Personal finance course

Sounds like a comprehensive and useful course, and I certainly admire you initiative and responsibility. Any "suggestions" are dificult to make for anyone without experience in teaching such a course. Guaging the receptivity and ability of students is, I think, key to teaching, so you may want to make changes on the fly as you get a feel for what the class is responding to.

I have my off-the-wall suggestions - please don't take this as criticism I like stocks, so if learning, what I'd want to be taught is:

One thing that jumps out at me is the simplicity of the practical problems to solve. These are very simple - almost too simple - compared to the subject material you want to cover. FWIW, I'd add some more difficult practicals - maybe asking each student to bring in one of five (pre-determined) mutual funds' annual reports (the physical thing), then walk them through compare and contrast (with emphasis of portfolio composition and turnover).

I wish you the best with the course! Demonstrably, the population needs a solid foundation.

I would add an expenses assignment to cover budgeting, emphasis on cost control and knowing exactly where money is spent. Ideally, for one complete month each student tracks exactly where every dollar is spent, then compares their total to their checking account withdrawals. But that could be reduced to one week, and it could be made a game of by asking each student to keep an exact record of every penny spent on one specific category such as "junk food." At least that would get the germinal idea of managing expenses across.

For the third section you might add the BLS data link to consumer expenditures (which has a very detailed list of expense categories for U.S. households), or you could do a print out and bring it to class. Some students may have minimal contact with accounting, but it's a fundamental to all planning, and apparently most people get into trouble because they do not know where their money goes, how much they have, and how to budget. The derivation of the word "economy" is Greek

- oikos (house) + nemein (manage).

All households add up to a nation's economy - and what you are teaching is very important. Good luck!

I don't see much content in those TRPrice web pages... seems more like sales pitch than the tutorial they pretend. I think I have seen a better example, but can't remember where.

You might have them review some example Northern Trust newsletters on asset allocation - very clear explanations of what mix they propose and why at

Thx for all 3 responses I have seen thus far.

T Rowe is where I do my investing, so even though their page is biased, it's worth a reference because I am familiar with much of its contents. I often say no advice is unbiased, until you find the the bias and can live with it. (Buyer Beware). Referencing a page like that to help with investing is good, and I am "sure" Vanguard, Fidelity and many other companies have similar information available.

I am all for more complex problems to solve. In other discussions, most people are suggesting the students (whether adults or high school kids) will be more focused on payday loans and refund anticipation loans than how to invest money. If each student stays out of debt and has a $3000 emergency fund in the bank, that is success and all the other topics are noise which get in the way.

For example- with risks, I want to talk about inflation risk, market risk, interest rate risk, currency risk and many other forms of risk. Things like losing a job, taking a reduction in income and similar- things which might derail a financial situation. So reading an annual report makes sense, there would be 2 issues there-

I read my companies annual report, but usually do not read the whole thing. Instructor might have some homework. Thx for suggestion.

"I wish you the best with the course! Demonstrably, the population needs a solid foundation."

you got that right- I was surprised when I asked that no such course even existed.

That certainly is a comprehensive list but I have to say I do not like "laundry lists" which can be unending and sleep inducing.

I haven't thought this out but I would rather see a goal oriented approach. For example in order to buy a house, certain things need to happen. You need a budget for the house you can afford, a down payment and good credit. How do you establish each of these? The items on the laundry list map into the activities to buy a house.

Other major goals are college, retirement and getting rich in the stock market. :) Maybe also consider getting your first credit card, paying down credit card debt, managing credit card spending. How about monthly budgeting? Avoiding the death tax?

Frank

Frank- I could not agree more- that list is 24 items long, and if I spend 1 day on each topic (2 hour class), then some things do not get enough coverage and some things get too much coverage, and it will be tough to separate what is important to what is not important.

In the communities around this campus, most of the population would be trade based (as opposed to professional/ white collar) and if the average household income was 50k, that would be REALLY HIGH.

I am surprised credit cards were not on my laundry list, as that is an important concept, but I must have lumped it in with "debt" or credit scored, without discussing credit cards as a specific line item. Good catch.

Purchasing a house should definitely be added to the list of problems to solve, Good catch again.

If this works out, I do plan to suggest further classes on investing, retirement planning, college planning and similar, using this first course as my entry pre-requisite. I am also studying for the series 7 and 66 exams, which are probably good to have before teaching a class on investing.

I keep seeing ads about "asset protection". I have assumed much of this is bunk, but you may want to cover it (or touch on it) to the extent there are legit ways and, perhaps even more importantly, to warn of the bunk out there. Offshore trusts have been mentioned, but seem like they fall in the bunk category.

I used to see ads and invites to free dinners about how to turn your appreciated real estate assets (rental house, personal home) into no management income property - basically 1031 exchanging into a TIC property. I haven't seen any of these for a while (no surprise!), but this might be a topic, including the pitfalls likely not properly discussed by the promoters (i.e. how to properly turn your personal home into an investment property that can be 1031'd; setup and transaction fees; management costs; what happens after they typical (?) 7 year hold period passes - more setup and transaction fees, at the least)

Now I see ads for free dinners about - well, I don't know. They list a bunch of things "would you like to learn the secret to doing ____". I think it boils down to annuities.

If the course has never been taught before, use your 'laundry list' to let your interviewer see what you are prepared to cover, then explain that you want to make it a course emphasizing what the students need. I.e. get feedback from your students, both verbal and visual, interpret it, and structure the course accordingly, with a focus on practicality. E.g. "What are you most interested in learning about?" or "How many of you have a savings plan?" or "How many of you currently spend more than you make?" or if high-school students, just state that "everyone leaving this class should understand how they are able to put 10% of their income away each year" (and watch their reactions).

Please note, it's easy for me to talk about teaching a course, but like many, I'm not sure I have the guts you have to actually do it.

I am smart enough to take comments and funnel them into something constructive. Plenty of things are on that list I have NO experience with (like payday loans).

I have taught other things (software) for a living, so the teaching aspect is the easy part. It's actually having materials, text books or similar available, and making sure school has electronic presenters available and my laptop can get plugged in into school's network... things like that... which I have as many questions about as the actual course content.

thx for reply

I would start out with something fun, like having the students create an investment portfolio near the beginning and follow it during the duration of the course.

This is a bit more work, but in one class I took, the instructor had compressed a couple years of actual numbers, changed the names of the companies (but kept the industry intact), and had some information/news about the general state of the economy at that time and company information. Then, each day new market prices and news would be provided. Watching the existing stock market over a class length of a few weeks or even months might be pretty dull.

Jim,

If this is a pre-existing course, it's likely that there will already be a curriculum they would like you to generally use. Also, even if a brand new course, your prospective boss may already have some sort of plan for it. Of course, they may expect you to go in and "roll your own". I'm just saying be flexible in the interview. Listen at first; get an idea of what their needs are. Flexibility is your friend. :)

Regardless of the situation during the interview, once you start teaching the class it is likely you'll have a lot of flexibility in day-to-day matters. Keep your enthusiasm, and good luck!

-- Rich

Well jiM, I'm pretty impressed with your original curriculum. I never got anything like this is high school. Maybe a few checkbook questions in algebra class.

I think Robert Kiyosaki did a good job of explaining the basics of financial statements in Cash Flow Quadrant. You divide a rectangle horizontally and vertically in four quadrants. On top you have the two Income Statement quadrants: Income and Expenses. On the bottom you have the two Balance Sheet quadrants: Assets and Liabilities. Money pumps through a financial statement like blood through a body. Assets can generate income which add to assets (compound interest!) If you are living beyond your means, expenses add to liabilities which add to further expenses (the road to bankruptcy.)

Maybe you could get together with the drama director and play "Car Dealership." You could even have the salesman's cubicle and the Finance Office. People have written whole books on this topic. Never be a "payment buyer". "We'll work with you" generally means lower payments and longer terms. Walking away from a bad deal is the most effective tactic of all. The local car dealers will scream bloody murder over this, so it may not be feasible. Students will buy cars whether you prepare them for the experience or not.

Those ideas are excellent and certainly belong in a personal finance course. Something to consider is that falling for one of those scams can result in a loss of a WHOLE LOT of money, much more than could be gained by economizing on grocery purchases or buying cheaper gas at the pump. Another thing that is often overlooked is that a one-half or so difference on your home mortgage rate can build up to an enormous money over a period of many years. So a little shopping around and investigation of mortgage rates can mean big savings for home buyers.

Suggestion: Do an advanced google search of .edu sites for {personal financial planning syllabus}. Some .edu institutions will offer several courses in series. Go to the first course. Choose maybe eight topics that someone who is not going to college anytime soon can use /now/ and that will affect their ability to be financially independent now.

Remember about 73% of the age eligible population do not have a four- year college degree and so will be employed accordingly. They need basics. If they choose to get more education, they can get into more depth with their financial planning.

Stay away from talk about individual stock picking. They mostly will not have the time nor sophistication for this, given their jobs and educational background. There may be a tendency to see stock picking as gambling. Stick with emphasizing mutual funds/ETFs, diversifying, and the nature of economies. Touch on what it means to own a part of many companies via a mutual fund/ETF.

Be prepared for students not able to handle complicated mathematical analyses nor even much mathematical analysis. Yet you have a responsibility to teach them something about rates of return, for one. Keep it simple. Teach rules of thumb that have some common sense at the core.

Winnowing down your list and after looking at a few .edu sites w/ personal financial planning courses:

-- Budgeting (all income to the household, all expenses. Check monthly. Live within means, period. Consider excerpt or two from _Millionaire Next Door_. It's too fun and I think real-life to leave out.)

-- 401(k) (get a job that offers one; matching; mutual funds; diversify)

-- IRA (the alternative to the 401(k) for many; income tax advantage)

-- Income taxes (records; learn to do your own; paying self-employment taxes and advantage of paying into social security; IRA and 401(k) treatment in income taxes; mortgage interest deduction)

-- Buying a house

-- Buying a car (negotiating; paying cash; buying used vs. new; best places to get a car loan)

-- Credit cards (avoid them or pay balance off monthly, period)

-- Health Insurance (best insurance is healthy lifestyle; catastrophic insurance; paying cash for health care; always negotiate large health services bills)

Be on the lookout for students who may be capable of handling more advanced topics and, in the words of one of my former professors, as appropriate for certain topics state, "For the interested student, see [exact citation], or talk to me after class."

Jim,

Are you going to (hopefully) keep us posted on the structure of your personal finance course? We may not be the same demographic as your class, but we don't know everything, either.

For possible interest, when I 'started out' on my own, I counted all the money I had on me in the morning, keeping track of all I spent all day, then matched my 'spent' totals to what I had on me in the evening, and kept records. This developed into predictable categories, later expanded to include all expenses such as rent, phone, utilities, credit cards, checks, and oh, yes ... income and savings. Computers came along and it became easier; still in use today, with the benefit of being able to compare years ago with today.

FWIW, "rent" or "housing" has been the single most increased item, presumably as I increased my standard of living, but rising real etstae prices also (hard to separate the two). It's much easier to live within one's means when one can precisely define what one spends money on. All you need to know to budget is how to count, add, and subtract - it amazes me that supposedly sophisticated people apparently can't do this, get into over-consumption, and run up debt. There are some multi-million dollar houses up for sale these days, not all by choice. It's probably also a good time to buy a boat: cheap. And as Geithner just commented, the government borrowed $700 billion from our children (talk about taxation without representation!).

(If I were teaching an entry-level course on personal finance, budgeting would be the pass/fail point.)

I interviewed and it went well. I have experience teaching and we talked about that more than the specific subjects listed above.

Here were some comments made (to me) by the person interviewing me:

Here is what I did after the interview I divided the above topics into 2 course proposals

One was personal finance for individuals and professionals. Course would be for financial advisors, stock brokers, insurance salesman, mortgage brokers, bankers and I came up with a few other job titles in those same fields. This course focused on all of material and would cover about 20 hours worth.

I suggested a second course which was retirement planning for professionals and individuals. This focused less on the debt aspects of things, and would have more of an asset allocation discussion and similar.

The school quarter begins Oct 15 (plus or minus) so that is next time classes run, I might not find out they are running until a few weeks before. The interviewer set the expectation that once listed, things happen fast (registration and similar).

I can copy the exact contents of the emails for a list of topics if anyone wants them.

Huh? You have Senators and Representatives, don't you? Thumper

My experience is that having trouble with debt (inability to live within one's means) is not a result of poor math and budgeting skills. Rather, debt comes from not keeping track of one's checkbook balance and an inability to say "no, not now".

While lots of useful lessons can be learned in a classroom, personal responsibility is not one of them.