🤑Money talk: Financial literacy
Look, I’m not dummy, I get it - my students will PROBABLY never need to graph standard form quadratics by hand or synthetically divide polynomials again in their post-high school future. But you know what they WILL need to be good at? Managing money. And that means understanding exponential growth and decay and how it relates to interest, specifically compounding interest: the 8th Wonder of the World according to Einstein.
In Algebra II, I follow up quadratics with polynomials and then rational functions (graphing, applications, and the algebra part as well: adding, subtracting, multiplying, dividing rational expressions). I squeeze in a mini-unit on properties of exponents, rational exponents, and radicals. I typically end Algebra II with a unit on exponential and logarithmic functions, weaving in Inverse function ideas as we go.
Covid messed up my pacing, and for the past two years, I haven’t made it to exponential and logarithmic functions at ALL because we ended with rational functions. It didn’t feel right sending students to Pre-Calculus never having worked with logarithms, so this year I’m swapping my final units and doing exponential and logarithmic functions BEFORE rational functions. I risk not getting to rational functions at all, but rational functions are a huge part of Pre-Calculus since they fit perfectly with end behavior, asymptotes, and limits, so students will thoroughly do that unit anyways next year.
THIS means that I finally get to do my mini Financial Literacy lesson again at the end of exponential functions! Students have already graphed exponential functions by hand, transformed them, written equations for them given different scenarios, and number-crunched with them. Time for the fun part - application problems!
I’m planning on doing real-world problems on Thomas Malthus + Food Shortages (post coming soon on this), a 10-sided dice experiment, and this Compound Interest lesson.
My sister, who is super money savvy and much more financially literate than me, came in to speak to my classes about 10 years ago and made an excellent presentation for them. I used excerpts from her Powerpoint to create an updated Google Slideshow to use in my classes.
I plan on first going through these slides and introducing my sophomores to some basic financial vocabulary. I’ll tell them some different institutions they can invest with and share with them some snapshots of my retirement account and ETF accounts so they can see what these look like. We’ll estimate the interest rate on my ETFs using my ‘unrealized loss/gain’ and talk about how much higher it is than a typical interest-yielding savings account or even a savings CD.
Their biggest takeaway should be to invest AS EARLY AS POSSIBLE, like RIGHT after graduating college, and include in their portfolio the S&P 500, arguably the most reliable and steadily increasing ETF out there. I’ve consistently made the most money from this single ETF compared to other flashier, sexier ETFs. Slow and steady S&P 500 wins the race and is EASY to manage - it’s passive income!
Next, they will each open up a nearly blank Google Sheet that I assign to them. They’ll each get their own copy on Google Classroom - I do this so I can monitor their Sheets from my laptop and make sure everyone is following along. We’ll go through an example together from my most recent credit card statement, which I will hand out for them to look at. My credit card bill was around $1650.00. I always pay off my credit card bills fully each month, but when I was looking for a good problem to give my students, I thought about what if I DIDN’T pay it all off, and only paid the minimum $40 payment. My credit card has a 20.74% APR. My credit card statement says that if I only paid the minimum $40 and didn’t make any additional charges, it would take me SIX YEARS to pay this $1650 off.
My students’ job will be to confirm this claim using Google Sheets and formulas. I will go through each of the following scenario with them
SCNEARIO 1: Suppose I don’t make any additional charges on my card
SCENARIO 2: Suppose I keep having $1600 on my card each month (a MUCH more realistic example, because bills don’t stop yo!) - takeaway: you will NEVER be debt-free again!
I tried this on my own today to make sure it actually did work out, and wouldn’t you know it, I made a critical error and wasn’t getting the result I wanted. I had to Facetime my sister and edit the Sheet with her. My issue? I wasn’t dividing the 20.74% APR by 12 for the 12 months. Now it works! Looking forward to going through this with my students!