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Do you want to learn how to best manage your money, so that you can lead the life of your dreams?
In today’s blog, I interview a teacher who tells us how teaching economics made her better with money, it might just help us, too!
I couldn’t help but wonder about her background.
This is my second year of teaching high school economics. The state standards have a personal finance component.
I really just tried to blow that up in this semester that I have with the kids and spend a lot of time on financial literacy, and pretty much giving them the information that I wish I would have known back in my late teens and early 20s.
That's really the emphasis of my economics class in addition to the basic supply and demand stuff and understanding about taxes, tariffs, and international trade.
Definitely, an emphasis on the financial literacy piece, which has made me a lot better with managing my finances, planning for the future and the personal finance people become very interested in.
So what gave you that fire, and led you in that direction?
I had always taught history, mostly US history and modern world history for a long time.
One of our teachers who had taught economics went to a new high school, and they needed somebody to step up and fill in the spot. It was kind of a class that nobody wanted to teach.
I had a little bit of room in my schedule, so last year, I took over a couple of sections of economics and ended up loving it. I looked at the curriculum and decided that I really wanted to focus on personal finance.
My thought was, if I'm going to tell kids how to manage their money, I need to have my finances in order. I started reading about personal finance. I got books from the library about budgeting, saving and investing.
I want to hear about a recent blog post that you wrote called Forgiving Money Mistakes and your blog is myeconomicseducation.com.
You put in this quote, “The ruthless pursuit of statistics and numbers can cloud the true goal of FI, and that’s freedom,'' then you talk about some behavioral things with your students such as sunk costs.
I want to get your perspective on sunk costs.
One of the wonderful things about teaching economics is that it can apply to students in their life at that moment.
They understand that economics is all about the choices that we make. Kids are making choices all the time, just like adults are. Their choices, maybe a little bit different, but they still understand a concept like sunk costs.
The basic idea of sunk cost is that we gave up something, and we can't get them back. We should be able to make a logical decision and move on from that.
One of the scenarios that I give to students is that you’re a second-year student and in your sophomore year of college. You thought you wanted to be a biology major and then you ended up hating it.
What should you do?
The logical decision would be to switch majors. You should switch to something that you want to do, that you love doing.
You shouldn't just keep doing something that you hate because you're dwelling on those two years that you gave up.
I like that you're talking to them about later when they go to college. That it's okay, you don't need to stay in the same thing. Maybe it’s more beneficial for you to move on and go forward.
On your blog, you discuss some of the things that you did right, by allowing yourself to let go of your money mistakes, and how you celebrated the ways you addressed your issues and started your FI journey.
I have to ask...what does financial independence mean to you?
The beautiful thing about financial independence is that everybody can have their own interpretation. This is something I emphasize with my kids, so for some kids, that means having a million dollars in the bank, and for others, it’s the ability to provide for their families.
I love that you said that financial independence means something different to everybody. Because it is something different for everybody, and everyone does have their own journey.
However, if we're keeping score, everybody is touching on these particular points:
No matter what those are for you, whether it’s to travel more or to be at home, it means freedom choices and options.
We're teaching that to teenagers. It's easy to see how they would be hooked on that. They want to take control of their lives. It's a really easy sell to kids, especially when we make the budgets. I tell them that they have this money, and cannot go over that amount. They have to research careers, calculate out bills and places that they want to live.
Then they have that discretionary spending. I tell them you can do whatever you want. Personally, I don't like to buy a lot of clothes, because I would rather spend my money on vacations.
I have some kids for example, that are really into video games. Hey, if that makes you happy, if you have the money in your budget to spend money on video games, and all your bills are paid, and you have some money in your emergency savings, and you’ve got some money in your retirement account--go for it.
So yeah, that’s the beautiful thing about personal finance. Obviously, it's personal, so everybody can kind of emphasize the things that bring them the most happiness, and whatever brings them the most joy.
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