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Financial Literacy for Middle School Students

Instructor: Laura Gray

Laura has taught at the secondary and tertiary levels for 20+ years and has a Ph.D. in Instructional Design for Online Learning.

This lesson focuses on financial literacy for middle school students. Aspects of financial literacy are laid out in three areas: basic budgeting, how finances work, and advanced aspects of finances.

The Importance of Being Financially Literate

It's important these days, perhaps more so than ever, for students to have a good grasp of how money works and why they should use money responsibly. Some students are getting credit cards as young as 15 or 16, and college freshmen are having to take out loans to finance their educations. The sooner we can teach students about finances, the better off they'll be in years to come.

There are three levels to financial literacy: understanding basic budgeting, understanding how loans and credit work, and understanding advanced concepts, like the stock market. Each of these aspects can be taught to middle-schoolers, on their level, so that they can have a sound grasp on how finances work.

Basic Budgeting

Knowing what a budget is and why it's important to stick to one is usually the first lesson that students learn regarding finances. By the time they reach middle school, most students have received a weekly allowance for some time, but whether they understand that money is a finite resource depends on what their parents have taught them about money thus far.

One good exercise for teaching budgeting to middle-schoolers is to ask students how much money they think they would need to survive on their own for one month. Of course, answers will vary, but eventually you should be able to come to a realistic agreement by listing all of one's monthly expenses and seeing if the number that they have in mind will cover those expenses. This can be a fun exercise since it allows students to see how many different bills they would have to pay to survive for one month, and it gives them an opportunity to have some input into how much they think is reasonable to pay for food, entertainment, and the like.

Credit and Loans

After going over basic budgeting, you might want to discuss the issue of credit and loans with your students. Most probably will have no idea that credit card companies and banks charge you money for using their money, and by explaining the concept of interest, late fees, and over-the-limit fees, you can sneak in a quick math lesson as well.

Middle-schoolers do not necessarily need to know how interest is compounded or how much interest one would pay on a 7 percent loan over 10 years, for example, but the idea that credit is not 'free' will probably blow some of your students' minds. If you want, you can talk about loans for college students during this lesson as well.

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