The New Jersey Dept of Ed recently (Ed.: February? Really?) announced that it has revised the statewide high school graduation requirements. You can read about all the changes here, but what I’d like to focus on is the new requirement of “2.5 credits in financial, economic, business and entrepreneurial literacy (effective with the 2010-2011 9th grade class)”.
Setting aside the semantic debate over the use of the word “literacy”, I have to say I’m behind this requirement. While I took 4 years of math classes in high school, not once did we cover credit cards, compounding interest, APR/APY, monthly payments, budgeting, or any “real world” math that I might actually have to use one day (but hey, if you need a hypotenuse calculated, holla at ya boy). In fact, in my experience, both as a teacher and a student, the “business” or “consumer” math classes have been traditionally reserved for the lower tracks of math, or even exclusively for special education.
In addition to the traditional curriculum these teachers will start covering next school year (you know, like “don’t buy things you can’t afford”) , I’d like to offer three personal finance tips that I hope our more Internet-savvy Business Ed and/or Social Studies teachers will consider including – one now, and two in a following post.
1. Get Paid: In 2009, there is no shortage of high-interest checking and savings accounts that will pay accountholders 3, 4, and 5% interest on their account balances. This started in the realm of “Internet-only” banks like ING Direct, but even traditional “brick & mortar” banks have started offering high-interest checking and savings accounts. We opened our first high-yield savings account with Capital One back in 2005 or 2006, when we were pulling in somewhere between 4-5% interest on our balance. That rate has dropped significantly over the last few years, and it’s now down to somewhere around 1.5% or so – a disappointment for us, but compared to the 0.25% interest rate (or whatever it was; it was a long time ago and it only earned me a few cents every month on a fairly sizeable balance) I had on my old Wachovia savings account, that’s still not too shabby.
We made do with that 1.5% until I read about a local bank that was offering a high-interest checking account at 3% APY. We made the switch from our traditional (read: 0% interest) checking account to the high-interest account with our new bank. Of course, in order to receive the high interest rate each month, there’s usually a “catch” of some sort. In our case, we have to do the following each month:
a) make 10 debit card purchases
b) have at least one ACH withdrawal or direct deposit
c) log into online banking at least once.
We do all these things anyway, so for us, switching from no-interest checking to high-interest was a no-brainer. Some accounts may require minimum balances or other caveats in order to get the best interest rate, so make sure you read the fine print (another good life lesson for the kiddos). Shop around for the (FDIC-insured!) deal that’s right for you, and let your money do a little work for you each month.
I’ve got two more up my sleeve, but what economics/personal finance/”entrepreneurial literacy” tips do you teach or think should be taught?