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What Research Says Students Don't Know about Personal Finance - Classroom ECONnections from the Fed, Episode 12

In this Classroom ECONnections webinar, Andrew Hill, of the Federal Reserve Bank of Philadelphia, shares some of his research results showing that students know some personal finance before taking a course on the subject, but have little prior knowledge on some personal finance topics. The gaps provide opportunities to increase students' knowledge. To help you, we feature free, classroom-ready resources from around the Federal Reserve System.

Links to resources are in the transcript below.

Transcript

Below is a full transcript of this video presentation. It has not been edited or reviewed for accuracy or readability.

Jean Roark: Hello, and welcome to the Federal Reserve Classroom ECONnections Webinar. Today, we'll discuss what research says students don't know about personal finance. I'm Jean Roark from the Federal Reserve, and I'll be your facilitator. Let me introduce our presenters. We have Kris Bertelsen from the St. Louis Fed and Andrew Hill from Philadelphia.

Before turning our call over to Andrew, I'll run through our call logistics on slide two. If you haven't joined us through the webinar yet, use the link you received after registering. For the best webinar experience, open the FAQ document, which can be found using the materials button in the webinar player page. I'll highlight a few important notes for you.

You can listen to the audio through your PC speakers or through the phone. If you choose to use the phone option, slides will not sync with audio unless you change your settings. You can do this by selecting the gray gear located on the upper right corner of the slide window, just above the presentation. From there, you should see a few options in the media chooser, and you should select the phone option, but only if you're listening to this call through your phone. You can expand the size of the slides. To do this, use the maximize button in the upper right corner of the slide window located on the webinar player page. And if you'd like a PDF version of today's presentation, you can access it using the materials button. All right. With ECONnections calls, we take your questions, and we'll be doing the same today. And, we'll take the questions at the end of the presentation, but you can submit them at any time during the webinar. And to submit your question, use the Ask Question button located on the webinar player page, and we'll get your questions cued up for our Andrew and Kris today.

All right. We're going to turn to slide three, and I will read through our legal disclaimer. The views expressed in this webinar are those of the presenters and not necessarily the views of the Federal Reserve Banks of Atlanta, Dallas, Kansas City, Philadelphia, Richmond, St. Louis, or the Federal Reserve System. And with all of that out of the way, I'll turn our call over to Andrew Hill.

Andrew Hill: Thanks, Jean. I'm really excited to be able to be here today and to share some thoughts about what we've found in our research over the last couple of years about what kids know when they come to their high school personal finance course. So, at the very beginning before they've even started to take any of the course, what is it that they know already? So, let's go to the next slide. And, I'm having an issue here, Jean.

Jean Roark: All right. I just transitioned the slide. You should see slide five. Oh, it says standard disclaimer. I'm sorry. Let's move to slide six.

Andrew Hill: Slide six.

Jean Roark: Okay.

Andrew Hill: So, yeah. I see it now. Okay. So, some of this research comes from our work that we've done on our Keys to Financial Success Course. So, if you're not aware of our Keys to Financial Success high school program, this is a program where we train teachers to teach their own high school personal finance course, and you can learn more about that program on our website, philadelphiafed.org/keys. But, the research shows that the students who take a Keys to Financial Success course, they show, that before they take the course, that they get 41 1/2 percent correct on the pre-test that we give them. And, this is using the Financial Fitness for Life High School Test. This is a standardized test that has been used quite frequently in the research, and I'll talk a little bit more about that test in a few minutes.

At the end of the course, we give them the test again, and they're on the green bar that you see there. They get almost 67 percent correct on that test. This test was developed and released in 2005, and the test, when it was released, it had the norm, which means it was sent out to a nationally representative sample of students. And, those students that did not have the Financial Fitness for Life lessons, they scored, on average, about 45 percent correct. So, our students coming into the program are coming from a further back portion, in terms of their financial knowledge, and then, the students who did have the Financial Fitness for Life lessons, they scored about 56 percent.

So, overall, we see that, with our Keys to Financial Success program, our students outpace students who just had the Financial Fitness for Life lessons alone, and we published this set of paper, Carlos Asarta, Bonnie Meszaros, and I in 2014 in the International Review of Economics Education. Jean, let's go to the next slide.

So, while those are our overall results, we're able to compare both the norming sample and our sample and look at the effects, then, of students, who before they come into personal finance, what do they know and then getting some ideas about the things that kids do know in high school before they take personal finance, and that could really inform our knowledge. So, Jean, I should be showing the slide that says "Compare FFL High School Overall Test Results." So, that would be slide six, I think. Slide seven.

Jean Roark: I do have slide seven showing, which is Compare FFL-HS overall.

Andrew Hill: Okay. Sounds good. It just popped up here. So, what I've done here is I've plotted, then, the average for the Key students at the pre-test level on the vertical axis, and I've plotted them against what the students who did not have the Financial Fitness for Life lessons. That's on the horizontal axis, and so, we get a point on this graph. So, vertical, that's the reading that's there, our average from Keys for Financial Success students, and then, on the horizontal axis, these are the students from the norming sample. So, this gives us a lot of power because we can compare now these two cohorts of students, see how they differ, and then also see how they're in common. So, we can see from two different, completely separate sets of students that were about 10 years how they scored on this test, and this gives us a way of understanding, before they come into personal finance education, what is it that they know. Let's go to the next slide, Jean.

So, what I do here is I actually set up now a vertical line and a horizontal line. The vertical line is at that overall average for the norming sample, and then the horizontal line, that is set at the height that's associated with the average for the Keys to Financial Success students at pre-test. Let's go to the next slide, Jean.

So, this gives us an opportunity now. We have this gray line on our graph, and what I've done here is to disaggregate. The nice thing about this FFL High School Test was that the questions were divided amongst four different buckets, and those buckets were defined by the original four Jumpstart standards: income, money management, spending and credit, and saving and investing. So, what I'm showing at those points, then, is the Keys to Financial Success students' pre-test average versus, and this is on the horizontal axis, what the norming sample students had, and you'll notice that they line up along a diagonal line that's not drawn there, but they are all laying along a diagonal line. So, at the diagonal line, those numbers would be relatively close. So, by disaggregating, we really haven't seen much in the way of difference. We're just seeing that, these four buckets of questions, they congregate around the mean, which would be at the cross point of those gray lines. Let's go to the next slide.

So, one of the nice things about the FFL test is it was then disaggregated even further beyond the standards level to the benchmark level, and, at the benchmark level, I've plotted then, again, the Keys average for each benchmark versus the norming sample average. And so, what we now see is, at the center where our two gray lines cross, that's our mean for our overall test result for both the Keys students and for the norming sample, that we actually see, then, that there's a whole bunch of benchmarks that are congregated right around that mean. But, we have some outliers. We have some outliers on the positive side, and we have some outliers on the negative side. And, we're going to dig into both of these, both the positives and the negatives. So, let's go to the next slide.

So, let's talk about the positive areas by benchmark first. So, I've identified, then, the three main areas. One is around the concept of reasons for saving and investing, and I'm in the upper righthand quadrant of the graph now. Both the Key students and the norming sample students, they do well on that question. So, they understand that benchmark, and, in a minute, we'll look at what that question is. Also, on personal and financial responsibility, they get that question correct overwhelmingly. The Key students do not do well on the opportunity cost question, but the norming sample students do, and I'll explain a little bit about that. That's our major outlier from this graph, in terms of major difference between these two samples. Let's go to the next slide, Jean.

So, looking at this Reasons for Saving and Investing benchmark, that's measured by one benchmark, by one question alone, and this the question that's there. And so, when you read the question, you realize that it's a relatively easy question, but, nonetheless, I think one of the important points here is that students, when they're in high school before they've taken the high school personal finance course, they do understand, overwhelmingly, that saving early in life is a good financial strategy. So, what does this mean? This means that we don't need to start with high schools, preaching to them or telling them that they should save. They already understand that basic level that saving is important in terms of their financial futures. What we need to do, and we'll talk about this in a few minutes here, is talk more about the deeper issues related to personal financial education. The deeper and bigger and more complex issues, like, you know, where do you save your money, how do you invest, and what are the various investment vehicles that are out there. So, let's go to the next slide.

On the next slide, we're talking about the personal financial responsibility question, and that benchmark is measured by one question. Again, this is a relatively easy question for them, and overwhelmingly, both groups, the Keys and the norming sample, both get it correct. But, in this case here, you see that they do understand that people's choices have consequences for the future, and so, therefore, making good choices is going to be important. So, those questions, they do really well on in both samples. Let's go to the next slide, Jean.

This is the opportunity cost question. There is a little bit of an issue with this question, and one of the issues is that the question, the correct answer is not worded correctly on the test instrument or in the examiner's manual. The other thing that's interesting here is that they norming sample, the students who took the test way back in 2005 who were nationally representative, they do relatively well on this. I don't know whether the question was reworded on there, but what we do know about the norming sample is those students, overwhelmingly, had economics. Our Keys to Financial Success students, at the pre-test level, they don't do well on this question, but, also, we know that, overwhelmingly, they have not had economics. So, what does this tell us for the rest of our results. Well, we know that the norming sample, even though they've had economics, they're still significant areas of personal finance that they don't do well on the topic or on the question. So, economics, in other words, is not a perfect substitute for personal financial education, and we've seen that in other studies in the literature. Let's go to the next slide.

Now, we're going to talk a little bit about the weaker areas by benchmark. So, what I've done here is I have two graphs, the one on the left and the one on the right. The one on the right is just zooming in on that set of benchmarks that I've circled in red there. So, we're just zooming in on that lower left-hand quadrant. So, these are the areas where, again, at the pre-test level, our Key students don't do well, as well as the students who were the norming sample. They did not do well on these particular benchmarks: rights and responsibilities of buyers and sellers and creditors, credit history and records, sources of credit, saving and investment benchmark, rate of return on investments, and then, inflation and investing. So, these are more advanced topics than just you should save. These are more advanced topics in personal finance, and they don't do well. So, these are areas where students in high school, before they've taken a personal finance course, they don't do particularly well. Let's go to the next slide, Jean.

So, we're going to look first at the rights and responsibilities benchmark, and, on that one, the Keys to Financial Success students, 17 percent of them got that correct at the pre‑test level. In the norming sample, only 16 percent got it correct, and that question is represented by question 38. So, let's go to the next slide, Jean.

So, here, I've shown you question 38 from the Financial Fitness for Life test, and this is, of course, a topic that is pretty common when we're looking at personal finance courses. It's what is your liability if your credit card gets stolen? And, we know that there's a few little details there that can mitigate or change this number, but, overwhelmingly, the right answer is $50.00. That is the most common answer, the best answer to this question, and students, overwhelmingly, did not know that. Now, admittedly, this is a knowledge-type question. Either you know it, or you don't know it, but students don't know this at the pre-test level before they've taken a course. Jean, let's go to the next slide.

This is inflation and investing. The Keys to Financial Success students, 22 percent of them got this correct at the pre-test level, and the norming sample, only 20 percent got it correct. Now, in a low inflation environment, it's sometimes a challenge to get kids to understand why thinking about inflation versus the nominal rate of return and how that comes into a real rate of return, how that matters, but, nonetheless, if you're earning 0.1 percent on your savings account and the rate of inflation is 2 percent, the real rate of return is going to be negative. So, this is something that's important to get kids to understand, particularly as they seek to find higher rates of return over the long haul with retirement savings and things like that. So, it is an important question. Students, overwhelmingly, at the pre-test level, before they've taken a personal finance course, they don't know this. Let's move onto the next slide, Jean.

Some of the benchmarks are actually averages of two question. So, for the savings and investing benchmark, there's two questions, and I've squeeze them here onto the same slide. So, question 21 talks about the opportunity cost of letting your interest compound in your savings account. So, this is getting at the idea of compound interest and the fact that you do give something up, and that thing that you give up when you leave the money in there to compound is less money for your current purchases. Again, students don't get that right before they've taken a personal finance course. On the right-hand side, you see there question 23, and this is, again, around the idea of compound interest. So, why is it that we recommend that you start saving when you're young? Well, it's because the power of compound interest. So, again, a very important concept in personal finance, and students, overwhelmingly, are not getting that idea correct at the pre-test level. Let's go to the next slide please, Jean.

So, this is rate of return on investments. These are two questions that, again, the average is what you get then for this benchmark, so 0.24, so 24 percent correct for the Key students. This is the average of their answers on these two. One, on the left-hand side, asks them to do some estimation around what they're going to have in their account if their savings account has an annual rate of interest of five percent. On the right-hand side, that's a question getting at the rule of 72, and, again, overwhelmingly, the students don't know this in high school unless they've taken a personal finance course. Let's go to the next slide, Jean.

Another area is sources of credit and thinking about how do we evaluate different sources of credit. On the left-hand side there, you see question 37. This is around using the APR as the best indicator of the cost of a loan. Again, really super important for kids to know this, but, when they're in high school before they've taken a personal finance course, they're not aware of that. And, on the right-hand side there, question 40 is around the fact that payday loan companies are going to be the ones who are likely to charge the highest rate of interest. Again, the average of these two questions show that students do not, overwhelmingly, know the answers to this concept about where to get credit and what the best indicator is for the cost.

Let's go to the next slide please, Jean. This one's around credit history and records. And so, what are the three things that the creditors will consider when they judge your creditworthiness: character, collateral, and capacity, the three Cs. That's in the left-hand side. And then, on the right-hand side, what does a credit bureau do and the idea of tracking bill pay habits of consumers on the right-hand side. Now, there's a question on there that I'll show you in a few minutes about credit reports, that the students do, overwhelmingly, get correct. It's interesting they don't necessarily maybe know that the credit bureau is the place that the credit report comes from. Let's go to the next slide, Jean.

So, our cohort of students, then, the Keys to Financial Success students, they all gain. So, I've plotted here their pre-test score. That's at the bottom of the arrow. That's the starting point. Their post-test score is up above there, the point at which the arrow is pointing to, and these are in those six areas where we know students know the least. So, the Keys to Financial Success program that we train teachers to teach here at the Philadelphia Fed, in partnership with the University of Delaware Center for Economic Education, it all results in gains, then, that are relatively large on a percentage basis and highly statistically significant. Jean—Oh, I'll actually mention one more thing about that. We use this information, then, also, to inform how we train teachers in subsequent cohorts. So, there are some areas where we know we do a lot more work. One of those areas is making sure that teachers recognize that they really need to be empathizing to students how to calculate the real rate of return, and we've added some additional curriculum materials to the Keys program over the years to help to address that because we know that's an area where students need to know more. Jean, let's go to the next slide.

So, we've now been working with a later cohort of Keys to Financial Success students. There's a new test that's been developed by the Council for Economic Education in New York, and that's the Test of Financial Literacy, the TFL. So, one of the values of having two different instruments—Now, admittedly, these are two different cohorts of students because there's about 10-plus years difference between the two norming samples. There is three or four years between the Keys to Financial Success student cohorts. This is how we would normally show our results, but I'm going to stick to my graph that I've been using with you here to show the differences. Jean, let's go to the next slide.

So, the Test of Financial Literacy was disaggregated into six sections defined by the National Standards for Financial Literacy. They were published by the Council for Economic Education. I've done the same thing again here. I've taken the average of our students, our Keys to Financial Success students. The average is less than 50 percent on the test at the pre‑test level. I've made a horizontal line there. The vertical line shows the norming sample. This test was normed in 2016, 2017. I've just aggregated that into the six standards area, and you see that there's only one that's really outlying from around the mean, and that's the buying goods and services standard. Jean, let's go to the next slide.

The TFL test does not break down by benchmark, but it does by the 45 questions that are there. So, this gives us an opportunity now to plot those 45 questions and see which are the positive areas and which are the negatives. What you'll notice is that all those points lie along a diagonal line coming out of the origin, and what that tells you is that the students that are in the Keys to Financial Success sample and the students that are in the norming sample, they're really giving us, basically, the same results. There's not a whole lot of difference between these two groups, but we do know for different questions they show different levels of knowledge. And again, this is the same thing again. These are students who, in theory, have not had any personal finance education. They certainly have not at the high school level yet in terms of course. Jean, let's go to the next slide.

This is question nine. This is one of those areas where the students do really well. Maddie gets a haircut at the hair salon, and she washes her car at the spray wash. She orders a coffee. She gets a flu shot. Which one of her consumer purchases has the most widespread and positive effect on others in her community? So, this is looking at positive externalities of our purchases and our spending. They, overwhelmingly, get it correct, in terms of the flu shot. Again, not a particularly hard question, but the students do get it. Let's go to the next slide, Jean.

Here's a question about advertising. Why is advertising important? What's the reason why companies are doing advertising? Again, the students, overwhelmingly, get this correct. Jean, let's go to the next slide and look at question 23. This one says, you know, which of the following will most directly affect a credit score, and the students understand that it's about your payment history. So, this is in contrast to that question about credit bureaus that we had on the Financial Fitness for Life test. Here, the students are understanding that your payment history is going to affect your credit score. So, that's a very positive thing that students do understand that going in high school before they've taken their high school personal finance course. Jean, let's go to the next slide.

And, we'll look at that bottom left-hand quadrant of our graph for the TFL results, so looking at those weaker areas by question, and we're going to focus on question seven, 18, 31, 34, 37, 41, and 43. Jean, let's go to the next slide. Question seven talks about income taxes. So, if you're a teacher who is teaching about how to prepare income taxes, this gives a lot of credence to the point that students don't know, when they're in high school, before they've taken a personal finance course, about the types of things that are deductible from federal income taxes. So, that gives some increasing evidence that we need to continue to teach kids about taxes and the types of things that will reduce their tax burden. Jean, let's go to the next slide.

This is question 18. Again, students, overwhelmingly, don't know that employers can contribute to a 401(k) plan, and this is highly important. We know that we want to make sure that kids understand, that when they get their job and if they have access to an employer-provided 401(k) plan, that they should be contributing and making sure that they're contributing up to that point where they get the maximum match from their employer, and, overwhelmingly, students, in high school before they've taken a personal finance course, they are not aware of that. Jean, let's go to the next slide.

We'll look at question 31. So, this one is thinking about two different bonds that a corporation might issue. So, this is about bond structure and term structure. So, one matures soon, in a year, and the other is in 10 years. And, this is looking at the fact that the one that matures sooner should be expected to have a lower interest rate. So, again, this is much more advanced type questions than some of the other things that we've looked at, but it's something that's important for people who are going to be investing to understand, which is that you earn a lower interest rate if you invest for a shorter period of time. Jean, let's go to the next slide, and we'll look at question 34.

Which of the following would cause the current value of bonds to increase? And, that would be if interest rates across the economy decreased. So, this is the inverse relationship between interest rates and bond prices, an important thing to consider and understand as a financially literate person. Jean, let's go to the next slide, and we'll look at question 37. This is thinking about insurance and why it is important to have insurance, and one of the things that we're getting at here is, if you buy insurance and you don't use it, do you get any value from it? And, the answer is yes because you've transferred your risk for the period of time in which the policy was in effect to the insurance company. Again, students, overwhelmingly, don't realize that, even if you don't use your insurance, you still are getting a benefit, which is that you were protected. Let's go to the next slide.

This is question 41, and this is about the reasons for why you should have a co-pay. And again, I think probably some of this is associated with the fact that students who haven't taken personal finance and haven't delved into the deeper issues around insurance, they may not be aware of what a co-pay means. Let's go to the next slide, and this is the last of our questions from the TFL in which students don't do as well. And, this is the idea of the fact that, if your windshield gets cracked, what kind of auto insurance is going to cover that. It's going to be the comprehensive portion of your auto insurance policy, and again, students here may just not be aware of the types of auto insurance, the different parts of your insurance policy. Jean, let's go to the next slide, and I'll talk about some of the conclusions.

So, one of the things we know is students come to their high school personal finance course with some knowledge, but they also have a number of areas where they have absolutely no knowledge or very little knowledge of personal finance topics. But, what is true is that they need to be learning more about the deeper and bigger issues of personal finance and not simply having repeated visits, let's say, from business people or people talking to them about the same concepts of, you know, you should save and you should have a budget. They really need to be looking at the deeper and bigger issues of personal finance, and, often times, that's going to require that they're not just getting, you know, a unit on personal finance or they're not just getting a lesson here or there, but rather that they're getting a comprehensive capstone high school personal finance course before they graduate. And, that's really the reason why the Philadelphia Fed has done so much in terms of equipping teachers to teach the Keys to Financial Success program.

So, now, I'm going to turn it over, if we could advance two slides, Jean. I'm going to turn it over to my colleague, Kris Bertelsen, at the St. Louis Fed, who is going to share with us some resources that you can use right away to be able to address many of these gaps and get at some of the areas where kids have some challenges in understanding personal finance concepts when they're in high school. So, Kris, take it away.

Kris Bertelsen: Okay. Thank you very much, Andrew. I just want to echo what my colleagues have said. Thank you all for joining us, and thank you for everything you do for students. It's great work, and hearing Andrew's research findings here today makes me wonder if, perhaps, when I was teaching, I spent too much time on subjects they already knew and that's what made them bored. So, maybe that's the case, but thank you, Andrew. The research certainly led to a number of areas that we have resources to fill in, and so, I'm going to run through some of those. Before I do, I would just want to mention that this not an all-inclusive list of everything at the Fed, but, at the top of each slide, I've listed the concept that Andrew discussed and then a resource or two from various Reserve banks that I found that would address those concepts. If you could advance for me, Jean.

We're going to start with the real interest rate question, and, at the Federal Reserve Bank of St. Louis, we have a podcast series called the Economic Lowdown, and you can access this through https://stlouisfed.org/education. At the end of my session here, I'll show you how to access that and assign your students through the portal, and the students can listen to or watch our videos and answer questions. And then, you can get the assessment feedback through the teacher dashboard on that. If we run short on time, I do have those slides listed at the back of the presentation, which are available on the PDF file, of course, as well. So, that's the first one, real interest rates, 11 minutes. It's not going to take up your whole class. It talks about the effects of inflation on returns. Next slide, please.

The next slide is it's a bell ringer from the Atlanta Fed, and it has some of the risk and return, risk and reward, featured in it with just a five, 10-minute activity. Students build a hypothetical portfolio to understand risk. That's a nice follow-up, I believe, to the real rate of return as well. We do have a number of other resources from across the system that address that concept, and inflation, of course, is addressed in many of our online modules as well and lesson plans. Next slide, Jean.

I want to call your attention this curriculum called Making Personal Finance Decisions, and, if you could advance the slides for me, Jean, the next slide shows the table of contents. You can order a copy of this. You could probably get one from your Reserve bank in your area, but, if you really want one, you can download or you could e-mail and I could send you one. A lot of the concepts that we're going to talk about today and other personal finance concepts are in this book. There's PowerPoints on our website for it at stlouisfed.org, and so, you can just take a look at these lessons and see where they plug in. Specifically, for this question, sources of credit, that is APR and financial institutions, I thought we'd take a look at one of the lessons in Unit Two that addresses. Jean, if you could go to the next slide.

This lesson is actually called "Planning and Tracking", and it's meeting financial goals, rate of return. And, I know the print is small, but I wanted to call your attention to were the concepts at the bottom. And, you see there is appreciation, depreciation, expected rate of return, inflation rate of return, real rate of return, and return. And so, this is a good lesson to recap those points about rates of return, inflation of facts, things like that. Activity-based, these lessons all have some kind of activity, and, usually, they incorporate good math. It gets students using math skills as well. We did that in partnership with the Minnesota Council on Economic Education with one of their professors who wrote it, Curt Anderson, who is an economist and just works math in really well. So, please note that curriculum. If we could go to the next slide please, Jean.

Again, we'll look at sources of credit on this question we're addressing, and there are a couple of resources here that, you know, I'll point out. These are both from St. Louis, banks and alternatives. This is personal finance conversations 101, and this episode talks about a bank or credit union and then alternatives to banks or credit unions. So, it ties nicely into a student's understanding of interest rates and how much things will cost. I'm going to show another slide here in a moment that breaks down what that is. The personal finance chat, how to open a bank account, students, particularly those who are unbanked, families who are unbanked, this is a nice way the students click through and see. They have this fictitious conversation that they watch about opening a bank account, and so, it's a little introduction to what goes into opening an account with the bank. Next slide for me, Jean.

This next slide is actually a St. Louis Fed infographic, and the title you see there is Debt Can Drown You. And, it's the acts of financial services that you use and check cashing, banks and credit unions you see there. And then, there's some videos, and, if you could advance the slide for me, Jean. Those videos are also rent-to-own, tax refund services, and then short-term loans alternatives, banks and alternatives. So, these are actually launchable from that curriculum on the website. Just three, four, five-minute videos here and a good way to look at those fees and APR, and we saw from Andrew's research that that is one of the areas we need to emphasize for students. Next slide for me, Jean.

On the next slide, we're going to go into what Andrew talked about in terms of credit history and credit reports and scores and things like that. And so, the first resource I'll show you is a credit report where you see these numbers, one, two, three, four. The students can click on those, and it gives just a little bit of a description of what each part is. So, students go in there. They read it. They look at what's on it, and that gives them some information. One way that I would like to use that, possibly, is to maybe write up a couple questions, have the students go onto our portal and answer those questions, and you don't have to print anything off. You just have them answer the questions and submit it through our system. So, that one is personal finance, financial forms explained. Jean, if you could go to the next slide for me.

On this slide, this is a video that we did about determining a FICO score, and, you know, students would likely ask you, "Well, who is this FICO?" But, this is a really well‑done video. It's about five minutes. It talks about, you know, credit scores, how they're determined, things like that. It's really well done. We get excellent feedback on that. So, this is a good, short way to introduce students to how those are scored, or how credit scores are determined. Okay, Jean, if you could go to the next slide for me.

This is a lesson plan that just came out recently. This is about credit scores, and it goes back to—It's got some of the rights and responsibilities piece to it. I didn't mark that on top, but it includes the Equal Credit Opportunity Act. The students do some decision-making. You can see in there that they evaluate creditworthiness based on some characteristics, and so, they get an opportunity to use some of their knowledge to do some decision-making. So, that's a lesson plan that also has PowerPoints along with it on our site. Next slide, Jean.

If you like to have students do readings, this is a good one from the Federal Reserve Bank of Richmond, Credit Reports. This was in their 5E Navigator, and it's really about, you know, looking at your credit report, knowing what's in it, and then how to correct errors, if there are errors in your credit report. Next slide for me, Jean.

And this slide, it's from the Atlanta Fed. It's the Katrina's Classroom curriculum, and they've updated this. So, it's not Katrina-dated. They update this. They keep on top of it, but the infographic is why is good credit important. And, if you're teaching, I would recommend that you get a hold of Atlanta and order all those infographics, the posters, because they're—I don't know if they've created lessons for all of them yet, but they are in process and most of them have lessons. This one is why is good credit important, obviously, but they're really a nice visual for your classroom and a lesson that goes along with it. Okay. Next slide, Jean.

And, please remember if you do have questions, we will take those here at the end, and I'm going to try to get to those as we can. This curriculum is the rights and responsibilities piece that Andrew had actually mentioned that what are the credit responsibilities, things like that, and It's Your Paycheck has you covered on that one. It's available in a lesson plan with PowerPoints, Smart, and as an online module. If you could go to the next slide for me, Jean.

The two lessons that I'd like to point out from this curriculum, and, of course, we want you to use it all if you can, but the two lessons that would specifically address Andrew's research question or answer were lessons six and seven regarding the credit report and then criteria and borrower's rights and responsibilities, which were areas that students showed weakness in. Next slide for me, Jean.

This is a credit card disclosure statement, and I mentioned earlier, you know, we have these forms explained, and this is one of them. I apologize that you can't read that, but it lists the disclosures that a credit card company has on their statement. And so, students can take a look at that and see what all these, you know, transaction fees, the terms they use, the words they use, things like that. So, it's just another good formative piece that you can use with other assessments. Next slide, Jean.

I'm going to go somewhat quickly here. I'm going to go quickly on this topic. This series is called "No-Frills Money Skills", and I'll be addressing a couple of these videos. The first video in that series is compound interest, and it goes through a young woman. It follows this young woman, whether or not she had started saving and things like that. So, that's a, you know, 10-minute video, which you can assign your students and then get the feedback through our website, which I'll show you. Next slide, Jean.

The next slide is actually having students do some compound interest calculations, things like that. This is, again, from—Like I said, I'll put it on there. This is from making personal finance decisions, but actually spelling out and showing the math. Here's how it works. You do it with a student, or you have the students do it and talk them through the formula and check their answer. So, it's really a nice visual and step-by-step what's the difference between simple and compound interest, that kind of thing. Okay. Next slide, please.

The next slide is just a screenshot of an article that came out one of our colleagues wrote about individual income tax, and, while its title and its focus is on the recent changes in tax law, it does talk about deductions in the article. And, I think, if you've not used page one, the focus on finance, I really encourage you to do so. It fits really nicely to your curriculum. It's a great lesson to do some jig sawing. If you want to have students teach different concepts, you can put them into groups with different articles. It's really a nice resource, and this one does address that concept of deductions and charitable contributions. And, you can, as a teacher of course, you can add to that conversation, but it's a nice way to start it out. Next slide please, Jean.

The next slide is the second "No Frills Money Skills" video, episode two. This is ways to save, and this video talks about 401(k), 403(b), Roth, and the difference between a traditional and Roth. And so, this is a nice way to introduce that concept about the employers, which is in the video, but you can use that as a starting point. Next slide for me, Jean.

The next slide is from the Kansas City Fed, and it's along that same line of contributing, your employers being able to contribute to your 401(k). And, this is 10 tips to get more from your paycheck. You can see that on the website that it's listed there. Next slide please, Jean.

The term structure of interest rates and the relationship between bonds and interest rates is a good one. That concept is covered mostly in the fourth video, Understanding Bonds, and you can probably see from the screenshot that this is a spy thriller. But, it does talk about the interest rate, prevailing interest rate, and then the price of bonds. There's a risk and reward little segment within that, and so, that's one resource to talk about that particular thing. Next slide for me, Jean.

This is episode six of insurance. This talks about transferring risk, and episode six is just insurance generally. And then, episode seven is in three segments. If you can go to the next slide for me, Jean. That one is the different coverages: comp, collision, and so forth. And so, each of those segments is under this video, episode seven. If you could go to the next slide for me, Jean. This is just a screenshot of what the student would see, or what you would see as you are choosing among these videos. So, you can preview it here. You can select it. It shows the time, how many classes have used it this year, and so forth. Jean, if you could skip to slide 67 for me. This is a page one economics personal finance video that—I'm sorry, video. This is a personal finance focus on finance about insurance, and this is a good one to talk about co-pays and beneficiaries, things like that. And, I'm going to show you what that resource looks like here in a minute, but you can assign the students. They read it, and then, they answer questions, which you can grade. Next slide for me, Jean.

This is where you'll find everything on our website, stlouisfed.org, and then, you click on Economic Education. If you want to use the materials that are behind the teacher portal, you would just click in that blue box there. You see Teacher Portal. You'd click there and sign up for an account. Next slide, Jean. And then, in this slide is where you would log in. You can use Google Classroom, and students can log in with their Google account. So, you can use Google Classroom that way. Jean, if you would, go to slide 72 because I want to leave a little for questions.

And, on slide 72, you're going to see a screenshot of what the assessment looks like behind the portal, and so, students do their work, and in this case it's a video. They watch a video. They take the quiz, and then, you can see their scores. So, any of our materials, you're able to do that, and, if you have any questions on that, please don't hesitate to contact me. If you could go to slide 74 for me, Jean.

I'm going to show you, this is from Dallas, personal financial literacy. They have five units. This is Dallas Fed, and there's some nice ways to plug this material into your curriculum. And then, on the next slide, you'll see Building Wealth, which is a very popular Dallas publication, which you can order paper copies and that one has financial goals, budgeting, saving, investing, building and managing your credit, and then some insurance as well. And so, I want to leave a few minutes here for questions. So, I'll remind you that if you want to go back and see—I skipped a couple of slides that just show what our portal looks like, but I'd like to give an opportunity for questions.

Jean Roark: Okay. Thank you so much, Kris. So, if you have a question, please submit that when you're ready. You can use the Ask Question button on the webinar player page, and we did get a comment in. We haven't gotten a question yet, but I'll tell you what the comment says and you guys can certainly speak to that comment if you'd like. The person says, "This is not a question, but a comment. This material is very interesting, and I think that many adults could benefit from it as well. I believe that personal finance illiteracy is massive, even among people who have attended college."

Andrew Hill: This is Andrew. Yeah. That's definitely the case. I mean, one of the things I think that's always very interesting about working in this space, and I've been in this field for almost 17 years, is, you know, when you walk up and you talk to people about what it is that way we do, which is to train teachers and equip them to teach personal finance in their own classrooms, everyone always says the same thing, which is, "I wish I'd had more of this in school, or I wish I'd had this in school. I wish my kids would have this." So, overwhelmingly, the results are there that people want to have this taught in schools. They want their kids to learn this. They, themselves, want to learn this. There's been a number of studies that have shown that. So, we really need, as a country, to be doing more in this space.

Jean Roark: All right. Thank you for that, Andrew.

Kris Bertelsen: And, Jean, I would—That's okay. I would just like to add two things. One is that we have a tab on the Consumer tab on our website. You can access anything of ours on that site open, so you don't have to have an account or anything. And, we have a lot of community and church or religious organizations that use it, put on family nights at schools, and it's amazing to watch. The kids will click through some of these things, and you can see the parents learning on their faces. So, it really does matter to—Whoever said that question, that's an excellent point.

Jean Roark: All right. Thank you for that. So, I have gotten a couple of comments thanking you both for the information and just saying that this was really well done. We got a question about where you get the materials. So, the question is, "Materials for the curriculum should be ordered from the Fed office that develop it?"

Kris Bertelsen: Yes. That's the best way to do it is to go to the district that produced it. I can speak for Dallas for Building Wealth. They do send them. We send things from St. Louis, and you can order things, I think, from all the Reserve banks. But, if you need more than the quantity listed, if you reach out to your district education specialist, they can work with you on that as well.

Jean Roark: Okay. Thank you for that, Kris. Okay. We have another question. "I teach an online personal finance literacy course for a Texas school district. I've read your terms of use. Do I need to obtain written permission to use these resources?"

Andrew Hill: Go ahead, Kris. Yeah.

Kris Bertelsen: Andrew, I don't know if it's a system thing is what I was going to just ask you, but we have teachers all over who use our stuff, link to it, all of our materials. I think, as long as they're not charging admission to the classroom, you're good to go.

Andrew Hill: Yeah. I would echo that, as long as you're not modifying the materials in any way. So, in other words, if it's a video, you're not editing the video. As long as you give us credit, you know, and you credit the Reserve bank that created it, you're fine with using it, and again, not making money off of it.

Jean Roark: Okay. Thank you for that. We have another question. It's, sort of, a question and a comment. So, the question is, "Any lessons that explicitly address what behavioral economics have revealed? People want to save, and yet, they don't do enough. People worry about getting ripped off, but let their fear paralyze them, leading to worse outcomes sometimes." So, the question is any lessons that explicitly address what behavioral economics revealed.

Andrew Hill: So, some of our colleagues in the over-arching National Association of Economic Educators Network produced a couple of lessons on behavioral economics. Those are actually on the Council for Economic Education's website, and they get at some of these issues around behavioral economics overall. But, we definitely know that we need to do more in the space of looking at behavioral economics, looking at the fact that we know that these responses that the human is doing over the rational economist, or economics thinker, would do are very important in terms of outcome. So, yeah. We're doing more in terms of making teachers aware of this and explaining it to students, but we need to produce more lessons in this space as a field.

Jean Roark: Okay. Thanks for that, Andrew. All right. So, I don't see any new questions that have come in. So, I'm going to give Kris a chance to provide some closing remarks, and then, if we get any additional, then I will announce those.

Kris Bertelsen: Okay. Thank you very much, Jean. Again, I would like to thank everyone for attending today, and thank you, Andrew, for your research. That's really fascinating stuff. I did mention this already, but please make sure you check your district banks' websites, not just for new materials, but also for professional development opportunities. For example, Andrew, in Philadelphia, they put on workshops all summer, including the Keys program. In St. Louis, we have our annual AP conference, which is very well attended and excellent, and I know all the other banks are doing programming for which you will receive professional development credit and excellent content and instruction. So, please do that, and, if you have any questions on anything we've discussed today, feel free to e-mail us or give us a call. Thank you, Jean.

Jean Roark: All right. Thanks for that, Kris, and there aren't any new questions. So, I'm going to go ahead and close out our event today by first thanking both Andrew and Kris for presenting and sharing your time and expertise with us. A survey should now be available for those of you who joined via webinar, and shortly, everyone will receive a survey via e‑mail. You really only need to fill that out once, but we definitely would love to hear from you if you have comments about our webinar today. So, thanks again for joining us. This concludes today's Federal Reserve ECONnections Webinar. Enjoy the rest of your day.

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Audience:   Middle School, High School
Language:   English
Subjects:   Economics, Personal Finance
Resource Types:   Webinar
Concepts:   Banks, Credit, Interest, Risk, Insurance, Taxes, Types of Saving