I advise all students, “If you cannot afford to pay it back, then you cannot afford to charge it,” making sure they understand that credit cards are short-term loans that can be used continually as long as they’re paid back in a timely manner. If the credit card is not paid in full each month, then interest must be paid, and interest can be very expensive. So, I stress that if you don’t have the money in your account to pay for your charges, then don’t charge anything unless it is an absolute emergency.
We talk about delayed gratification, and we have some really good discussions on savings and the importance of having a budget. I teach them the principle that every dollar has an assignment, and it is important that the dollar knows exactly where it is supposed to go and what it is supposed to do. It may sound silly, but it really works. That’s why budgets work. I talk about the importance of paying yourself first and having an emergency fund and stress the significance of establishing these habits before they have responsibilities of their own. If the students get in the habit of living on 80 percent of their income, then paying themselves first and having an emergency fund becomes easier.
Over the years, I have had students come back and tell me how much the Economics and Personal Finance class has helped them. One student called me from Hawaii to let me know that she had joined the Army. When I asked her what job she chose, she said, very matter-of-factly, that she had picked finance. “I chose what you taught me,” she said. Another student was inspired by the class to go to work for a bank, and yet another, spurred by what he had learned, majored in economics in college and now he works for the federal government in Washington, DC.
The value of understanding economics and personal finance for students cannot be underestimated. By equipping them with knowledge and skills to make sound financial decisions, they can avoid common pitfalls such as overspending, debt accumulation, and financial mismanagement. By instilling good financial habits, students are empowered to take control of their financial futures and build a strong foundation for economic success.
I can confidently say that choosing to teach Economics and Personal Finance is one of the most impactful decisions of my career. I believe I have not only influenced my students but also positively affected many families—and ultimately, isn’t that the true purpose of our profession?
Alice Stocks, a member of the Education Association of Norfolk, teaches at Granby High School. She was named a 2023 Virginia Regional Outstanding Economic Educator by the Virginia Council on Economic Education, and has also served as EAN Vice President, Board member, and Building Representative.
Interested in helping your students get a better grasp of some of the financial responsibilities that are headed their way as they venture into independence? The Virginia Council on Economic Education has a lineup of materials to help with students of all ages. You’ll find lesson plans, case studies, and other resources at vcee.org/teacher-resources/.
According to the Economic Policy Institute, teachers in Virginia earn 67 cents on the dollar compared to other (non-teacher) college-educated workers. Virginia’s teacher wage penalty is the worst in the nation.
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