Financial Education and the Fed
Financial education supports not only individual well-being, but also the economic health of our nation.
—Federal Reserve Chairman Ben Bernanke, August 2012
In "Conversation with the Chairman: A Teacher Town Hall Meeting," Bernanke explained to educators across the United States that fallout from the financial crisis made it clear that financial literacy should be a top priority in this country. During this talk, he also described his view of the content of this education: "Effective financial education is not just about teaching students about financial products or performing financial calculations. It also involves teaching them the essential skills and concepts they will need to make major financial choices."
In an effort to continue its focus on financial education as well as to observe its centennial, the Federal Reserve has two initiatives under way:
- Financial Education Day, October 23, featuring professional development for educators. (You can find Federal Reserve System-level information on the Fed's education website at federalreserveeducation.org/financialedday/.)
- Classroom lesson plans: "Financial Fundamentals"
Financial Education Day offers educators professional development
The Federal Reserve is committed to providing quality learning opportunities for educators. The main office and five branches of the Federal Reserve Bank of Atlanta will participate in Financial Education Day by conducting educator professional development programs on or near October 23, 2013. You can find information about some of these programs on the calendar of events.
The programs will offer educators hands-on learning and provide opportunities for them to network with others who are interested in similar subject matter. Educators will also receive materials that will help them be better equipped to teach personal finance subject matter.
Classroom lesson plans on financial fundamentals
The Federal Reserve System's Financial Fundamentals curriculum features four personal finance lessons that focus on essential personal finance knowledge. The four lessons are "Focus on Finance," "Credit," "Invest in Yourself," and "Savvy Savers."
Focus on Finance
This lesson introduces students to the importance of financial services through the online video "Banking for Safety." During the lesson, students read information about services offered through financial institutions and identify their own service preferences. Students compare institutions listed and, as an assessment of what they've learned, choose the one that best meets their needs.
In this lesson, students explore the concept of credit and the impact of liabilities on an individual's net worth, monthly budget, and balance sheet through a series of interactive and group activities. Working in groups, students analyze a borrowing scenario and evaluate the advantages and disadvantages of using credit.
Invest in Yourself
In this lesson, students are divided into four groups. Each of the four groups produces its own name tents, using them to highlight different levels of human capital. Students identify ways that people invest in their human capital and analyze unemployment, educational attainment, and median weekly income data. Each student then works with a partner to analyze the data and write sentences to describe relationships among the variables. Finally, as an assessment of the students' learning, students create graphs or charts to illustrate the unemployment, educational attainment, and income data. They also use the U.S. Bureau of Labor Statistics' Occupational Outlook Handbook to identify a possible career and the type of investments in human capital required to obtain that occupation.
This lesson has students calculate compound interest to identify the benefits of saving in interest-bearing accounts. They learn the "rule of 72" and apply it to both investments and debt. They learn that there is a relationship between the level of risk for an investment and the potential reward or return on that investment.
Other Fed resources
The Federal Reserve offers a variety of other personal finance resources.
Katrina's Classroom: Financial Lessons from a Hurricane: A DVD-based personal finance curriculum centered on the 2005 hurricane that devastated New Orleans. (Note that each segment in this four-part series is being updated throughout 2013 with new lessons and technology-based resources as part of the Classroom Economist project.
FederalReserveEducation.org: This Federal Reserve System website offers numerous personal finance lessons, activities, and interactive materials.
Federal Reserve Bank of Atlanta tour programs: The Atlanta Fed's main office and some branches offer scheduled or self-guided tours. Some even have virtual tour programs available.
By Jackie Morgan, senior economic and financial education specialist at the Nashville Branch of the Federal Reserve Bank of Atlanta
September 30, 2013