Money To Live

September 22, 2008

Teaching Financial Literacy

Filed under: education — by moneytolive @ 5:00 am

In general, I am a big supporter of financial literacy programs, but some new research has me questioning the usefulness of financial literacy. Lauren Willis contrasts financial planners with doctors and lawyers. While you can buy thousands of books that claim to tell you how to manage your finances, there are not nearly as many telling you how to become your own doctor or lawyer. In a paper, Against Financial Literacy Education, she says

For some consumers, financial education appears to increase confidence without improving ability, leading to worse decisions.


This reminds me of a conversation a friend recounted to me in college. My friend was a math major and was talking to a humanities student, who had taken a special humanities-math class the previous semester. When the math major told the humanities student that she was taking topology, the humanities student said, “You spend a whole semester on topology? We finished it in two weeks!”

In the humanities-math class, the high point of the topology unit was tying one’s feet together with a rope and turning one’s pants inside out without removing the rope. (If you are familiar with advanced math, you know that topology involves much much more than turning your pants inside out.)

Willis’s article about financial literacy reminds me of the humanities-math class because in each case, the students were learning a little bit, but importantly, they were not learning what-they-were-not-learning (Rumsfeld might say there are “unknowns unknowns,” but the students may not even know the existence of “unknown unknowns”) .

A criticism of financial literacy education is that the information can be outdated. As new types of loans (i.e., subprime) come onto the market, consumers need to be re-educated about their options. A different approach to financial education is to teach people to evaluate financial products so they are comfortable asking questions and getting information from multiple sources before making a decision. Really, this would be more like “general critical analysis” training.


September 8, 2008

Retirement benefits for teachers

Filed under: education,retirement — by moneytolive @ 5:00 am
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After I gave copies of On My Own Two Feet to some of my cousins, my extended family had a conversation about money and finances.

On one side of my extended family, all of the women out of college (except me) are either contributing to or receiving income from a teacher retirement fund. All of the women (except me) either are currently working in education or worked in education in the past. I was very surprised to realize this, but maybe it should not be too surprising in a family that is overall highly educated and that has houses full of books.

Good teachers and educators are never paid what they are worth and frequently spend money out of their own pockets to provide for their students. While I think teacher salaries should be much hire (1.5x or 2x what they are currently), I am glad to know that teachers are supported in retirement.

Teacher retirement plans vary by state and by education level. Calculating expected benefits can be complicated, and the easiest way to get information is to visit your HR department. I spent some time reviewing benefits from the Teacher Retirement System of Texas, and it took a significant amount of time to wade through the information and determine what was applicable to my mom. Some information about health insurance in retirement was not available online, but a friendly customer service agent was able to answer all of our questions.

If you are a teacher or are considering teaching, I recommend that you look through the retirement papers as soon as you start working (even if retirement is 30+ years away). In Arkansas, for example, retirement benefits can vary drastically based on a contribution choice made at the initial hiring.

August 25, 2008

What should kids learn about money?

Filed under: education — by moneytolive @ 5:00 am
Tags: , ,

This is my unsolicited, child-less advice about what kids should learn about money. Many PF bloggers have been talking about how to teach children about finances, and I think an important issue has been left out of the discussion: basic math literacy.

An understanding of basic mathematics is needed to understand all aspects of personal finance: how to balance a checkbook, how to figure the price of an item on sale, how a coupon works, how credit card interest is calculated, how to compare car loans, etc.

By no means do children need to be math prodigies, but one of the best ways to prepare a child for financial success is to encourage confidence and comfort in basic calculations — addition, subtraction, and multiplication. Yes, division is also important, but you can get by with weak long division skills because of calculators.

As a young child, I thought I was horrible at single-digit multiplication. Since my mother did not want me to grow up thinking I was bad at math, she found fun ways for me to work on my math skills. In the car, we sang along to tapes about multiplication (I can still sing some of the songs). And now I have a Ph. D. in Applied Math from an Ivy League university — thanks, Mom!

Here are some fun activities and games for children to work on fundamental math skills:

24 – pick four numbers and try to make the number 24 out of them.

Example: 2,3,4,5

4 * (5 + 3 – 2) = 4 * 6 = 24

Buzz – This game can be modified to nearly any level of difficulty.

Easy version: Stand in a circle, and each person counts the next number. If I say “1,” the person to my left says “2,” and so on. Whenever the current number is a multiple of 5, the person with that number says “Buzz” instead of “5” (or “10” or “15”), and the next person goes back to saying a regular number, like “6” (or “11” or “16”).

Difficult versions: Make up 2 or 3 rules. For example: (1) Multiples of 6 — spin in a circle. (2) Prime numbers — clap your hands.

Estimate how much the grocery food costs – I think you know how this game goes.

Sing songsMultiplication Rocks has some cute ones.

Make fake homework assignments – I do not know why, but little kids love fake homework assignments. Give a few addition or multiplication exercises to the kids just before dinner.

Mathcounts – “The mission of MATHCOUNTS is to increase enthusiasm for and enhance achievement in middle school mathematics throughout the United States.”

August 13, 2008

Financial advice for college students: How to not spend $5,000

Filed under: cost analysis,education — by moneytolive @ 5:00 am
Tags: ,

The point of college is to learn to think critically and effectively and communicate ideas. No matter what you do after graduation, these skills will take you far. Somehow, at the end of four years, you are supposed to know how to find a job.

The problem is that, in classes, you are usually too busy learning about Shakespeare or how neurons fire in a rat’s brain to address these bigger goals. Your professors may be so focused on their own disciplines that they provide little guidance to your broader intellectual growth.

Since universities know that professors might not help you out in these areas, they provide resources on campus. You just have to know where to look.

As a graduate student, I stumbled across these resources, and if I were to pay for the services on my own, I estimate that it would have cost more than $5,000.

Writing Center

At the Writing Center on your campus, you can get help generating ideas for a paper, detailed line-by-line editing, or anything in between. Both undergrads and grad students can make appointments for anything they are writing. I visited the writing center regularly when writing my dissertation. My advisor read my final draft and gave great feedback, but he did not have time to read each draft I wrote. At the writing center, someone sat down with me and went through line-by-line.

This is a summary of the resources I used and the estimated out-of-pocket expense I would have to pay off campus:

Workshops on writing scientific papers $100/hour: $1800

Conferences with my writing teacher $100/hour: $300

Conferences with a graduate student peer tutor $50/hour: $450

Total: $2,550

Learning Center

This wonderful office sometimes gets a bad reputation on campuses. This comes from a misunderstanding of its purpose. Students with high SAT scores who get into good colleges think they know how to read effectively, take notes quickly and effectively, and plan a large project easily. Maybe a few do, but most could benefit from these resources.

I admit I am biased: I worked for this office at two different universities and took advantage of the resources “from the inside” by teaching the ideas and techniques to other students.

Services typically aimed at undergrads:

  • Effective reading
    This could be speed reading or effective reading of textbooks. Learning this changed how I read the newspaper — I spend much less time, and I am much more informed.
  • Note-taking
  • Exam preparation
  • Planning for a large project
    This is great for planning a term paper or a senior thesis.

This office usually also offers resources for teaching on campus. Graduate teaching assistants can get help with teaching right now or in planning to go on the job market.

Services typically aimed at graduate student:

  • Workshops on pedagogy development
  • Individual advice on syllabus design and teaching statements
  • Interview preparation

This is a summary of the resources I used and the estimated out-of-pocket expense I would have to pay off campus:

Workshops (pedagogy development) $100/hour: $1,000

Teaching observation (videotaped to a DVD): $300

Teaching statement advice: $100

Total: $1,400

Career Services

These services are typically offered at a career services office (it might be the “career center” at your school):

  • Guidance in choosing jobs and industries
    They might offer you personality tests or books about career choices.
  • Guidance in finding internships
  • Practice interviewing
    This is great for perfecting your answers to questions like “What is your greatest weakness?” and “Tell me about a time you worked on a team.”
    This is also great for identifying bad interviewing habits. Whenever I finished talking in an interview, I nodded my head several times. The interviewer helped me find something else to do (shut up, sit still, and smile).
  • Resume or C.V. advice
    Be prepared to go back several times with revisions of your resume.
  • Negotiation advice
    Got an offer? Congrats! Take it in for some guidance in interpreting the offer (what is a non-disclosure agreement?) and negotiating.
  • Workshops
    Ask for a schedule of workshops or panels that the office sponsors

Keep in mind:

  • It could be hit-or-miss depending on who you meet with. Ask friends for recommendations of who is helpful.
  • The more prepared you are, the more you’ll get out of it.
  • If you don’t know where to start, go anyway and say you want help getting started.

To get similar career advice takes a lot of money. I estimate that I would have to pay $100/hour for most of these services. The director at my school was particularly helpful, and I think she could charge $200/hour.

This is a summary of the resources I used and the estimated out-of-pocket expense I would have to pay off campus:

Resume, mock interview $100/hour: $200 total

Evaluating offers, negotiation advice $200/hour (director): $400 total

Workshops on applying for jobs, interviewing, … $100/hour: $500 total

Total: $1,100

Total in free resources

Total: $1,100 + $1,400 + $2,550 =$5,050

There are countless other resources on campus — your classmates, professors, teaching assistants, residential staff, and many more.

Already out of school? Some of these offices can also help alumni, especially career services. Check with the alumni office at your school to see what resources are available.


What did I leave out? What campus resources have you used? Leave them in the comments, with an estimate of what the services cost out-of-pocket.

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