Thursday, August 30, 2012

SEC Study Regarding Financial Literacy Among Investors

The staff of the U.S. Securities and Exchange Commission just released a study regarding financial literacy among investors as required by section 917 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Studies reviewed by the Library of Congress indicate that U.S. retail investors lack basic financial literacy. According to their research, the most effective existing private and public efforts to educate investors include programs that are:
  • Research-based
  • Goal oriented
  • Emphasize important investor education concepts
  • Easily accessible
  • Delivered efficiently
  • Relevant to their target audience
As a strategy to improve financial literacy, OIEA and other FLEC participants will work jointly and collaboratively to develop programs:
  • Targeting specific groups including young investors, lump sum payout recipients, investment trustees, the military, underserved populations, and the elderly
  • Promoting the importance of checking the background of investment professionals
  • Promoting as the primary federal government resource for investing information
  • Promoting awareness of the fees and costs of investing
Click here to read the full SEC report.

Monday, August 27, 2012

Why your students should follow @TeenDollars

TeenDollars is my student designed and managed website dedicated to sharing financial literacy information useful to students and teachers. Many high school students face similar financial decisions and responsibilities as adults. Some of these decisions carry with them lifelong consequences or rewards. Decisions such as a student debt choice, purchasing a car, or preparing to live on their own for the first time.

Our Twitter account is dedicated to sharing links and tips to help current students make wise and informed financial choices they are facing today.

Have your students click here to follow TeenDollars on Twitter.

The TeenDollars student page is full of information to help guide a student's college debt choice, as well as fun and engaging financial literacy games. There are also links to helpful tools and resources for teachers on this page.

TeenDollars is possible in large part thanks to the generous sponsorship of MoneyTrail and Raising CEO Kids. Both organizations are a great fit as a sponsor, as they provide helpful services suited for parents who want to raise financially literate children.

Tuesday, August 21, 2012

Mobile Apps

I have had multiple people ask me for mobile apps I recommend for financial and economic literacy. As usual, the Council for Economic Education has it covered. Click here for their comprehensive list of recommended mobile apps. 

On a different note, their national educator conference is October 4-6. Click here to register.

Consumer Education Guest Post: How Seductive Marketing Techniques Influence Financial Risk Taking

The following is a guest post from Ryan T. Howell, Ph.D. Assistant Professor, Psychology Department San Francisco State University and Co-founder of You can follow him on Twitter @SpendingWell.

Think about the last time you watched a football game. Now think about the all the commercials you had to watch. Have you ever wondered why certain brands seem to just add attractive models, for what appears no good reason? Well, there is a reason -- highly seductive and positive emotions make you take more financial risks. Why is that? I am glad you asked.

When you are exposed to seductive marketing techniques, a region region deep within your brain called the nucleus accumbens becomes activated. This is the part our brain that is "turned on" when we experiencing positive emotions such as excitement. So, how do we know that this region of the brain will make you take more financial risks? A study by Knutson and colleagues provides evidence for the link between nucleus accumbens activation and financial risk taking.

In their study, participants were randomly presented with pictures of couples in seductive positions (highly seductive and positive), snakes and spiders (highly seductive and negative) or household appliances (neutral picture). They were then instructed make an investment--their two choices were to invest $1.00 or $0.10 (a less risky investment). The researchers also used functional magnetic resonance imaging (fMRI) techniques to “see” what parts of the brain were activated (what brain regions were turned on) during financial decision making. In this way they can correlated brain activation with financial choices.

The researchers found that when people were shown pictures of couples in arousing positions, they were more likely to risk $1.00 compared to when they were shown pictures of a spider and a snake or household appliances. Most importantly, they found that the nucleus accumbens, the part of the brain associated with experiencing positive emotional states, were more activated when making riskier decisions.

Thus, by activating the nucleus accumbens region of the brain through arousing stimuli, people made risky financial investments.

So, this is all well and good, but why do these results matter? Well, this type of subtle “priming” happens all the time. In fact, this basic principle is widely used in casinos. Casino owners want people to make riskier decisions when gambling, so casinos are designed to maximize positive emotions like excitement. Casino floors are full of colorful lights, attractive servers, and appetizing food and drinks all working together to increase your nucleus accumbens activation. So, the next time you’re in Las Vegas, pay attention to parts of the environment designed to activate your nucleus accumbens. While there is nothing wrong with going to Las Vegas, it might not be a bad idea to pause and consider what is influencing your spending habits. After all, casino owners know what will make you spend more money—you should too.

How can you find out what else influences your spending habits? At BeyondThePurchase.Org we are researching the connection between people’s spending habits, happiness, and values. To find out more about subtle primes that influence your spending, we encourage you to first Login or Register with Beyond The Purchase and then take the Implicit Buying Motives Study. You might then try the Consumer Susceptibility to Interpersonal Influence Scale, which measures the extent to which the values of your family and friends influence your own behavior. Along the way, we think you’ll find out a bit more about why you buy and what makes you happy. The results might be surprising.

This post is based on the following research paper:

Brian Kuntson, G. Ellition Wimmer, Camelia M. Kuhnen and Piotr Winkielman (2008). Nucleus accumbens activation mediates the influence of reward cues on financial risk taking. NeuroReport, 19, 509-513.

Entrepreneurs Can Change the World

I will be showing the video clip above to kick-off my course on entrepreneurship. If you need to justify to your boss spending a little less time pre-testing and data collecting and a little more time creating an innovative classroom culture, read "Test Scores vs. Entrepreneurship: PISA, TIMSS, and Confidence" by Yong Zhao.

Monday, August 20, 2012

Cruel & Unusual Rules

We found out today that our graduation rate dropped from 96% to 80%. So what happened?

I still cannot believe this myself...

Our special needs students have the opportunity to further their education in a vocational program following high school. Because of their unique disabilities, the program is funded as long as the school district defers graduation. They each get a diploma, and have for all intents and purposes - - graduated. Our district does the right thing and works to make sure the kids who qualify for the program are awarded the opportunity to participate.

According to this law passed by the US Department of Education, as of this year those students now count against our graduation rate.

As it relates to us, this was a 7% 'knock' on our graduation rate.

So what about the other 9%?

When students transfer from our school to another we have to process paperwork. Our staff follows up by sending the appropriate paperwork and student records. However, if the student does not show to the school they transferred to, ODE counts it against our graduation rate even though they withdrew from our school to attend a different school.

I'm curious if the news media will report our new graduation rate - - or the truth behind it.

Friday, August 17, 2012

Financial Education Curriculum for Special Needs Students

I am blessed to teach at Reading Community City Schools, a district dedicated to financial literacy. In order to graduate from Reading High School, you need to pass my semester long personal finance course.

I volunteered to teach a financial education class specifically designed for special needs students, which I will be doing for the first time this semester. Thanks to VISA's Practical Money Skills, I have a strong framework of curriculum to begin with.

Click here for their free curriculum and resources.

Thursday, August 16, 2012

How the Poor, The Middle Class And The Rich Spend Their Money

How do Americans spend their money? The graph above shows average household spending patterns for U.S. households in three income categories — one just below the poverty line, one at the middle of the income distribution and one at the top of the distribution.

Click here to read the full piece on NPR's Planet Money.

Teacher Retirement - A Sad Reality

Sadly, Michigan teachers will have their pensions phased out. As you can see here, Senate Bill 1040 (H-3) was was just passed by the House and amended by the Senate yesterday. You can read the House Democrats take on what happened here, and if the GOP has a response it will probably be posted here. The bottom line is that I feel terrible for Michigan teachers, and Michigan is not alone. Pages 99-113 of the National Council on Teacher Quality provides an overview of the pension status of each state. You can read the report here and for some states it is not a pretty picture.

Teachers in some states are also counting on Social Security and Medicare. As you can see from the charts above and below, our Federal Government is facing real entitlement problems. As Andrew Sorkin pointed out in a recent tweet, like him or not the Ryan pick for VP may finally bring to the forefront entitlement reform.

There will be a lot of discussion about who has a better plan. Quite frankly, nobody can craft a plan that delivers the same kind of Medicare we receive today. There is not enough money. Representative Ryan's plan is essentially a voucher, and President Obama will tell us it is cruel because it leaves seniors to pay the difference. Unfortunately, we are either paying the difference directly or through tax dollars, the money has to come from somewhere. 

The purpose of my post is to bring to light that the days of putting in 35 years and retiring with comfortable benefits may be coming to an end. This is tragic, as our low salaries were always justified by our benefits. What saddens me the most is that teachers are paying for a financial crisis caused by bankers, politicians, central bankers, and economists. As you can read here, many of them are doing quite well right now. Did I mention that nobody who had a hand in our collapse went to jail?

Every state has a retirement package that is a little bit different, hopefully your state is in great shape. Contact your state teacher retirement system to find out where your retirement stands. We need to prepare for the worst, and hope for the best. 

Monday, August 13, 2012

Teaching Insurance

Insurance is often the forgotten content in financial education. Here are a list of my favorite free insurance education resources. Each organizations offers a full compliment of lesson plans, tools, presentation material, and in many cases videos.

The Griffith Foundation provide K-12 teachers and guidance counselors with the information and tools they need to teach these concepts to their students and make them aware of the career opportunities in these disciplines.

The Ohio Insurance Institute provide free resources to help explain the theory and everyday workings of insurance — information students will need as they enter the adult world. We even provide lesson plans to help take the guesswork out of what to teach.

The Life and Health Insurance Foundation for Education (LIFE) is a nonprofit organization dedicated to helping consumers make smart insurance decisions to safeguard their families’ financial futures. The main topics we address in our educational efforts are life, disability, long-term care and health insurance.

InVEST is dedicated to give you a foundation for your study of insurance through the InVEST program. Just as you must learn a new language when you decide to move to a foreign country, it is important for you to have a basic understanding of the fundamentals of property and casualty insurance, of which automobile insurance is a part.

Sunday, August 12, 2012

Politics and Personal Finance

Are political ads affecting your personal finance IQ? Take 60 seconds to see...

Click here to take my six question quiz. Be sure to write your name and click 'Start' to begin.

Friday, August 10, 2012

What Money Shouldn't Buy

"While most of our everyday transactions are driven by the marketplace, are there some things money shouldn't be able to buy -- a spot in line, maybe a human life? As part of his Making Sen$e of financial news series, Paul Solman speaks with Harvard professor Michael Sandel about his new book, 'What Money Can't Buy.'"

Click here for the full PBS & EconEdLink video series Making Sen$e. Each video segment is 7-10 minutes and covers current topics in economics and personal finance and are a great way to bring real-world examples in to your classroom.

My Classroom Economy

"My Classroom Economy enables any educator to teach children financial responsibility through fun, experiential learning. It's a simple classroom economic system based on the idea that students need to earn school "dollars" so that they can rent their own desks.

To earn a paycheck, they need to take on classroom jobs. They can get bonuses for academic performance, outstanding behavior, or extracurricular activities. But students can also incur fines for dishonesty, disrespect, or breaking other classroom rules. And for those who can save more than their rent, the system has rewards."

I enjoyed volunteering for the Vanguard Education Advisory Council to provide input on this free K-12 experiential learning program. As I reviewed the program for the elementary grades, I saw a lot of similarities between the rewards system for character point programs and My Classroom Economy. The difference is that My Classroom Economy takes it a step further and teaches kids how to manage the money they earn. 

The Role of Technology in Education

Arne Duncan declared August connected educator month. There are countless advantages to being connected, and numerous resources available like this one to guide new teachers into the connected world. As I explained in this piece for SmartBlogs, I have personally benefited from being connected by learning about numerous technology tools, pedagogical suggestions, and the evolution of my content area.

As Mary Beth Hertz wrote in this piece, connected educators are at the beginning of the innovation curve when it comes to using technology to further our learning and grow professionally.

I just finished reading this paper by Aaron DeNu, a buddy of mine for over ten years who attended graduate school at Fordham University and Harvard University and is pursuing PHD coursework at The George Washington University. As he pointed out “It’s tragic when we can’t be together, and with an increasingly separated society, we’ve turned to interface technologies to alleviate detachment. Often, technology bridges the communicational gap by reducing time and space constraints. The interface brings us together which, in turn, creates a new communicational paradigm.”

For educators, his insight is spot on with being a connected educator, and translates into flat classrooms for students. With that said, let’s make sure we do not confuse the value for teachers to improve by being connected or students to collaborate using technology with exclusive online student learning.

Exclusive online learning can be valuable for some. When I decided to teach, I had the choice between attending Xavier University and the University of Phoenix. I could not attend Xavier because my first son was just born, my wife still worked, and I was holding down a full-time job. Class hours did not fit with our circumstances so online learning opened the doors to my education. Many teachers face the same constraints and choose an online graduate school education.

Most of us are mature enough, and certainly motivated enough to learn online. I see the service as valuable for adults because we have adult responsibilities and need flexible learning opportunities. As Denu points out “The use of an interface can only be viewed as a tragic alternative. It is simply a substitute—a bridge.”

DeNu continues “An interface is especially deficient in fulfilling a channel for bodily warmth, touch, and smell (Gumpert & Cathcart). Consequently, this effort at communicating ‘denies us most of the sensory means of communication control and verification present in intimate situations’ (Gumpert & Cathcart).” This certainly translates into the consequences of exclusive or primary online learning for K-12 students.

In other words, technology has created countless tools that help teachers and students. Let’s make sure as technology continues to evolve that our classrooms are student-centered and teacher-led.

About Aaron DeNu: Aaron DeNu holds a position in communication and technology management at The George Washington University in Washington, D.C. He attended Wilmington College (Ohio) where he studied computer science and history. His Master’s Essay at Fordham University focused on the effects of technology on human interaction--specifically interface technologies and their pedagogical implications. While working towards his M.A. at Fordham University, he completed additional coursework at Harvard University. Most recently, he has expanded upon his anthropological scholarship with further graduate studies at The George Washington University.

Saturday, August 4, 2012

Conversation with the Chairman - A Teacher Town Hall Meeting

Updated Post (Including the taped broadcast of the event on C-Span)

I had the good fortune of attending the Federal Reserve’s “Conversation with the Chairman – Teacher Town Hall Meeting”. As you can see, I had a pretty good seat for the event. Chairman Bernanke addressed educators in Washington, D.C., and nationwide via video conference. His opening remarks focused on the need for personal financial education in the wake of the recent financial crisis. Following his remarks, educators from across the country asked a number of questions.

It was obvious the Chairman and the Federal Reserve are advocates for financial and economic education. Their website is full of terrific education resources, as are the websites of each of the individual banks. Chairman Bernanke did not have to take the time to do this, and his efforts are certainly appreciated.
A few takeaways from my experience…

First, the Federal Reserve does not set education policy, and thus the Chairman could not provide specific financial education policy direction. He did a great job advocating for the need for financial literacy in our schools, without diving into how he would prefer the instruction be delivered. He stated that every student should receive some sort of financial education instruction, but stopped short of articulating his preferred delivery of the instruction. He suggested a stand-alone course, integrating the concepts into various courses, and even brought to light the value in taking AP economics courses.

Second, as someone who has arguably greater influence over our economy than any other single person, I got the strong sense of his appreciation and respect for the free markets as the main driver for our economy rather than a single person. He addressed a question about the role of the “Invisible Hand” in the economic collapse, and you could see his face light up when he used Milton Friedman’s example of the magical free market forces that come together to just produce a pencil. He also pointed out that for markets to work, people need to understand what they are buying and selling. This was certainly not the case leading into the financial collapse, as the financial instruments that froze our credit markets were a mystery, as were the details of loans for many consumers.

Along those lines, he addressed growing student debt. At the micro-level, he accurately pointed out that students make debt choices, and guidance counselors need to serve as investment advisors for students who are going into debt to investment in themselves. Students should consider what they are spending relative to anticipated future income upon graduation. At the macro level he pointed out that most student debt is owed to the federal government, which may not lead to the complicated problems following the housing crisis but will lead to future fiscal burdens for taxpayers.

Third, I was surprised he was as direct as he was about our broad education challenges. He believes that the inequality of education is leading to economic inequality. I was pleased he pointed this out, and hope policy makers recognize appropriate ways to address the problem. As it relates to the purpose of the town hall meeting, this paper cites a direct correlation between unequal financial education opportunities and economic inequality.

Lastly, he responded to a question about whether he believed future generations are going to be worse off than previous generations. Among other factors, he believes America’s entrepreneurial culture and innovative technologies will continue to drive our economy to prosperity. I hope he is right, but as Yong Zhao points out here, current education reform policies could become an obstacle in developing future entrepreneurs and innovators.

Click here for the taped broadcast of the event on C-Span.

Financial Fables

I stumbled across a great lesson for 5-10 year olds just posted on the Federal Reserve website. Financial Fables are entertaining stories that combine reading, economics and personal finance into life lessons that feature "money morals."

"Through quick, interactive online tales, students can learn useful financial management skills that will better prepare them for the future. Created for students ranging from preschool to fifth grade, Financial Fables teach students about savings, money management, and how to set short- and long-term financial goals.

All fables feature a “money moral” or lesson to be learned that can be applied to everyday life. During each fable, the main character is presented with a financial dilemma and must use his or her money smarts to solve the problem. The interactive e-book features two modes:

  • The "Read to me" function highlights text while pages are read aloud to younger students. 
  • The "Read by myself" function lets older students read at their own pace. 
Each fable is designed around the concept that it’s never too early to start learning about financial responsibility.

Financial Fables feature enrichment activities and lesson plans that are aligned to national economics and personal finance standards, as well as state reading standards. Interactive features, including activities, coloring books and games, accompany each fable to extend learning at school and at home."

Click here to visit the website and access all of the resource documents.

Friday, August 3, 2012

Bloom's Taxonomy

I am addicted to using Blooms Taxonomy. I even have a post-it-note on my desk at school with Bloom's written out for assessment, pedagogy, and inquiry questioning reminders.

If you have trouble remembering what Bloom's Taxonomy is you can print the illustration above and put it on your wall at school. To better understand it read this simple explanation. As I mentioned before, I apply the process in a number of ways, and move through the process with each unit of content. A fun way to analyze Bloom's Taxonomy is to read this comprehensive list of Bloom's resources by Larry Ferlazzo and organize into bookmarks what works best for you. Of course, the best way to evaluate Bloom's and get your Seinfeld fix in is to watch this video. After doing so I would recommend creating your own blog post to share what Bloom's Taxonomy resources would be best from a student's point of view.

Updated 10/1/12: Hyperlinked below are my six favorite Bloom's Taxonomy resources:

Thursday, August 2, 2012

Fight of the Century

My students absolutely loved this video. Here is the background of the video from 

"According to the National Bureau of Economic Research, the Great Recession ended almost two years ago, in the summer of 2009. But we’re all uneasy. Job growth has been disappointing. The recovery seems fragile. Where should we head from here? Is that question even meaningful? Can the government steer the economy or have past attempts helped create the mess we’re still in?

John Maynard Keynes and F. A. Hayek never agreed on the answers to these questions and they still don’t. Let’s listen to the greats. See Keynes and Hayek throwing down in 'Fight of the Century.'"

Wednesday, August 1, 2012

Zip Code Lottery

School funding in Ohio is unconstitutional, as it is in other states. Specifically in Ohio, the court's finding "...declared the funding system unconstitutional and identified particular elements, such as the 'over reliance on property taxes'". You can read more here.

The latest state budget cuts widened the gap further. "The budget leaves school districts with $2.9 billion less overall funding over the next two years. That means school districts will have 10.5% less total funding next year, and a 4.9% further decrease in the budget’s second year, forcing drastic cuts and property tax increases." As an example, my district (a Title I district) will lose 28% of our funding by the end of the next fiscal year. You can read more about the state-wide funding crisis here.

What makes the problem even worse is the growing concentrations of wealth and poverty, which is evident in the chart above. As school revenue sources segregate even further, the education inequality gap grows out of control. The proposed solution of coupons for a limited supply funded education....I mean a policy that transitions the American culture and pride of equal opportunity into an American zip code lottery.