Despite the market's recent downturns stocks remain an important part of any financial portfolio

happened in the market the last few days, stocks are still one of the best tools for building long term wealth.

In this post, I thought I would offer a few of the PowerPoint slides I use to lead classroom discussions on stocks, as well as a few of the worksheets I use. I will post a couple of activities later on.

Since my Personal Finance classes do not have a textbook, and I’m not teaching Econ at the moment, these slides do not correspond to any particular text. I will place them below in the order that I cover them in class. Feel free to adapt them to your own needs!

PowerPoint Discussions over Stocks

PowerPoint Notes: Investing Expectations (Provides students with an overview of what to expect from stock market)
PowerPoint Notes: Introduction to Stocks
PowerPoint Notes: Financial Statements (Basic introduction of Financial Statements for students who haven’t had Accounting)
PowerPoint Notes: Characteristics of High Quality Companies (Students learn traits of high quality companies)
PowerPoint Notes: Other Investments (Introduces Bonds, Mutual Funds, and “other” investments)

Stock Worksheets

Worksheet: Reading Stock Quotes (Excel Format)
Worksheet: Company Financial Statements (Excel Format)
Worksheet: Company Quality (Word Format)

Related posts:

1. Personal Finance Lesson: Investing Expectations
2. Personal Finance Lesson: Budgeting 101
3. Personal Finance Lesson: Miracle of Compounding

My last final is on Wednesday, so posting will resume at a more regular rate after that. In the meantime, here are a few mutual funds activities my Personal Finance class has been working on over the past few days.  Enjoy!

Researching and Comparing Mutual Funds
Excel Worksheet: Mutual Fund Comparisons

Students learn the basics of comparing mutual funds by looking up fund information on Yahoo Finance.

Creating Your Own Mutual Funds
Instructions: Creating Your Own Mutual Fund

Students apply their knowledge of mutual funds by creating their own fund. They then “sell” their fund to the class in a PowerPoint presentation.

Sample Slide from Student "Create Your Own Mutual Fund" Presentation

Related posts:

1. Personal Finance Lesson: Cell Phone Comparison Shopping and Research
2. Project Based Economics: The Vanguard Black Swan Fund Advertisement (Phase 2 Rollout)
3. Personal Finance Lesson: Miracle of Compounding

While stock market games are fine, they do have some weaknesses.

Sample Slide from Investment Expecations PowerPoint

First of all, they teach students to have a short term investment horizon. While I haven’t fully subscribed to a “buy & hold” philosophy, I do think novice investors should have a longer outlook than one or two months.

The second problem I have with these games, is they can cause students to have skewed expectations of how the stock market works. Depending on what the student invested in, they may leave the game with the impression that the stock market is an impossible crapshoot or a guaranteed way to make easy money. Neither of these expectations is grounded in reality.

As a starting point for my unit on investing, I like to emphasize the  importance of having the right expectations when making an investment. I use the PowerPoint presentation attached below to lead a classroom discussion about expectations and afterwards I have the students log onto finance.yahoo.com where they practice looking up stock quotes for companies that interest them. 

During the classroom discussion, students are urged to expect the following when investing in stocks:

• Risk/Return Tradeoff
• To Own a Piece of a Company
• Growth
• To wait for said growth
• Volatiliy
• To, possibliy, lose money
• Conflicting advice
• Do homework on (and have fun with) their investments

The PowerPoint also touches on the concepts of diversification and stock betas. Each of these will be built upon in later lessons.

Lesson Resources
PowerPoint Discussion: Investing Expectations
Website: finance.yahoo.com

Related posts:

1. Personal Finance Lesson: Investing in Stocks
2. Personal Finance Lesson: Intro to Bank Accounts
3. Personal Finance Lesson: Budgeting 101

In this follow-up lesson, the class discusses some basic pointers on how to choose a bank. After the brief class discussion, the students take part in a group activity in which they combine their knowledge of different bank accounts with some online research to produce a sales presentation for a bank of their choice.

In creating and delivering the presentation, the students assume they are actual employees of the bank giving a sales presentation for their checking and savings accounts. I do not specify an exact layout for the students to follow, since I want them to be able to organize their thoughts on their own. However, I do suggest they cover these topics:

• Account Fees
• Interest Rates/Required Balances
  

  Sample Slide from Student Presentation of First Financial Bank

• Bank Locations/Hours
• Account Features (ATM locations, online banking, etc.)
   
• Bank History
• Anything else you feel will help you “sell” your bank to the class

After the students present, the class votes on which bank they would choose.

By the time the students research their bank and listen to the other presentations, they should be able to compare/contrast the different types of accounts offered by a number of real banks, as well as their features, benefits, and costs. 

Lesson Resources
PowerPoint Discussion: Choosing a Bank
Instructions: Bank Salesperson Activity
Scoresheet: Bank Salesperson Activity
Businessweek Article: PNC Lures Generation Y with Virtual Wallet

Related posts:

1. Personal Finance Lesson: Intro to Bank Accounts
2. Personal Finance Lesson: Effective Consumer Complaints
3. Personal Finance Lesson: Budgeting 101

When teaching Personal Finance, I am always excited to get to the “fun” stuff, like investing in stocks. But, before you can get to that point, you have to start with the basics. Like checking and savings accounts.

Some high school aged students are already familiar with bank accounts and their benefits. But, there a lot of people (high school students and adults alike) who avoid banks altogether – instead opting to pay fees to check cashing services every time they want to cash a check. Wal-Mart’s massive rollout of their in store “MoneyCenter” is a good example of the demand for non-traditional banking services.

This lesson guides students through the basics of checking and savings accounts through a PowerPoint discussion that includes the following topics:

• How Banks Work
  

  Sample Slide from Banking Basics PowerPoint

• Banks vs. Credit Unions
• Types of Services Offered by Banks
• Differences Between Savings Accounts, CDs, & Money Market Accounts
• FDIC Insurance
• Checking Accounts

I also include two small activities that get the students out of their seat.

• Bank Rate Comparison Activity: Students search the internet for a bank’s website. Then they find the APY for that bank’s various accounts and write the rates and the bank on the board. Class then compares the rates to determine which bank has the best rates.
• CNN Money Quiz: There’s a 10 question online quiz on CNN Money that goes along with this topic. I label four spots in the room (A, B, C, & D) then bring up the quiz on the projector. Then I read the questions off one by one and have the students move to the spot for the correct answer.

If you have time, and if your students need the practice, themint.org has a couple of good activities that could be incorporated into this lesson as well.

• Themint.org – Writing a check: Walks students through the process of writing a check
• Themint.org – Balancing a checkbook: Teaches students how to balance their checkbook

Lesson Resources
PowerPoint Discussion: Checking and Savings Account Basics
Website: CNN Money 101 – Basics of Banking and Saving Quiz
Website: Themint.org – Writing a check
Website: Themint.org – Balancing a checkbook

Related posts:

1. Personal Finance Lesson: Choosing a Bank
2. Personal Finance Lesson: Budgeting 101
3. Personal Finance Lesson: Miracle of Compounding

Sample Slide from Compounding PowerPoint Presentation

If you have ever been around a high school student, you know they are all about applicability (and you thought they were just all-about Facebook). Meaning that before you tell them anything, you need to convince them how it applies to their life – both now and in the future.

That can be a hard sell if you are teaching, say Biology. Like many students, I dissected animals in high school. Actually, mangled is probably the more accurate term.

15 years later, I can honestly say that knowing what is inside a frog hasn’t helped me much in a practical sense. Kids today are no different. If they feel that what you are talking about doesn’t apply to them, they are likely to tune out.

So, when I introduce my lessons on saving and investing, I guarantee the class that the material will be applicable to each and every one of them.

The lesson I am posting today covers the concepts of simple interest, compound growth, and the Rule of 72. It revolves around a PowerPoint discussion that provides the basics, as well as some eye-opening examples of how the concepts can be applied in real life. It also allows the class the opportunity to practice a few calculations, both manually and using some internet financial calculators (see attached worksheet).

 This lesson in compounding lays the foundation for further study. It provides a compelling reason as to “why” we should invest. I will post the lessons and activities that describe “how” to invest later on.

Lesson Resources
PowerPoint Discussion: Magic of Compounding
Student Worksheet: Online Savings Calculators
Website: Millionaire Calculator – Investopedia
Website: Savings Calculator – Dinkytown.net (Need Java to run)
Website: Compounding Interest – Wikipedia

Related posts:

1. Personal Finance Lesson: Cell Phone Comparison Shopping and Research
2. Personal Finance Lesson: Intro to Bank Accounts
3. Personal Finance Lesson: Effective Consumer Complaints

Ariely's book focuses on "The Hidden Forces that Shape our Decisions"

As consumers, we’d like to think that we have a pretty good handle on what things should cost. But, a growing body of research is proving that we aren’t as smart as we think. One of the pioneers in this field is Dan Ariely, a Professor of Economics at Duke University. If you haven’t had a chance to read his book, Predictably Irrational, you should pick it up. It provides a lot of great examples of how we as consumers act in ways that sometimes don’t make a lot of sense.

One of my favorite concepts in Ariely’s book is anchoring, which he defines as the human tendency to rely too heavily (or “anchor”) on one previously acquired piece of information when making a decision. For a quick discussion of anchoring, check out the Wikipedia entry. 

Even if you are not familiar with anchoring, you’ve probably seen it in action. Anchoring is why McDonald’s can charge $3.00 for a medium McCafe Latte and still get people to think it’s cheap, despite the fact that it’s one of the most expensive things on the menu. Since many people are “anchored” to Starbucks’ even higher prices, McDonald’s seems cheap by comparison.

You can demonstrate the power of anchoring to your classes using this activity, which comes directly from Predictably Irrational.

In the activity, you have your students write down the last two digits of their social security number on a sheet of paper. After the students have written down their numbers, they are asked to translate the number into a dollar amount (i.e., if the last two digits of the social are 82, that becomes $82). Finally, the class places mock bids on a series of products (I have them “bid” on things like a car stereo, a wireless keyboard, and a navigation system).

What Ariely found, and what you should find if you perform this experiment with your class, is that students who wrote a higher number tend to bid higher than students who wrote down a lower number. In fact, Ariely’s data shows that students with the higher numbers bid as much as 60 to 120% higher than students in the low group.

This activity works great in Marketing class when you are discussing pricing. I also use it in Personal Finance during my unit on consumer skills.  You can perform the experiment using the resources below.

Lesson Resources
Worksheet: Anchoring Activity
Photos: Products for Anchoring Activity
Website: Wikipedia entry for “Anchoring”
Website: Predictably Irrational Excerpt on Anchoring Experiment

Related posts:

1. Marketing Lesson: Product Placement in Movies and Television
2. Personal Finance Lesson: Choosing a Bank
3. Marketing Lesson: An “Eggcellent” Distribution Channel Activity

Budgeting helps us piece together our financial picture

It’s hard to find the subject of budgeting entertaining. Maybe that’s why so few people actually create and follow a budget.

When I was in college, I had a professor who liked to talk about the Constipated Accountant. As it turns out, the Constipated Accountant couldn’t budge-it, so he got a pencil and worked it out. That’s about the only encounter I’ve ever had with budgeting humor.

Even though it may be a dry subject, I can’t understate the importance of budgeting, especially in the context of teaching students Personal Finance. Today, I’m sharing my lesson on budgeting with this caveat: I know it doesn’t work.

Does it teach students the importance of completing a budget? I think so. Does it show students how to construct a budget? Yes. Does it allow students the opportunity to practice creating their own budget? Sure.

But, does the lesson work in the sense that it will cause every student to go out into the real world, create a budget, and dutifully follow it? Maybe not.

And that is the biggest challenge of Financial Education. We can give students the how’s and the why’s, but getting them to change their existing financial habits and behavior is harder. That being said, the reason I’m a believer in Personal Finance at the high school level, is that we have a better chance of changing poor habits early on, as opposed to trying to change them after they have had 30 years to take root.

Lesson Steps
The budgeting lesson itself consists of a PowerPoint discussion, two activities, and a budgeting project – all of which I will attach below.

I introduce the lesson by posing the following question to the students: imagine you have just been given $100…what will you do with the money?

How the students answer this question provides a glimpse into how they view spending and saving.

Next, I bring up the PowerPoint and we discuss goals. During this portion,

Sample PowerPoint Slide from Budgeting Presentation

students are given the opportunity to jot down some of their own short, mid, and long-term goals as well as their estimated costs.

After the students have written down some of their goals, the discussion continues with a focus on how to use a financial plan (i.e., budget) to achieve goals.

The in-class portion concludes with the students logging onto www.themint.org and completing the “Determining Your Budget” simulation. As the students complete this, most of them find it is hard to create a balanced budget. This provides the perfect opportunity to share with the class the two ways to fix a budget that is out of whack. Namely,

*Make more money (which can be hard to do)
*Spend less money (which can be hard to do, but sometimes more realistic than option 1)

After the lesson, I assign what I have creatively titled “the budgeting project.” Using the attached budget template, I have the students estimate their income and spending for an entire month.

Then, I ask students to keep track of all of their income and spending for a period of time (depending on the group, I may do 2 weeks or 1 month). I normally provide small, pocket sized notebooks for them to record their information.

At the end of the month, the students take the information from their notebook and compare it to their estimated budget. The last step of the project requires students to develop a plan for the following month based on what they learned from their recordkeeping.

Resources
PowerPoint Discussion: Budgeting 101
Worksheet: Excel Budget Template
Link: Themint.org – “Determining Your Budget”
Link: Suggested Reading – “Put Savings (and yourself) First”

Related posts:

1. Personal Finance Lesson: Intro to Bank Accounts
2. Personal Finance Lesson: Effective Consumer Complaints
3. Personal Finance Lesson: Choosing a Bank

Random Winner Certificate Used in Scam Lesson

As opposed to a run-of-the-mill lecture or, *gasp* a worksheet, I like to get the students out of their seats and actually simulate a few of the common scams that are going around.  In order to have the element of surprise, I don’t tell the students what we are covering when the class starts (or the day before, like I normally do). I just jump right in. As you read through the plan, you will see why.

Before the students come into the room, I pick 4-5 of their seats and tape a certificate underneath them.  The certificates inform the students that they have randomly been selected to win a free iPod Touch. As the students enter the room for class, they are given $5 in Monopoly money.

Once everyone is seated, and we are through with our starting off activity, I inform the class that some of them have been randomly selected to win a free iPod. If they have a certificate, all they have to do is pay $5 to claim the prize.

Most of the time I can convince at least one student to bite, and then the others will follow.

After they have made their decision, I inform them that they have been a victim of a fraudulent giveaway, and bring up a PowerPoint presentation that is used throughout the rest of the lesson.

The first few slides discuss fraudulent giveaways (like the iPod deal) and E-Mail scams, as well as how to avoid being a victim of these shady deals.

The next section of the PowerPoint covers deceptive marketing techniques. In order to set that section up, I tell the

Bait and Switch Ad Used in Scam Lesson

class that it is time for a candy break, and I put up a slide reading “Mr. Martin’s Candy Corner” (corny, I know).  With my candy table set up in front of the room by the projector screen, I advertise my two specials to the class using the slide shown on the right.

When the students come forth to purchase the Reese’s (100 for $1), I use a bait and switch tactic on them and try to sell them a single normal sized cup for $5. For the Snickers, I use a fake sale tactic, placing a sign underneath the candy that shows them being marked down from an outrageous price of $10 to a slightly less outrageous price of $5 (it’s 50% off, people!).

These concepts are covered in detail on the PowerPoint after the students have made their purchases.

Finally, we take a look at infomercials by watching a commercial for ShamWow, the supposedly super-absorbent towel. For the last mini-activity in the lesson, I bring in a few ShamWow towels that I purchased from Wal-Mart and we  do our own tests, comparing them to paper towels, to see just how absorbent they really are (fyi…be sure to get volunteers for the tests because for some reason the kids really like this part).  I would also recommend working in other “as seen on TV” items, like the Slap Chop, if you have them readily available.

Wrapping up the PowerPoint discussion, the class reviews the red flags that accompany many scams, as well as a few ways to be a smart consumer.

Note: Obviously, this is not a comprehensive overview of all the scams going. I cover scams in investments, employment, and car repairs when we talk about those specific areas.

Lesson Materials Needed
Printed “iPod Winner” Certificates
Monopoly or other Fake Money
Small Snicker Bars
Reese’s Miniatures Bag (Empty)
Individual Reese Cups
Shamwow/Slap Chop or other “As Seen on TV” Items

Lesson Resources
PowerPoint Notes: Consumer Scams & Rip-offs
Resource: PDF Copy of iPod Winner Certificate
Resource: Snickers Candy Sale Sign

Related posts:

1. Personal Finance Lesson: Effective Consumer Complaints
2. Personal Finance Lesson: Investing Expectations
3. Personal Finance Lesson: Budgeting 101

Always Check Over Your Bills

We have all been there at some point. You receive a bill in the mail that just isn’t right. Or maybe you purchased a product and were less than satisfied.

Knowing how to handle these situations is part of being a smart consumer. So, in my Personal Finance classes, we cover the process for filing a complaint.

Having just covered cell phone comparison shopping in the previous lesson, I use that as a starting point and play a news clip of a consumer who received a $16,000 cell phone bill (there are plenty of news clips of these types out there…any one will work).

The video clip leads into a discussion in which the class provides personal examples of instances in which they (or a family member) had to have an issue resolved.

I then go through a short PowerPoint presentation in which I cover the complaint process as well as the mechanics of writing an effective complaint letter.

The lesson concludes with the students writing their own complaint letter, following a sample letter included in the US Consumer Action Handbook.  Rather than having the students completely make up a letter, I have them randomly draw from a group of scenarios I have written up. An example being:

You recently received your monthly Cable Bill from Time Warner Cable (Account #8914651). Normally your bill consists of charges for Basic Cable and Internet, with a total of $89.99. However, this month HBO and Cinemax appear to have been added to your bill. You did not order these stations, and do not want them, but because they are on your bill, it is now $14.99 higher.

I intentionally leave a few items off of the scenario. First of all, I leave off the company’s address, so the student can practice going online and looking up an appropriate customer service address.

Also, there is no mention of how the problem should be resolved in the scenario. It is up to the student to decide what to request.

Some may say letter writing is an outdated mode of communication, and I agree. However, this activity helps students understand the basic information they would need to communicate in a consumer complaint. That knowledge can be applied to complaints sent via e-mail, telephone, or in person.

Lesson Resources
Website: www.consumeraction.gov (Government Consumer Education Website)
Video Clip: The $16,000 Cell Phone Bill
PowerPoint Presentation: Consumer Complaints
Resource: Scenarios for Student Complaint Letters
Resource: Complaint Letter Template (from Consumer Action Handbook)

Related posts:

1. Personal Finance Lesson: Consumer Scams and Rip-offs
2. Personal Finance Lesson: Intro to Bank Accounts
3. Personal Finance Lesson: Budgeting 101