A report introduced in 2001 stated that 8.2 million Americans owed more money than they were worth. Simply stated, people just do not understand basic financial principles. This unfortunate epidemic is the result of inadequate training of finances in the home. Repeatedly, teachers are often asked to compensate for the education not found in the home and that is why there has been a national push to have financial literacy required in the classroom.
Recently, a middle school teacher contacted our office asking for suggestions on a different method of teaching her students about creating and managing a budget. The traditional methods of planning for an expense such as a vacation or computer were not working for her students. Although the students were beginning to understand the basic concepts, they were not able to apply their new found skills with practical experience.
We suggest teaching this important life skill with something more practical and familiar to you, your classroom budget. By engaging your students in creating the classroom budget will not only help develop their financial skill set, but they may also come away with a sense of appreciation of the resources and materials that are provided in the classroom.
This exercise will provide your students with an exposure to revenue and expenses, the concept of planning ahead, the process of determining priorities and how to manage their funds when cut back occur.
Teachers should break down the class into four small teams, Planners, Buyers, Writers and Auditors. Each team will be responsible for a specific function of your budget as determined by you.
Planners would work with you to determine which books, training material, educational aids and supplies that are needed for the next year.
Buyers would be responsible for finding and tabulating the costs of purchasing the material and supplies needed.
Writers would be responsible for compiling the budget and completing the final package to be presented to the department head or principal.
Auditors are responsible for keeping the Planners and Buyers under budget for each item that is requested. This group "confirms" that all expenses and bids are within reason and under budget.
After these tasks have been completed, request that your Auditors reduce the classroom budget by 10%. The task now for the Planners will be to prioritize which materials are needed, and at what numbers and costs. The Buyers will need to review, evaluate and choose similar products at a lower cost. The Writers will again prepare the final package, while the Auditors confirm that the classroom expenses are under budget.
The skills that are learned by the students while helping to create the classroom budget are transferable to situations outside the classroom. They will now know how to pre-plan purchases, work within a specific amount of money (income), evaluate expenses (living costs) and prepare for a budget cut (loss of job).
Timothy Liptrap, is VP of Education and Develoment for the free 101 Financial Lessons newsletter. Visit http://www.101financiallessons.com for more information. The newsletter provides teachers and parents materials and ideas to teach money.
