Monday, July 18, 2011

An Investigation of Financial Education in B.C. Public Schools

Part 1: What's happening in the middle years, grades 4-6?

How many B.C. high-school grads
are financially literate?
I've been trying for a while to get a comment from B.C.'s Minister of Education on where we are going with financial literacy in the public school curriculum. Is there a move to make financial education a mandatory part of the grade four to 12 curriculum like Ontario is doing this fall? Or are we sticking with the status quo? Are B.C. high-school grads financially literate? Are we testing for that?

I was recently told by someone in the Ministry of Education's media department that not only is financial education woven throughout the existing curriculum, the twenty hours of instruction that students get in the finance unit of Planning 10 is "significant."

Is that so? As a parent with a child going into grade three this really matters to me. So, I've decided to comb through the curriculum to find out just how much financial education B.C. students are getting right now. I have gone through the subject areas for grades four through six which seem most likely to contain personal finance concepts: Health and Career Education, Math and Social Studies.

The following is an overview of what I found in the Prescribed Learning Outcomes (PLOs) for grades four through six that are made available by the Ministry of Education. PLOs, by the way, are government policy that establish "the learning standards for the provincial K to 12 education system and form the prescribed curriculum for British Columbia. They are statements of what students are expected to know and do at the end of an indicated grade or course."

Grade 4
In Health and Career grade-four students learn to identify the steps in a decision-making model, to inventory their skills and about the importance of developing effective work habits and how those habits can lead to success. These topics are not obviously related to personal finance but there is a connection to career and consumer choices.

In grade-four Math, students become literate with numbers up to 10,000, patterns, variables and equations, shape and space, 3D objects and 2-D shapes, statistics and probability and the concept of chance. How often money is used in examples and exercises seems to be up to the teacher. Nowhere in the PLOs does it specify that financial concepts be taught. Social Studies, however is more promising. In the unit of study called "Economy and Technology," students compare bartering and monetary systems of exchange in the context of exploration and how European explorers traded with Aboriginal people.

Grade 5
In Health and Career grade-five students start to learn how media can influence decision-making, how to identify types of work that appeal to them and continue to learn more about the benefit of having effective work habits. In Math, students work with numbers up to 1,000,000 and go deeper into the other topics covered in grade four. As is the case in grade four there are no money concepts specified on the PLOs for grade five. In Social Studies, however, students learn about supply and demand using specific resource examples such as the boom and bust in Barkerville and how fashion trends in Europe drove the fur trade. But that's it for money concepts.

Grade 6
In Health and Career, students build on the grade-five PLO's but go deeper into planning, goal setting and goal attainment including the consideration of "costs and resources." They talk about the word "budget" and do some exercises to practice creating a budget for a project or to achieve a goal. In Math, grade-six students learn to work with numbers greater than 1,000,000 and continue to build on the other mathematical concepts they have been working on since grade four. Again there are no money concepts in the Math PLOs for this grade.

In the "Economy and Technology" unit of Social Studies, grade-six students learn about trade between regions and countries including what imports and exports are. They also compare Canada's economy, technology and quality of life with those of other countries (suggested for comparison are the Horn of Africa countries). Here they learn terminology such as: industrialized, developed, developing and least developed, non-profit organizations and fundraising.

Not mandatory means it's up to teachers
From grades four through six, B.C.-students learn about decision making, effective work habits, career choices, goal setting, and do some budgeting in Health and Career. They also study Math, which is great and foundational for financial literacy. And in Social Studies they learn about bartering, monetary systems, trade, supply and demand, imports and exports, non-profits and fundraising. That's not bad...or is it?

The bottom line is that personal finance concepts are not specified in the PLOs in the intermediate grades. How many of these concepts each student is exposed to depends entirely on the school and the teacher. As the Ministry states, "Schools have the responsibility to ensure that all PLOs...are met; however, schools have flexibility in determining how delivery of the prescribed learning outcomes can best take place....Evaluation, reporting, and student placement with respect to these outcomes are dependent on the professional judgment and experience of teachers, guided by provincial policy."

Can most teachers teach money concepts?
In May, I asked a group of 42 elementary school teachers to complete a financial literacy questionnaire.When asked this question, "If you were given a list of 100 money-related words, how many do you think you would know?" exactly 50 per cent said they would know less than half of the words. I also asked the respondents "How often do you talk about money issues in your classroom?" While 12 of the 42 teachers responded that they talk about money at least once a week, 17 responded "hardly ever" and 13 said "maybe once a month." That means 71 per cent of the teachers in my survey don't generally talk about money to their students.

It's becoming clear to me that the answer to the question, "What are kids in grades 4 through six learning about money in B.C. schools?" is far from clear and certainly not universal. I can imagine that a small percentage of teachers with a personal interest in investing or entrepreneurship may bring a host of financial language to the PLOs, while those who are financially illiterate likely shy away from talking about money and do just enough to meet the requirements.

Who is responsible?
Unlike the commitment to financial literacy that the Ontario Ministry of Education has made by making personal financial education a mandatory part of the grade four through twelve curriculum (complete with teacher training), B.C. is leaving it up to individual teachers, many of whom are not financially literate themselves.

My hope is that by the time she finishes grade six, my daughter will be fluent in the basics of earning income, credit and debit, cash flow and investment. After all, she already has amassed quite a nest egg and if she makes smart money decisions now that will surely pay big dividends as she gets older. The sooner she is saving and investing her money, the longer she has for that money to grow. Raising fiscally responsible citizens is central to the economic future of Canada. Funny how our "underfunded" school system and "underpaid" teachers in B.C. don't seem to be striving to meet that goal, at least not that I can see from the PLOs that I've been reading.

By the way...there is still room in the Money & Me camp for ages 9-13 that I'm teaching next week in North Delta from 1:30-3:30 pm. Call 604-940-5550.

Copyright 2011. Laura Thomas. All Rights Reserved.
For reprint permission contact moneyme at telus dot net.

Friday, July 15, 2011

Dialoguing to create a-ha money moments

Ideally, a "money moment" is going to be an "a-ha" moment. What's an a-ha moment? According the World English Dictionary, an a-ha moment is "an instant in which the solution to a problem becomes clear." Am I going to be able to create a-ah moments for my money moments? I hope so but I don't think I can do it alone.

Creating 10 a-ha moments
Now that my stint of teaching youth writing camps and guest blogging for the Vancouver Sun are almost behind me (today is my last day of teaching a week-long short story camp), I can turn my attention to the pre-production work that needs to be done for my new 10-episode TV show. The show is called Money Moment with Laura Thomas and it's entirely up to me to create the a-ha moments that I believe should be central to each episode.

No pressure right? We start filming in two weeks and I'm already losing sleep.

Earlier this year when I sat down with one of the producers at Delta TV (a community arm of Eastlink in Delta, British Columbia) and made my pitch for a series of short fillers that would boost the financial literacy of viewers in my community, I was blissfully unaware that months later I would be setting the bar really high for myself by feeling the need to deliver an a-ha moment to as many viewers as possible in every episode. I knew that I wanted to educate, but I hadn't fully envisioned what it would mean to not just educate but help viewers actually figure out how to solve at least some of their money problems. That's a big goal and I've decided that I can't achieve it alone.

It's a synergy thing
This blog is not even a year old yet, but in the course of the interviews I've done--even with celebrities like Arlene Dickinson and Robert Herjavec--the biggest insights have come organically out of the conversations, not purely out of the questions I have asked or the answers that my interviewees have given me. Synergy is what I'd call it: the working together of two or more entities to produce an effect greater than the sum of their individual effects. Which is why I've been on the phone this week looking for people in my community to co-star with me in each Money Moment. Rather than deliver a monologue, I am going to set up a dialogue for each episode.

In the episode on realistic budgeting, I'm going to be in conversation with Rob Wright of Cap's South Shore Cycle. In the episode about the theory of financial bubbles and how to get ahead on your mortgage, I'll have realtor and entrepreneur Fraser Elliot on the show.  And Delta City Councillor Heather King has agreed to hit the streets with me so that we can talk to people about the their financial successes and failures. Financial blogger and finance guru Preet Banerjee will also drop in for an episode, if he's in town at the right time.

I'm still looking for a few more chatty folks to come on the show and dialogue with me about new mobile banking technologies, credit cards, the gender gap in financial literacy and other money topics. I'd also like to do a budget-wise home makeover for two single dads and need some help with that.

So if you know someone from the Delta area (or who can get to Delta during the first week of August) who loves to explore ideas, talk about money and be in front of the camera, have him or her contact me as soon as possible. Or if you or your company would like to sponsor this community-based financial literacy project please email me for a rate sheet.

Copyright 2011. Laura Thomas. All Rights Reserved.
For reprint permission contact moneyme at telus dot net.

Tuesday, July 12, 2011

Will B.C. voters keep or kill the HST?

On Friday I wrapped up my two-week assignment writing for for the Vancouver Sun "Your Money" blog with what I thought was a neutral overview of the debate. Reading over the comments I can see that there is no such thing as neutral when it comes to the HST referendum. It really is keep or kill, with a very vocal emphasis on kill. And, the folks who seek to kill the HST seem to be zeroing in on a single major complaint: the HST favours businesses over consumers.

Business v. Consumer
At the root of the "business over consumer" complaint is skepticism about whether or not businesses are truly passing on their savings to consumers. Under the old sales tax system, businesses paid PST on their operating expenses such as power, heat, rent and anything else that goes into making a product or service. Under the new system, many businesses are reimbursed that seven per cent with the idea that they will pass that savings on at the till or use that cash to re-invest in equipment or on improving productivity. Either way, the theory is that when businesses pay less tax the economy grows.

Has B.C.'s economy grown since the HST was introduced last July? According to the Business Council of B.C., the province's economy (according to their "economic index") has expanded, but only marginally. The economy dipped into negative territory in the third quarter of 2010, rose slightly in the fourth quarter and then dropped slightly to a 0.6% gain in the first quarter of 2011.

On the other hand, what has grown with more gusto is the tax burden paid by households. It has been estimated that in 2011/2012 households will pay 1.33 per cent or $1.33 billion more in sales tax while businesses will pay 0.73 per cent or about $730 million less in taxes. 

Business v. Business, Consumer v. Consumer
When you look deeper at the "business versus consumer" complaint, the issue gets even more divisive for each camp. While the "average" B.C. household with an income between $40,000 and $60,000 is paying about $350 more in sales tax, 40 per cent of the HST has been collected from families with a household income of more than $100,000. These higher-earning households have seen a net increase in tax of more than $1,000.

There are inequities in the business camp as well. Businesses that under the old system only had to collect five per cent GST on their services are now forced to charge their customers twelve per cent. This means that restaurants, recreation and entertainment businesses, builders and people who offer creative services (such as myself) have been negatively impacted by the HST.

Speaking with a home renovations contractor recently, it seems that the extra seven per cent has created a slow down in new business as customers now have to factor that extra expense into their budgets. Undoubtedly, the slowdown is likely to continue through the upcoming months until the tax issue is resolved and consumers know exactly what they are going to have to pay if they want to remodel their kitchen.

Financial institutions, insurance companies, doctors and landlords are also negatively impacted by the HST because they do not qualify for the seven per cent rebate that is given to other companies on their operating expenses.

Us v. Them
So what's the bottom line? On the surface, under the HST regime consumers are paying more tax while businesses are paying less but how that plays out depends on household income and the type of business. This is part of what makes the outcome of the referendum impossible to call at this point.

The other part is that it's just weird (I could even say fiscally irresponsible) that our elected officials are giving voters the chance to decide, especially when we know that not every voter is financially literate or fiscally responsible. I do worry that we may keep or kill the HST based on divisiveness and defensiveness rather than on sound financial principles and a clear understanding that whatever happens, we are in this economy together. There really is no us versus them.

As you witness the fallout of the HST versus GST/PST debate feel free to use this coupon for Turbo Tax to save a few dollars on software that will help you deal with those pesky taxes.

Copyright 2011. Laura Thomas. All Rights Reserved.
For reprint permission contact money me at telus dot net.

Friday, July 1, 2011

Your Brain on Credit Cards

Impromptu dinners out at posh water-side restaurants, spontaneous shopping sprees for over-priced camping gear and all that good but crazy-expensive festival fare are just some of the ways we might blow our budgets this Canada Day long weekend. But it doesn’t have to be that way. Even with all those little financial decisions looming large this weekend, there is no reason to jeopardize the household budget. Try practicing metacognition—thinking about thinking—and leave the credit card at home.

When I was at the FCAC-OECD international financial literacy conference in Toronto last month I was fortunate to attend a keynote presentation on consumer choices by neuroscientist and writer, Jonah Lehrer, author of How We Decide. Our consumer decisions, explained Lehrer, begin and end with a tug of war between two tiny but highly emotional parts of our brains—the nucleus accumbens and the insula.

A Tug of War
The nucleus accumbens is part of the dopamine reward pathway, which basically means that it plays a big role in the experience of pleasure and is generally associated with the “good feelings” that lead to addiction. The insula, on the other hand, is the part of the brain that registers nausea, disgust and pain.

Lehrer talked about a neuroscience experiment in which undergraduates were given two hundred dollars spending money, put in a brain scanner and then given the option to buy a variety of goods that would appeal to the average twenty-year-old such as George Forman Grills, Harry Potter books, DVDs and a variety of snack foods. While in the scanner, students were shown a picture of one of these desirable items.

The researchers found that when the consumer product was desirable to the student the nucleus accumbens would “light up and get very excited.” Lehrer said, “The possibility of getting something we want seems to drive consumer desire and the scientists could, in fact, use the relative activation of the nucleus accumbens to predict which items people actually wanted.”

In the second part of the experiment, after they were shown a picture of a desirable item, students were shown the price of that item. When the price was shown, the insula became very excited causing an emotional tug of war between itself and the nucleus accumbens. According to Lehrer, “Scientists could predict with 90 percent accuracy which items people would actually buy by simply looking at the relative activation of the pleasure of the nucleus accumbens and the pain of the insula.”

Credit Cards as "Anesthetic" for the Insula
Back to credit cards. In one of the conditions in this experiment students were allowed to pay by credit card. What the scientists found was that when paying with plastic the negative emotional activity of the insula was greatly reduced as opposed to when students had to pay with cash. The insula was “anesthetized” in the credit card condition as opposed to the cash condition in which the insula seemed to register the pain of giving something up more forcefully.

Commenting on credit cards and the forthcoming pay-with-your-smartphone technology Lehrer said, “The end result is that because we don’t fully experience the pain of spending money, we spend money that we don’t have.”

Lehrer concluded his talk by suggesting that our brains aren't really equipped to handle the modern economy. He encouraged us to use the new science coming out of behavourial economics to analyze our daily financial decisions—to think about how we are thinking about money—so that our household budgets have a better shot at staying in the black, especially on holiday weekends.

A similar version of this article ran in yesterday's Vancouver Sun where I'm guest blogging for Your Money guy James Kwantes while he's on holiday from June 27 to July 8.

Copyright 2011. Laura Thomas. All Rights Reserved.
For reprint permission contact moneyme at telus dot net.