A Lesson in Business

I’ve written previously on how important I think financial education is in schools, and so in the spirit of collegiality I’d like to share an example lesson I recently delivered in my class that illustrates well the kinds of activities a teacher who is looking to introduce business or personal finance might try.

This was taken from my business class’s unit on credit, and a lesson we were doing on credit cards. We’ll all likely need to access credit at some point during our lives, be it for a car loan, mortgage, student loan or even for consumer spending. My first message to the students when it comes to credit cards is that abstinence is best – but if we’re going to use them, we should be well-informed and responsible users.

Business Course iBook Cover

By way of background, I use a course iBook with my students – a sort of custom digital course text I have developed for my class that contains all the content I plan to use throughout the year. Without going too deep into the details, it basically allows me the opportunity to employ a flipped-classroom instructional strategy, and keeps all of my traditional curricular content housed in one easy-to-access digital collection. My intent for this lesson was to create an activity based on student understandings of the different characteristics of credit cards. To that end, I have listed in the course iBook a series of definitions students need to have a handle on in order to make the activity a success. These definitions include things like ‘credit limit’, ‘cash advance fees’, ‘minimum payments’, and so on.

To begin the lesson I gave students a chance to refresh on those concepts so we could make sure everyone would be able to participate fully in the activity. I then assessed their prior understanding by distributing a handout with a set of Likert scale questions asking students how important they thought each of those features were when it came to selecting a personal credit card. Obviously having an understanding of what each of those terms meant would be a pre-requisite to evaluating their relative merit. My goal was also to see at the end of the lesson if the students still felt those were the most important characteristics after having completed the activity.

laminated credit cards
Creating laminated credit cards for the activity.

Once prior understanding had been assessed the fun could begin. Prior to class, I had created 60 laminated fake credit cards, enough for each student to have 2, and also created 20 different profiles of card based on 5 types of 4 different brands: MasterCard, Visa, American Express and Discover. I allowed each student to draw 2 cards and gave them an accompanying handout with 2 tables on which to record the specific features of their selected cards. On blue posters hung around the classroom were listed all the characteristics of the 20 different cards. All the students had to get up out of their chairs and circulate the room to the 10 different posters to find out what was ‘in their wallet’!

Once they had recorded the 10 different characteristics of their two cards, students returned to their seats to evaluate which of their two they felt was a ‘better’ card by drawing a star above that table.

Next, I asked everyone to get back up out of their seats for some real mayhem. Students were challenged to try and get the ‘best’ card possible by trading their cards with their classmates. There was a lot of wheeling and dealing during this period with students trying to convince each other to trade.

Negotiating a trade.

Students had to think critically about the different features of each card, what was important to them and how they could convince others of the qualities of their cards. This required a deep understanding of the characteristics of the cards and happened to be a lot of fun too. The students seemed to get a real kick out of trying to negotiate with each other for their laminated credit cards.

Negotiating a trade.
Negotiating a trade.

Once the trading started to slow I asked everyone to go back to their seats. I posed the question, “Who thinks they have the best card, and why?” Different tudents offered their opinions, and it was during this period that we really understood that what constitutes a ‘good’ card really depends on personal preference. Do you prioritize having a low or no fee card? Do you prefer having a particular rewards program associated with your card? Or maybe cash back? Is being able to perform a no fee balance transfer with an interest grace period important? The answer completely depends on the profile of the user.

Negotiating a trade.

I finished the lesson by going through, one last time, each of the 10 different features we highlighted reflected upon the merits of each as they pertained to particular user profiles. For example, foreign transaction fees would be more important to a user who travels often… making only minimum payments is a recipe for disaster for all credit card users… and we also had a rich discussion about what merchant fees are. We even tied in a current event where Walmart and Visa had a dispute over merchant fees.
In the end, the students came away with a much richer understanding of the complexity of credit and credit cards, and can now make a more informed decision when it comes to, first, whether to have a credit card or not and, secondly, which card features will be important to them if they do decide in the future to make use of one. And they were engaged and having fun along the way.

I’ve made free use of some of the resources I’ve developed for this lesson here on my blog. Feel free to use them or alter them as you see fit. If you have any suggestions as to how I might improve this activity, please leave me a message in the comments section below.

A Lesson in Business

On the Importance of Financial Education

As a business education teacher I have a small bias towards my subject matter, but I think it’s fair to say that students of past and even recent generations have left their K-12 experience sorely lacking in basic financial education.

A typical grade 12 earns their diploma understanding the quadratic formula, meiosis and mitosis, the causes of the French Revolution and how to order from a restaurant in French or Spanish (among other things).  All valuable skills.  But the typical graduate also doesn’t know what an RRSP is, the difference between an asset and a liability, how to file their taxes, how to avoid crippling personal credit card debt, manage students loans or pay a mortgage, and they also don’t know they don’t have to be an employee – that it is actually possible to start your own business.  Personal finance is something we all will have to deal with, regardless of what career path we end up choosing.  And it’s about time we started taking seriously the education of our youth in this respect.

Schools today are great at pumping out employees.  Students learn how to take instruction, meet deadlines, produce work whose parameters are provided to them by a superior, and are all familiar with some type of chain of command.  Conversely, encouraging entrepreneurialism is one of the best ways to push critical thinking skills, problem solving skills and creativity skills.  Want to be an entrepreneur?  You’re gonna need a good idea first.  You’re going to have to solve some problems with respect to production, labor, marketing, etc. And you’re going to need to know how to communicate with and lead a team in order to fulfil your vision.  If we want to encourage creativity, collaboration and critical thinking skills, I can think of no better vehicle than entrepreneurialism.

Personal finance is a second, and arguably even more important skill to master.  People need to understand from an early age the dangers and pitfalls of credit.  One only has to look at the 2008 financial crises to see what effect prolonged accessible and cheap credit can have on people.  Interest rates fluctuate.  My loan rate of today is not necessarily my loan rate of tomorrow.  Credit cards are meant to be paid off each month.  Pay Day Loan companies are financial wolves in sheep’s clothing.  Just because I can buy something doesn’t mean I can afford it.  ‘Frugality’ doesn’t have to be a dirty word.  How are young adults supposed to learn this if it’s not taught in school?  Especially when popular media is persistently encouraging consumption and materialism.

A basic understanding of the stock market, I believe, is also incredibly important.  Whether or not you become an active trader of your personal portfolio or not doesn’t matter.  Almost all of us will in some way be directly or indirectly impacted by the performance of the stock market.  Do you have a company or government pension?  Then you’re in the stock market.  Do you have mutual funds, bonds or even just a mortgage?  All of these can be affected by what happens on the stock market.  If you have no idea of the basic functions of the marketplace, how can you be assured a competent understanding of your own personal economic future?  How can you plan for retirement?  We can put our heads down and work hard and just hope that it will all work out in the end, but I’d far rather see an educated public that understands what fundamental forces are at work behind the scenes.  This, as far as I’m concerned, should begin in high school.

For many families finances are still not a conversation topic at the dinner table.  How often have you discussed with your teenagers what’s left on your mortgage?  Which credit card your family uses most often and why?  How you save for family vacations?  What retirement plans the adults of the family are invested in?  These are all valuable conversations.  Especially if the family finances aren’t perfect – what a powerful learning opportunity!  And maybe it can even provide some impetus to spur the adults on to greater fiscal responsibility.

We ask students what they want to be when they grow up.  ‘A doctor.’ ‘A teacher.’ ‘A lawyer.’  How often have you heard a student say, ’an entrepreneur’?  Statistics vary, but roughly 48% of Canadian’s work for small business.  It’s one of the life-bloods of the Canadian economy.  To start those businesses someone at some point had to take an idea, combine it with a bit of courage and some basic understanding of business development and maybe even the help of a mentor.  We need to encourage students to take a keener interest in business both for their own sake, and for economic benefit of us all.  And even more importantly we need to be graduating students who know how to manage their own finances…  to have them understand the importance of saving for a rainy day…  that the best time to start saving for retirement was yesterday…  how to take care of their financial responsibilities and avoid debt… what it means to pay a mortgage… and to appreciate the fact that the stock market touches us all.  If they gain some collaborative, creative and critical thinking skills along the way I think our economy, our workforce and the financial stability of our families will all be better for it.

On the Importance of Financial Education