Earlier this week, we had our first lesson of the year on personal finance. It is part of my unit on series, which is the sum of terms of a sequence. This leads nicely into the mathematics of savings and borrowing on loans.
The main concepts that I went through in the class were pretty much what we mention in here:
- the cost of school (about $16,000 per year with an annual increase of 4.5%)
- OSAP (government loans that are paid over ten years)
- bursaries and scholarships
- how to pay of loans more quickly (lower interest rates, lump sum payments, round up your payments to the nearest $20 or $100)
- good loans versus bad loans (good loans are things that give you the potential for more assets, such as a house, or an education or a loan for a business. All of these give you the potential to make more money. Bad loans are everything else: cars, trips, big screen televisions. Although these things are fine to have, if you are able to save for them, it makes more sense)
- saving and investing (save 10% of your salary and you will be rich. As well, try to save half of your raises. This is an extremely easy way to increase your savings and not notice it)
- the three main ways of getting rich: savings (slow and steady and guaranteed), real estate, and starting your own business.
We will go through the mathematics of savings and borrowing in this class, but the idea for that lesson was the discussions that came out of it. They couldn't believe that banks would give you interest to save your money. I simplified it for them and said that banks will give you 2% interest on your money, and then go loan your money out to someone else for 4%. They have made money on your money. This was unbelievable to the kids in the class, but I hope that logically they got it.
I will post more frequently throughout this unit (if the snow ever stops...we have had two snow days in a row) when the students have good questions or comments. One of the students in the class said that I can be her financial planner, which although I am vastly unqualified for, made me feel good.
Showing posts with label education. Show all posts
Showing posts with label education. Show all posts
Thursday, December 10, 2009
Monday, August 10, 2009
More Links about Education and Money
I am just going to post a few links (with a running commentary) for people who want more information about where money matters are taught in schools. Some say that they are, some say that they aren't. I teach Grade 11 math and that is my favourite unit. We generally discuss the mathematics side of compound interest and mortgages, but I always leave one lesson open to discuss financial matters (saving for university, how you will pay it back, budgets, loans, mutual funds, why not to go to a "Cash Mart", etc.). There are also high school electives in business and marketing, but I am not sure if they talk about saving and spending.
Learning How To Avoid The Debt Trap - a post from the Toronto star explaining how an MBA ended up with a high paying job and in his parents basement at 30 years old. They also talk about the importance of talking about compound interest (which is done in the mandatory Grade 11 math course).
Money Instructor - A link for all teachers showing how they can put financial ideas into their classrooms. These are for youngers students generally, but these sound financial ideas (save some money, spend less than you make, if you can't afford something you have to save before you can buy it) can be reinforced from a young age and hopefully will stick.
Young and Out of Work - A depressing article stating that for young people the unemployment rate is 21%. For a comparable read, check out "The Tipping Point", who discusses that unfortunately when you graduate school and how the economy is doing can greatly contribute to your success. They discuss in this article that you can ride out the recession while in school. As well, students think that because they have a University degree in whatever and a $20,000 student loan that they are entitled to a high paying job. Unfortunately, those days are over.
Tips To Teaching Money Management Skills - a nice post and suggestions on how to teach financial management to your children and students.
A Cartoon Buffett, Teaching Children About Money - Finally, Warren Buffet is creating a cartoon starring himself teaching children about money. I can't wait for the action figures!
Learning How To Avoid The Debt Trap - a post from the Toronto star explaining how an MBA ended up with a high paying job and in his parents basement at 30 years old. They also talk about the importance of talking about compound interest (which is done in the mandatory Grade 11 math course).
Money Instructor - A link for all teachers showing how they can put financial ideas into their classrooms. These are for youngers students generally, but these sound financial ideas (save some money, spend less than you make, if you can't afford something you have to save before you can buy it) can be reinforced from a young age and hopefully will stick.
Young and Out of Work - A depressing article stating that for young people the unemployment rate is 21%. For a comparable read, check out "The Tipping Point", who discusses that unfortunately when you graduate school and how the economy is doing can greatly contribute to your success. They discuss in this article that you can ride out the recession while in school. As well, students think that because they have a University degree in whatever and a $20,000 student loan that they are entitled to a high paying job. Unfortunately, those days are over.
Tips To Teaching Money Management Skills - a nice post and suggestions on how to teach financial management to your children and students.
A Cartoon Buffett, Teaching Children About Money - Finally, Warren Buffet is creating a cartoon starring himself teaching children about money. I can't wait for the action figures!
Tuesday, July 21, 2009
What A Math Teacher Can Do For The Future...
As a teacher, I hope that I have some influence over students’ decision-making in the long term. So I bring my love of numbers and of money into the classroom every day. I just thought that I would share with you some questions off of my final exam from my MCF3M Summer School class.
3) Mr. Sadler purchased a house this spring for $217,000. He makes monthly payments at 5.25%.
a) Give three suggestions that I can use to pay off my loan sooner (3 marks)
We discuss this in class during the lessons, and I hope that these stick with them. Some solutions that I will accept are:
- pay bigger payments: I talk about rounding up your payments from the minimum (ex. if my bill is for $191.28, I will pay $200)
- pay more frequently: I talk about linking your payments to how frequently you get paid. Of course it is cheaper if you may every day on your mortgage, but if you get paid every other week, it makes sense to have your mortgage come out this day (rather than once per month)
- put down a lump sum payment: we talked about how the no-deposit loan has really hurt the United States, and that a 20 or 25% deposit will lower your interest rate on your loan as well.
- find a lower interest rate: I took this for a mark, because if you negotiate your mortgage to a lower rate (either at another bank or your current bank), you will save tonnes of money. Additionally I talked about credit cards in class and how you can call up your company and ask for a lower rate!
b) His mortgage is for 30 years. What are his monthly payments?
This is just a straight calculation question for my class, which most of them are happy to do.
c) Mr. Sadler is a smart guy and wants to pay off his mortgage in 11 years. What will his new monthly payments be, and how much interest will he save (as compared to paying it off in 30 years)?
This (along with part a) are the questions that I hope will stick with the students through the years. The answer is that for a 30 year mortgage you pay $431,380.80 and for a 11 year mortgage you pay $286,117.92 for a savings of 145,262.88. The only problem is that the 30 year mortgage payments are $1198.28 and the 11 year mortgage rates are $2167.56 (almost double) so it is not always feasible.
I also discuss with my class about slowly raising your minimum payments with raises, and slowly raising your savings, etc. We'll talk more about this in future posts, but I'd thought I'd share this as I finish marking these exams!
3) Mr. Sadler purchased a house this spring for $217,000. He makes monthly payments at 5.25%.
a) Give three suggestions that I can use to pay off my loan sooner (3 marks)
We discuss this in class during the lessons, and I hope that these stick with them. Some solutions that I will accept are:
- pay bigger payments: I talk about rounding up your payments from the minimum (ex. if my bill is for $191.28, I will pay $200)
- pay more frequently: I talk about linking your payments to how frequently you get paid. Of course it is cheaper if you may every day on your mortgage, but if you get paid every other week, it makes sense to have your mortgage come out this day (rather than once per month)
- put down a lump sum payment: we talked about how the no-deposit loan has really hurt the United States, and that a 20 or 25% deposit will lower your interest rate on your loan as well.
- find a lower interest rate: I took this for a mark, because if you negotiate your mortgage to a lower rate (either at another bank or your current bank), you will save tonnes of money. Additionally I talked about credit cards in class and how you can call up your company and ask for a lower rate!
b) His mortgage is for 30 years. What are his monthly payments?
This is just a straight calculation question for my class, which most of them are happy to do.
c) Mr. Sadler is a smart guy and wants to pay off his mortgage in 11 years. What will his new monthly payments be, and how much interest will he save (as compared to paying it off in 30 years)?
This (along with part a) are the questions that I hope will stick with the students through the years. The answer is that for a 30 year mortgage you pay $431,380.80 and for a 11 year mortgage you pay $286,117.92 for a savings of 145,262.88. The only problem is that the 30 year mortgage payments are $1198.28 and the 11 year mortgage rates are $2167.56 (almost double) so it is not always feasible.
I also discuss with my class about slowly raising your minimum payments with raises, and slowly raising your savings, etc. We'll talk more about this in future posts, but I'd thought I'd share this as I finish marking these exams!
Subscribe to:
Posts (Atom)