With a year of working at In-N-Out Burger under her belt, high school senior Sarah Wiley would say she makes good money. But when she first started working, she wasn’t sure what to do with her paycheck. She had a feeling that it wasn’t a good idea to spend it all at once, but otherwise she was stumped. “I was like ‘How do I invest this money? And how do I make sure I’m saving enough?’” she said.
So when planning her senior schedule, she looked to her school’s personal finance class for guidance. It was the second year the course was offered at San Marcos High School in southern California. “I thought that it would be a class that would give me some great life skills for the future,” she said early in the semester. “I’ve already learned so much.”
Studies show that students are more likely to budget, save and manage their credit after they take a financial literacy class. Yet just under half of states require a personal finance course as a graduation requirement, and only one in four students have access to such classes. Newly offered personal finance classes at two schools in San Marcos Unified School District (SMUSD) have attracted students who want to understand their part-time job paychecks, get student loans for college or make an informed decision to get a credit card.
An investment in personal finance for teens
The San Marcos Promise, a local nonprofit, brought the idea of adding personal finance to SMUSD’s curriculum nearly three years ago. Before that, they offered after-school college and career workshops that spanned topics related to personal finance, including advice on how to buy a first car and how to build credit. Because the workshops about money were always well-attended, the nonprofit organization approached Jeff Montooth, a social science teacher at SMUSD’s Mission Hill High School, to see if he’d be interested in teaching personal finance as an elective.
When the board approved the course, hundreds of Mission Hill students signed up. “We had to turn kids away. I went from thinking I was going to teach one section of it to it being what I teach full time now,” Montooth said.
The following year, Tara Razi, a history teacher from SMUSD’s San Marcos High School, decided to start a personal finance class at her school.
Teachers’ personal experiences make learning memorable
Montooth and Razi use curriculum from Next Gen Personal Finance, a nonprofit organization that provides professional development and resources to educators who are teaching personal finance for the first time, and they add their touches to the structured units. The personal finance classes at SMUSD span the whole school year and cover career readiness basics like how to write professional emails and crafting resumes.
When the class starts focusing on money, Montooth uses personal stories to help concepts stick in students’ memories. For students, talking about money can be uncomfortable, especially when they come from a range of socioeconomic statuses. At Mission Hills, almost a third of students receive free and reduced lunch. Early in the school year, Montooth shares about his financial past, including bad financial choices he’s made.
“I’m able to share with them my mistakes,” said Montooth, who confessed during his lesson about compound interest that he didn’t start saving for retirement until his thirties. He took out a calculator and showed students how much money he would have made if he started earlier. “By being open with them from the very beginning, I think it sets the tone of letting them know that it’s okay that somebody doesn’t have all the right answers,” he said. “Everybody’s going to leave this room knowing more about how to manage their finances in the future.”
Josh Lazo, a senior at Mission Hills, remembers when Montooth talked about his struggle to pay for college. “Comparing his story to where he is now and the kind of person he is, it is pretty fascinating to see,” Lazo said. Hearing about his teacher’s setbacks helped him understand how everyone has a different financial journey and how he can avoid making the same errors.
Some stories Montooth tells are educational, and some are just entertaining. “If you happen to be a family member or a friend of mine, you’re probably going to be brought up in my class,” he said. For instance, when his class finished a unit about student loans, he told a story about a friend from college whose car broke down mid-year. He took his student loan money and bet it all on a football game.
“Their feeling was that if they won, they would be able to both buy a car and pay for school,” says Montooth. “They did not win.” While the average student is unlikely to make the same mistake, he said the outrageous story helps them feel more comfortable asking questions because it shows that money mishaps can look all types of ways.
At San Marcos High School, personal finance teacher Tara Razi tells her students about how she grew up in Orange County, where it was common to go into serious debt to keep up the appearance of being well off. During the 2008 recession, right after she graduated high school, her family’s home was foreclosed on, which pushed her to become more financially literate.
With students, she explains the difference between savings and checking accounts and what it means to have good credit. “It’s not just credit cards, but auto loans, student loans and mortgages that go into managing their credit,” said Razi, who has no problem using her own financial records as examples in class.
“One of the first things she told us was her credit score,” recalled Razi’s student Sarah Wiley. “She talks about her mortgage on her house and how expensive things really are.”
As a class project, students have to research different credit cards and consider the different interest rates, annual fees, cashback, benefits, and late payment fees. “She literally brought her wallet into class and showed us her different credit cards,” said senior Samantha Miller-Coughran.
If a student wants to get a credit card to start building credit they can get a permission slip signed by their parents and schedule time to sit down with Razi to set it up.
Use hands-on activities and learning won’t be taxing
Montooth expects students to be excited about learning how to get their first credit card, but he was surprised to see that students also take a liking to filing taxes.
“When you’re 16 or 17-years-old, you’ve always heard about taxes being this terrible burden,” said Montooth. “And it’s funny because it is one of the lessons that they really get into.”
When students learn to file state and federal taxes, they can use fake documents or pay stubs from their part time jobs. Students get excited when they see how much money they got in the tax return. It’s almost like a game to them, said Montooth, because students will often compare how much money they got in their tax return. “Those kids aren’t going to be scared the first time they have to do their taxes,” he said.
At both high schools, students learn to budget their money during a project where they have to plan as if they are financially independent and working a job that doesn’t require a college degree. They have to find an apartment with roommates that is close to where they’re going to be working as well as get copies of grocery receipts and utility bills from their parents to use in their budgeting.
In the budgeting unit, Razi brings in several name-brand products and their generic equivalents from the grocery store. Students blind sample the products and see if they can guess which one is which.
“The average is four,” said Razi. “It shows that you don’t have to get the name brand version of everything.”
For parents and their teens, money can be a “conversation starter”
Even when financial literacy is being taught at school, the lessons should start at home, said Razi. “A lot of parents try to keep their kids out of financial decisions, but you’re doing them a disservice by throwing them into it as soon as they get out of college.”
Parents may feel reluctant to burden their kids with financial discussions, but they don’t have to delve into stressful specifics, such as family debt. Instilling financial literacy can be as simple as having your teen watch you to pay the bills and tag along to the grocery store.
“Have them sit with you and see what goes into the expenses and the value of a dollar at home,” Razi suggested. She noted that parents who are recent immigrants, do not speak English as their first language, or are just uncertain about financial literacy also can learn a lot from their kids.
Montooth has had parents tell him that talking about finances with their teens has strengthened their relationship and led to fruitful discussions. He hopes more of those discussions will happen both in families and in schools. “One of the messages that I would really like to get out is that you don’t need to be afraid of trying to begin personal finance at your high school,” said Montooth. “It’s engaging and it’s important.”