New Indiana law requires schools to teach financial acumen

Back in 1977, as a high school junior, Indiana Superintendent of Public Instruction Tony Bennett lost his shirt in the
stock market. He remembers the lesson well to this day.

Fortunately, there was no real money involved. For two
weeks, Bennett played a game his history teacher called “Panic,” simulating the stock market crash of 1929 and
the subsequent Great Depression. In it, each student started from the same financial position, then engineered trades every
day. Computers were still bulky and rare in classrooms back then, so the juniors practiced their math skills calculating their
returns by hand.

“I went broke,” Bennett laughed.

Today, Bennett is leading a similar
effort that will soon be incorporated into the lessons of every elementary and high school in the state. This spring, the
Legislature passed Public Law 154, which requires public schools, charter schools and accredited nonpublic schools to provide
instruction in personal financial responsibility to students in grades six through 12 under standards adopted by the state
board of education.

Bennett’s in charge of establishing those standards. He hopes to get the job done by
year’s end. His goal: Incorporate financial responsibility into the classroom via real-world example. Bennett wants
to see money management concepts embedded across the curriculum.

“What better way to teach multi-column
mathematics than to balance a checkbook? It’s a great lesson,” he said. “What better way to teach kids to
add and subtract than using a financial transaction?”

Bennett

Bennett wants students, on the day of
their high school graduation, to be able to understand the impact of compound interest. They should know
how credit cards work, which of their actions will lead to strong credit scores, the difference between
fixed-rate and adjustable loans, and much more. Such lessons are always important, Bennett said, but
never more so than in the worst recession since the Great Depression.

“We have to make our next generation
of consumers better credit consumers,” Bennett said. “Better money managers in general.”

Financial
advisers have long hoped for something like Public Law 154.

Dave Williams, president of Noblesville-based RDW
Financial Group, wishes this type of education had been standard for the baby boomers and their parents. Many were never taught
fundamentals, like the difference between stocks and bonds, or the concept of price inflation, said Williams, who this month
was named Advisor of the Year by trade magazine Senior Market Advisor.

“I’m surprised today
at the number of 50-year-olds I meet who really don’t understand what a mutual fund or ETF is,” Williams said.
“By the end of high school, you should know the concepts of budgeting and saving for the future. So by the time they
hit college, they know if they borrow, there’s a consequence.”

These days, Williams said, everybody
needs a working knowledge of money and how to preserve and grow it. The complex modern world requires everyone to understand
concepts like medical insurance co-payments, debt management, investment risk and tax deferment.

Even adults
sometimes struggle with such subjects. Williams said he finds the best way to explain them is via tangible anecdote. He talks
about insurance by way of examples from the nursing home. He explains the difference between accumulating wealth in one’s
working years and harvesting distributions in retirement by way of poker and bridge. Both involve decks of cards, but each
requires an entirely different approach.

“The best way I’ve found to teach people about money is
through storytelling,” Williams said. “Make it relatable. Show how something will happen so everyone can relate
in one shape or form.”

Some schools have been following Williams’ advice for years.

Nancy Campbell, department chairwoman for Family and Consumer Sciences at Walker Career Center at Warren Central High School,
said the types of classes taught at Warren Central once were called “vocational,” like welding in shop or cooking
in home economics. But today’s lessons cover personal budgeting, the pros and cons of different bank accounts, car insurance,
and the seven financial habits of highly effective teen-agers.

Perhaps the most difficult concept for today’s
student to grasp, Campbell said, is the idea of deferred results. Modern kids, used to the ubiquity and instant response of
cell phones and the Internet, don’t understand that uncleared checks mean they have less money to spend than their online
bank balances show. Delayed transactions and interest make no sense to them.

To make such concepts concrete,
Campbell employs lessons much like Bennett’s game of “Panic” back in 1977. She asks students to analyze
their cell phone bills, for example, or walks them through the many, many expenses connected to raising an infant.

“It’s eye-opening for anyone when they budget out where their money is actually being spent,” Campbell
said.

As helpful as classroom lessons may be, kids learn their biggest financial lessons at home.

Denise Musick, who teaches Family Consumer Science at Southport High School, has seen students increasingly ask real-world
questions based on somber subjects like bankruptcy and foreclosure. Musick said she can tell the queries are often inspired
by financial troubles at home.

And unfortunately, many parents aren’t terrific financial role models. Some
try to shield their kids from money woes by avoiding the discussion. Others preach the right philosophy, but practice something
else with the household budget.

“So many things we’ll teach them in financial literacy they’ll
say, ‘My mom and dad don’t do that. They don’t pay it off every month.’” Musick said. “When
they see their parents pull out the credit card every time, they may not be talking to them, but the kids are observing the
behavior of their parents.”•