Financial Literacy for Children

A lifetime of skillful financial decisions starts with experiential learning at a young age. To increase financial literacy for the next generation, consider these actions:

  • Give children a payday. Instead of a weekly allowance with simply giving money, create a system of earning these funds. Connect their household chores to earned amounts with a weekly payday. This practice can teach a child that people are paid for work to earn money for their living expenses.
  • Create awareness of opportunity cost. Every financial decision has trade-offs. Once money is spent, that money is not available for other uses. Keeping money in a clear jar allows the young person to visually see what funds are available, and when the money is gone.
  • Allow children to experience borrowing. If a child wants to buy something but does not have the money, set up a signed loan agreement with repayment terms. Also create a plan for the amount owed to be taken from future household earnings. Have the young person physically pay the money to better understand how credit works.
  • Connect them in the budgeting process. Include children in the discussion of family finances and the household budget to help them understand where money is spent. Consider creating a chart with spending amounts, or use slips of paper representing money that are used to pay the bills each month.
  • Teach wants vs. needs. Shoes or a clothing item may be a need but not a high-fashion version. To cover the cost of the higher-priced item, young people should be required to earn the amount for the additional expense.
  • Use money games. These activities can help children understand earning, saving, wise spending and other basics of money management for a financially sound future.

For additional information on financial literacy for children, click here.

Teaching Suggestions

  • Have students conduct online research to locate other actions used by parents to teach their children smart spending and wise money management.
  • Have students talk to parents to obtain suggestions that might be used to teach wise money management to children.

 Discussion Questions 

  1. What are the financial, social, and relational benefits of children learning smart spending and wise money management early in life?
  2. Describe possible money management learning activities for children that involve creative use of technology.

FINRA Investor Education Foundation Publishes “The State of U.S. Financial Capability”

Did you know that in 2018:

  • 19% of households spent more than their income?
  • 46% of individuals lacked an emergency fund?
  • 35% of credit card holders paid only the minimum on their credit cards?

In September 2019, the FINRA Foundation released data from its latest Financial Capability Study—one of the largest and most comprehensive financial capability studies in the United States. Among the findings, younger Americans, those with lower incomes, African-Americans and those without a college degree face the toughest financial struggles. More than 27,000 respondents participated in the nationwide study. Conducted every three years beginning in 2009, it measures key indicators of financial capability and evaluates how these indicators vary with underlying demographic, behavioral, attitudinal and financial literacy characteristics—both nationwide and state-by-state.

For more information, click here

Teaching Suggestions:

  • Ask students if they spend more than their income in a given year.
  • Ask students if they have a rainy day fund. If not, why?
  • Ask students if they pay in full when the credit card bill arrives. If not, why?

Discussion Questions

  1. What might be some reasons why almost one in five households spends more than their income?
  2. Why is it important to have a rainy day fund? Why almost half of Americans lack such a fund?
  3. Why is it vital to pay credit card bills in full? What are the costs of paying a minimum balance?

Apartment Loans

Many recent college graduates choose to rent expensive, upscale apartments rather than putting money into savings. Their “fear of missing out” (FOMO) on being “close to the action” or luxury-living amenities comes at a cost, with high demand for these units resulting in spiraling monthly rents.  To cover these higher costs, “apartment loans” are now available in several urban areas.

Similar to the high-risk mortgages that triggered the financial crisis in 2008, apartment loans may be viewed as predatory lending.  Renters may borrow up to $15,000 with no interest for the first six months, but then encounter an annual interest rate of 15-17 percent.  Some justify these loans in that the costs are lower than payday lending.

If you have to take out a loan to pay the rent for an apartment…you CAN’T afford to live there.  Your ability to build wealth and long-term financial security will depend on living within your income.

For additional information on apartment loans, click here.

Teaching Suggestions

  • Have students conduct a survey of renters to determine actions they took to determine the location and cost of obtaining an apartment.
  • Have students create a visual presentation with the dangers of apartment loans.

Discussion Questions 

  1. What actions might be considered to avoid apartment loans?
  2. Describe financial and personal concerns associated with apartment loans.

Fake Credit Repair: Good Teton Professionals, LLC

In June 2019, the Federal Trade Commission (FTC) charged that two defendants, Douglas Filter and Marcio G. Andrade, using such trade names as Deletion Experts, Inquiry Busters, and Top Tradelines, used deceptive websites, unsolicited emails, and text messages to target consumers with false promises of substantially improving consumers’ credit scores by claiming to remove all negative items and hard inquiries from consumers’ credit reports.

The defendants also falsely claimed to substantially improve consumers’ credit scores by promising to add consumers as “authorized users” to other individuals’ credit accounts.  In most instances, however, the defendants were not able to substantially improve consumers’ credit scores.  The complaint also alleges that the defendants charged illegal upfront fees and failed to provide consumers with required disclosures about their credit repair services.

The defendants often used illegal remotely created checks to pay for the credit repair services they offered through telemarketing, according the FTC’s complaint.

For more information, click here.

Teaching Suggestions

  • Ask students to prepare a list of federal laws that protect consumers from operators of fake credit repair schemes.
  • What is the best advice before you sign with such companies as, Grand Teton Professionals, LLC; to repair your poor credit?

Discussion Questions

  1. What is a household to do if it is experiencing problems in paying bills, thus resulting in poor credit scores?
  2. What are your options, if you are having problems paying your bills and need help?
  3. Discuss the statement, “Only time and a conscientious effort to pay your debt in a timely manner will lead to the success of improving your credit report.”

The “Bank of Mom and Dad” for Mortgages

Which source of home-buying finances has “millions of satisfied customers, has never asked for a bailout, and really cares about its borrowers”?  It’s the the “Bank of Mom and Dad.”

Parents and relatives are a common source of funds when buying a home.  With a difficult housing market, this financial assistance for young homebuyers is often necessary.  According to a study by Legal & General, the “Bank of Mom and Dad” is the seventh largest source of home-buying funds. The top six were Wells Fargo, JP Morgan Chase, Quicken Loans, Bank of America, U.S. Bancorp, and Freedom Mortgage.

The downside of this trend is that many parents are postponing, and even endangering, their retirement years to provide financial assistance to their children. Before accepting funds from family members, consider these factors:

  • Assess the current and future financial impact for family members involved.
  • Evaluate the tax situation and costs that might be involved.
  • Determine potential implications for other family members.
  • Consider other sources and possibilities, such as making it a loan rather than a gift’ also investigate government or private programs available to lower-income or first-time home buyers.

 For additional information on family assistance for home buying, go to:

Link #1

Link #2

Teaching Suggestions

  • Have students create a video presentation to demonstrate the positive and negative aspects of parents providing funds to their children for buying a home.
  • Have students conduct research online and with financial institutions to determine programs that are available to lower-income or first-time home buyers.

Discussion Questions 

  1. How might providing funds to children for buying a home affect the financial and personal situation of parents and other family members?
  2. Describe actions to take before parents provide funds to their children for buying a home.

Weighed down by debt? How to ease the load

If you’re overwhelmed by debt, it’s crucial to find a solution.

FDIC Consumer News offers a few tips.

  • Contact your lender immediately if you think you won’t be able to make a loan payment.
  • Reputable credit counseling organizations can help you develop a personalized plan to solve a variety of money problems. 
  • Be very careful of “debt settlement” companies that claim they can reduce what you owe for a fee.
  • Avoid scams.
  • Remember that you have rights when it comes to debt collection.

For more information, click here.

Teaching Suggestions

  • Ask students if they know anyone who has had financial difficulties and how they resolved their problem.
  • Ask students to review the main provisions of the federal Fair Debt Collection Practices Act and how the law protects consumers from unfair debt collectors.

 Discussion Questions

  1. Why is it critical to contact your mortgage lender immediately if you think you can’t make a loan payment on time?
  2. In what ways reputable credit counseling organizations can help you develop a personalized plan to solve financial problems?
  3. What are the warning signs of possible fraud by a debt settlement company or credit counselor?

Activities to Combat Illegal Debt Collection Practices

In March 2018, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) reported on their 2017 activities to combat illegal debt collection practices.  The CFPB handled approximately 84,500 debt collection complaints, making it one of the most prevalent topics of complaints about consumer financial products or services.  The Bureau offered five sample letters that consumers may use when they interact with debt collectors.

The FTC resolved 10 cases against 42 defendants and obtained more than $64 million in judgements, focused on curbing egregious debt collection practices, including phantom departments, schools, non-profit organizations, banks, credit unions, other businesses and government agencies.  The agency logged more than 60 million views on its webpages, with its videos seen more than 581,000 times at YouTube.com/FTC, and its consumer blogs reaching 199,860 (English) and 50,480 (Spanish) email subscribers.

For more information, click here.

Teaching Suggestions

  • Ask students to review the major provisions of the Fair Debt Collection Practices Act.
  • Let students debate the issue, “Can governmental agencies stop unlawful practices of the debt collection agencies that harm both consumers and legitimate business”.

Discussion Questions

  1. Is it possible to live without using any form of consumer credit?
  2. What can the governmental agencies do to protect the legal rights of all consumers in a manner that is efficient, effective, and accountable?

How to Dig Out of Debt? Grab More Than One Shovel

Millions of Americans are dealing with debt overload every day.  If you’re struggling to pay your loans, credit cards or other bills, here are some steps you can take to begin managing your debt problems.

  1. Create a budget.
  2. Try to get a clear picture of your monthly income and expenses.
  3. Contact your creditors about easier ways to make your most important bill payments.
  4. Have a strategy for saving money on interest and fees.
  5. Consider getting help from a reputable credit counselor.
  6. Know your rights if a debt collector contacts you.

For more information, click here.

Teaching Suggestions

  • Have students debate this issue “Is it possible to live without using any form of consumer credit”.
  • Ask students if they have created a budget, borrowed to finance a car, and have a strategy for saving money on interest or fees.

Discussion Questions

  1. What factors should be considered when a person is determining the amount of credit he or she should take on?
  2. What actions are commonly recommended if a person has difficulty making credit payments?

Phantom Debt Collectors

Consumers across the country report that they’re getting telephone calls from people trying to collect loans the consumers never received or on loans they did receive for amounts they do not owe.  Others are receiving calls from people seeking to recover on loans consumers received but where the creditors never authorized the callers to collect them.

The FTC is warning consumers to be alert for scam artists posing as debt collectors.  It may be hard to tell the difference between a legitimate debt collector and a fake one.

A caller may be a fake debt collector if he/she:

  • is seeking payment on a debt for a loan you do not recognize;
  • refuses to give you a mailing address or phone number;
  • asks for personal financial or sensitive information; or
  • exerts high pressure to try to scare you into paying, such as threatening to have you arrested or to report you to a law enforcement agency.

For more information, click here.

Teaching Suggestions

  1. Ask students to make a list of protections provided by the Fair Collection Practices Act.
  2. Ask students to prepare a list of steps they should take if the harassment continues.

Discussion Questions

  • If you think that a caller may be a fake debt collector, why is it important to ask the caller for his name, company, street address, or telephone number?
  • If you think that a caller may be a fake debt collector, should you stop speaking with the caller? Why or why not?

The Credit Repair Organizations Act

The Credit Repair Organization Act (CROA) makes it illegal for credit repair companies to lie about what they can do for you, and to charge you before they’ve performed their services.  The CROA is enforced by the Federal Trade Commission and requires credit repair companies to explain:

  • your legal rights in a written contract that also details the services they’ll perform,
  • your three day right to cancel without with any charge,
  • how long will it take to get results,
  • the total cost you will pay, and
  • any guarantees.

What if a credit repair company you hired doesn’t live up to its promises?  You have some options.  You can:

  • sue them in federal court for your actual losses or for what you paid them, whichever is more,
  • seek punitive damages—money to punish the company for violating the law,
  • join other people in a class action lawsuit against the company, and if you win, the company has to pay your attorney’s fees.

For more information, click here.

Teaching Suggestions

  • Ask students to make a list of major provisions of the Credit Repair Organization Act.
  • Ask students if there is a time limit on reporting negative information about criminal convictions.

Discussion Questions

  1. Where and how can you report credit repair frauds?
  2. Can the FTC resolve individual credit disputes? If not, why should you file the complaint with the FTC?