If you are reading this post, you must be considering adding a personal finance component to your class. As I stated in my first post Making Finance Personal, I feel this might be the single most important thing that students can learn while in high school. In this post, I am going to give you a review of why you should include personal finance in your class. How you can “Make it Real” and detailed information on the monthly Personal Expenses activity. In my business classes, personal finance assignments made up around 40% of the student's grade.
THE WHY
Why do personal finance? This is a great question that needs to be answered. Looking at all that is asked to facilitate this experience why add another element to the journey? This is especially relevant with new teachers teaching the course for the first time. The experience can be very overwhelming, and time-consuming, and tends to burn teachers out if they try to do everything. Saying all that, I still feel the inclusion of personal finance might be the single most important element for students to understand what it takes to live in the real world. So here are my reasons why I think you should strongly consider adding this to the experience and this is why:
Most schools do not offer or require any personal finance education. Twenty-five states (as of December 2023) currently have state-wide requirements for a personal finance course So your class might be the only time your kids get any training on how to manage money throughout their entire educational experience. The tasks of creating a budget, purchasing a vehicle, finding a place to live in their local community, shopping in the network, and paying bills give them a practical understanding of what they will be doing as adults as they move into that chapter of their lives.
Another opportunity to grade. VE is difficult to grade. The monthly tasks of paying bills, purchasing from other virtual businesses, and completing the personal finance exercises are consistent opportunities each month for individual grades in the classroom/office.
The virtual economy needs customers. All companies need to have customers to make the simulation work. When students are tasked to make purchases through the personal finance aspects of the program, this helps everyone involved. Companies receive and process sales, customers are using the network bank, and the more robust the students engage with the sales process the more robust the experience is for all the companies actively looking to make sales.
It can be fun. I have found students love looking for their first car, finding roommates in the class, and finding an apartment or a house to rent together. I have had students choose to simulate what it means to be a single parent and add kids into the equation and have even allowed student marriages in my classes and all that going with that. All of this enriches the experience for the students and gives them experience in the realities of surviving while in the workforce. In my 3rd blog post in the series Personal FUNances below, you will see some unique things I did in my classroom to make this experience memorable.
TIME TO MAKE IT REAL
Once students have completed their budget, purchased a car, and found a place to live, (all found in part 1) it's time for them to get real and start paying bills. With most banking now being online, students will get real training on how to pay bills online through their online bank accounts. My classes required students to pay all bills each month (14 total) and have a minimum spending requirement of 17% of their take-home salary. Each month I required them to pay utilities (electricity, natural gas, water, cell phone, cable TV, and internet), rent, car loan payment, insurance (renters and car), groceries, household supplies, and gas for their car. In addition, I included requirements for credit card purchases (17% of net income- typically spent on purchases throughout the month that do not show up in the other areas) and options for charity and healthcare (if your company has ventured into that realm) I use this PERSONAL EXPENSES sheet with my students and they would submit it each month showing what they paid.
PERSONAL EXPENSES EXPLAINED
Download the PERSONAL EXPENSES sheet and open it up, you might feel it is a bit complicated. So that is why I included this section. This is where the teacher should take a day or so and explain and demonstrate to the students how to use the sheet and work through completing it in a large group activity. Each student will have different information but should be following along as you demonstrate how to complete the sheet. Students only fill YELLOW areas, everything else will fill automatically throughout the worksheet. First off, the sheet has 3 tabs and Ill will explain each so you have a clear understanding of my system.
INFORMATION TAB:
You will start with your students on tab 3: INFORMATION. The students will need their budget, transportation, and living situation sheets out to get the information from that and transfer it to this sheet. (if your student has not done their BudgetPlanner Worksheet they will need to complete that first) On this tab you will, be adding personal information, pay (gross and net), pets, living location miles from the office (school classroom), and total rent amount. Next, use the drop-down menu to select the number of residents living together. This will determine their utility costs automatically. Note: I limited my students to 4 roommates and each needed to have their own bedroom. So typically if 4 students lived together they found houses to rent not apartments, but this is totally up to you if you want to be a stickler for realism. If they have roommates, I have them record each roommate's full name. There is also an open spot for a picture of the apartment or house they are renting. The last section is transportation. This is where they will put all the vehicle information and car loan information, the current average gas prices for their location, and a place to drop in a picture of their car. Once all YELLOW areas are complete, you will be moving to the MONTHLY EXPENSES tab.
MONTHLY EXPENSES TAB:
This is where they will record flexible and fixed monthly expenses. As I said before in my classes they are required to spend 17% of their net income on flexible spending each month, that way they just don’t hoard their money. That number is reflected in the gray box that is labeled required spending. In the list of flexible spending, they put in amounts for what they think they would have spent over the month on personal purchases. Recording in the YELLOW boxes will lower their required spending (along with Required VE purchases and Life Happens, which I'll discuss later in this blog) They need to get this below $0 remaining to meet the requirements. (this will appear as a negative number and be red) Now moving to Fixed spending, there are several options here for students. First is move-in fees, typically most rentals require a first and last month’s rent upfront. If students first move in, they need to pay two months in advance and this needs to be set to “YES” only for the first month. Change it to no for all other months. Some rentals included some utilities those options can be turned on but changing the “NO” to “YES” if it applies. Television has a bunch of extra paid or subscription options and needs to be discussed with roommates so they all have the same settings.
STIMULATING THE VIRTUAL ECONOMY
Under the third bullet item at the top of this blog was the statement “The virtual economy needs customers” It is super important and teachers require their students to make purchases from other firms. These are recorded at the top of the MONTHLY EXPENSES tab. In the area, labeled REQUIRED VEI COMPANY PURCHASES. This is a very simple process. This occurs through active company websites. To see the active website you log into the Marketplace Tools in the HUB and go to Firm Directory. Students can sort by category, state, or country. Active websites are designated by the company name in BLUE. Click the name and the website should pop up. If the students have set up the Buy Buttons correctly the site should allow customers to purchase from the company website. The purchase will be deducted directly from the student's bank account at the time of the transaction. I would require my student to make 4 purchases each month and record them on the top section of the MONTHLY EXPENSES tab. They would get big points for each of these so it motivates them to complete it each month.
LIFE HAPPENS
The last optional thing that you might use is variables that happen to the students each month. This occurred in my class by way of Life Happens cards. As we all know, “life Happens” and things occur periodically that we need to address. They can be a medical situation, car repair, speeding ticket, birthday gifts, etc. To simulate the unknown for my students, I would require them to draw a Life Happens card each week. They would record the card information under the LIFE HAPPENS section on the MONTHLY EXPENSES tab. We would do four each month and the banker/accounting department would bring around the cards and have each employee pick one. They would record the result of the Personal Expense sheet and any extra cost will be added to the required spending requirement for the month and counting toward meeting that minimum. The cards can be downloaded and will need to be cut into cards from this link Life Happens Cards
PAYING MONTH BILLS
This can be done on the first tab MONTHLY BILLS. The student should go down the list and pay for each of the line items. They can use the Standard Pay Rates - Personal when they need to pay their bills in their personal bank account. The student will need to “add payees” to their bank to pay them through the US Network Bank. Once bills are paid and they have added the month on the first tab, I would have them submit the digital Personal Expense sheet to me for grading.
VERIFICATION OF PAID BILLS
This can be completed by you the teacher or by a class banker working out of the accounting department. For the first option you will need to go to the Firm Admin found in the Marketplace Tools. There you can go to students and click the Bank Account for that student. You will get a quick view of transactions the student has been making and when they are made. You can use the BillPayTracker and Late Fee Calculator to record the bills paid by each student. This can take a lot of time and I typically use kids to verify for me. In class I had the banker do this as a monthly repeeating task and they would complete the BillPay Tracker and turn it in to me. For the second option, banker needs to access the employee bank accounts, you have two options to achieve this. 1) you can log into the Firm Admin at your desk and have the bank come and record the information from the employee accounts or 2) you can give the banker the log in information for each student so they can log in to employee accounts individually and gather the data. This requires you to trust the student and teacher might not be comfortable with this and opt for option 1. Advanced Feature: I would also have my banker charge late fees for employee who did not pay their bills on time. This would require them to create late fee notices that they would print and deliver to the students from the bank.
GRADING PERSONAL FINANCE
The PERSONAL EXPENSES were designed to be graded in about 10 seconds. This can be done on the first tab MONTHLY BILLS. The only YELLOW thing that needs to be recorded is the month of the personal expenses. On this tab, everything transfers over so you can view it all in one place, if error messages are visible it is because the student did not complete the YELLOW boxes on the other two tabs. As for points, that is totally up to you and will vary from teacher to teacher. For me, with 13 items (13pts) and credit card purchases (2pts), I would give them 15pts each month before being submitted. I would give them 5pts each (20pts) for the four REQUIRED VEI COMPANY PURCHASES and I would give them 2pts for each Life Happens and a bonus or 2pts for having all 4 for a total of 10pts for a total of 45 personal finance points each month.