FINREP
Financial Sector Development Project
FINANCIAL LITERACY:
TEACHING METHODS
WORKSHOP ON FINANCIAL EDUCATION COURSE
Kiev, Ukraine August 11, 2011 (2nd Session)
TEACHING METHODS AND POLICIES USED
 “Hands‐on” approach, where the emphasis is on building real‐world skills and financial awareness, and where students learn by doing
 Mixture of lecture/guided questioning and applying what they’ve learned via classwork/homework (approximately 50‐50 in terms of class time)
 Internet‐based projects (web quests), write‐ups of “current events” articles
 Investopedia stock game, an activity to teach students to invest money in the stock market—a fun, classroom competition
FINANCIAL LITERACY: TEACHING METHODS
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WHICH ACTIVITIES HAVE BEEN THE MOST SUCCESSFUL?
 Most students feel that the “web quests” have been the most interesting assignments, but the Investopedia.com stock game is the best‐loved
 The “current events” article write‐ups are next in popularity (they are meant to inform and challenge students’ thinking on certain financial/economic topics)
 Homework assignments that are not perceived as being “relevant” or applicable to them are tolerated (but the students know that they will have to deal with these topics sometime in the future)
 The review worksheets for the quizzes and tests are seen as good summaries of the material being taught
FINANCIAL LITERACY: TEACHING METHODS
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WHICH ACTIVITIES HAVE BEEN THE MOST SUCCESSFUL? (continued)
 Giving students real‐life examples of events going on in the financial/economic/political worlds that matter to them  Giving students real‐life examples of how their teacher has made money mistakes in the past (so that they don’t make the same mistakes!!)
 Making the course as “real world” as possible (this is an especially good course to teach in an election year, where everything in the news is financially oriented)
FINANCIAL LITERACY: TEACHING METHODS
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TYPES OF CASE STUDIES AND PROJECTS
 Web quests on each unit in the course (usually 1 per unit)—students must find the information on the topic from the internet, read the article, and then answer questions (example—history and purpose of Social Security)
 “Current events” article write‐ups where students read articles, summarize them, and use “critical thinking” skills to analyze them
 “Better Buy” problems—have students compare investments or purchases and determine which is “better”
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SPECIFIC EXAMPLES OF PROBLEMS
 Consumer Loan example
The Smiths purchase an HD television for $1200 and make a down payment of $200. They finance the rest at an APR of 12% for 24 months. Amt. Financed = Purchase Price – Down Payment
Monthly Payment = Chart Value X (# of 100’s in Amt. Financed)
Total Amt. Repaid = (# of months) X Monthly Payment
What will their monthly payment be?
a. ___________________
What is their total amount repaid?
b. ___________________
What is the amount of the finance charge on their loan?
c. ___________________
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SPECIFIC EXAMPLES, continued
 Compound Interest problem—“Tim and Tom at 9%”
DEPOSITS
YEAR
BY TIM
DEPOSITS
APR
BALANCE
YEAR
BY TOM
APR
BALANCE
$0.00
1
$2,000.00
0.09
$2,186.17
1
$0.00
0.09
2
$2,000.00
0.09
$4,575.83
2
$0.00
0.09
$0.00
3
$2,000.00
0.09
$7,187.93
3
$0.00
0.09
$0.00
4
$2,000.00
0.09
$10,043.17
4
$0.00
0.09
$0.00
5
$2,000.00
0.09
$13,164.19
5
$0.00
0.09
$0.00
6
$2,000.00
0.09
$16,575.72
6
$0.00
0.09
$0.00
7
$2,000.00
0.09
$20,304.81
7
$0.00
0.09
$0.00
8
$2,000.00
0.09
$24,381.02
8
$0.00
0.09
$0.00
9
$2,000.00
0.09
$28,836.65
9
$0.00
0.09
$0.00
10
$2,000.00
0.09
$33,707.03
10
$0.00
0.09
$0.00
11
$0.00
0.09
$36,844.59
11
$2,000.00
0.09
$2,186.17
12
$0.00
0.09
$40,274.21
12
$2,000.00
0.09
$4,575.83
13
$0.00
0.09
$44,023.07
13
$2,000.00
0.09
$7,187.93
14
$0.00
0.09
$48,120.88
14
$2,000.00
0.09
$10,043.17
15
$0.00
0.09
$52,600.13
15
$2,000.00
0.09
$13,164.19
16
$0.00
0.09
$57,496.33
16
$2,000.00
0.09
$16,575.72
17
$0.00
0.09
$62,848.27
17
$2,000.00
0.09
$20,304.81
18
$0.00
0.09
$68,698.40
18
$2,000.00
0.09
$24,381.02
19
$0.00
0.09
$75,093.08
19
$2,000.00
0.09
$28,836.65
20
$0.00
0.09
$82,082.99
20
$2,000.00
0.09
$33,707.03
FINANCIAL LITERACY: TEACHING METHODS
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SPECIFIC EXAMPLES, continued
 “Tim and Tom,” continued:
How much of a head start does Tim have before Tom starts investing?
How much interest did the two men earn between years 13 and 14?
How much interest did the two men earn between years 19 and 20?
What pattern do you see forming from the last 2 answers? What conclusions can you draw from the data? FINANCIAL LITERACY: TEACHING METHODS
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SPECIFIC EXAMPLES, continued
 Home Mortgage Example—Monthly Payment per $1000 of Loan
TERM OF THE LOAN
%
15 Years
25 Years
30 Years
9.00
10.14
8.39
8.05
9.25
10.29
8.56
8.23
9.50
10.44
8.74
8.41
9.75
10.59
8.91
8.59
10.00
10.75
9.09
8.78
10.50
11.06
9.45
9.15
11.00
11.37
9.81
9.53
11.50
11.69
10.16
9.90
12.00
12.01
10.53
10.29
12.50
12.33
10.90
10.67
13.00
12.66
11.28
11.06
13.50
12.99
11.66
11.45
14.00
13.32
12.04
11.85
14.50
13.66
12.42
12.25
15.00
14.00
12.81
12.64
15.50
14.34
13.20
13.05
16.00
14.69
13.59
13.45
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SPECIFIC EXAMPLES, continued
When purchasing a home, determine the amount of the down payment, amount of the loan, the monthly payment, the total amount repaid over the period of the loan, and the interest paid.
Purchase price: $112,000
Down payment: 15%
Interest rate: 12.5%
Time of loan: 30 years
Determine the down payment:
$112,000 x .15 = $16,800
Determine the mortgage:
$112,000 – 16,800 = $95,200
Determine the monthly payment: $10.67 x 95.2 = $1015.78
Determine the total amount repaid: $1015.78 x 360 = $365,680.80
Determine the total amount of interest. $365,680.80 ‐ 95,200 = $270,480.80
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IMPORTANCE OF SUPPLEMENTAL MATERIALS/OTHER RESOURCES
Because the financial world is constantly changing, the need for up‐to‐date resources is an ever‐present challenge for teachers who want to teach this course. Here are a few examples of real‐life changes in financial matters:




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Changes in tax laws
Changes in banking regulations/services (like online bill paying)
Changes in credit regulations/policies
Availability and awareness of online resources for budgeting, monthly payment calculators, etc. that did not exist a relatively short time ago
Quality resources can always be incorporated into this course to supplement students’ learning
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