What would you teach in Intro to Personal Finance?

[Peaceful_Warrior]

I'm considering teaching a small local intro to personal finance class, and was interested in what topics others thought might fit into the class. Here's a few things I've thought of so far:

- Attitudes/Limiting Beliefs about Money
- How to create a budget
- Debt Management and leveraging (not all debt is bad)
- How insurance fits into the picture
- Tax deferred/advantage accounts
- Post-tax strategies (i.e. indexing vs. AA vs. individual stockpicking, etc)
- Wealth building via business and/or real estate
- How to (Not) choose a personal financial planner (why would they want one if they're learning to do it themselves?)

The intent isn't to necessarily go into explicit detail into every topic (though some require details), but rather, get people on the right road to personal finance.

I'm thinking that hands-on activities, interactive discussions between students, and real-world homework projects (i.e. things they will use for THEIR personal finance) are some of the things I'd like to utilize.

Other thoughts?

 

[FIRE'd@51]

I would start off with the time value of money and compound interest. The example about the person who saves $2000 per year in an IRA from 25 until 35 and never saves another dime versus the twin brother who saves $2000 every year from 35-65. Most people are amazed that the first person winds up with more money at age 65 (at a rate of 7%) than the second. This is a real grabber, IMO. It really emphasizes the importance of starting a savings program at a young age.

 

[MasterBlaster]

Besides the benefits of compounding,

I would discuss in no particular order

asset classes and how they might fit into a portfolio.
Asset allocation,
portfolio changes as one approaches and passes retirement.
Risk versus rewards.
Risk versus asset classes.
historical asset appreciation versus asset class type
How much of a nest egg one might need to be able to retire
The significant benefits of starting saving early versus late
Explain how consumer debt is really horrible for building wealth

 

[Peaceful_Warrior]

Great suggestions so far - thanks.

Here's my first course materials... based on Fired@51's suggestion.

It's also configurable, so I can ask the question, "How many of you would like to be millionaires?" And then show them that if they invest $4,000 each year into a Roth IRA, they would have over $1M tax free.

Granted, there should ideally be all ages of people in this class so the Age 25 thing is more for illustration than parallel example (at least until I'm able to teach at the College level... right now I'm figuring to start with community programs).

You'll have to rename the attachment from .txt to .xls since .xls isn't allowed.

 

[aenlighten]

Beyond budgets, I would cover personal financial statements
Portfolio size for FIRE and the SWR

 

[Alex]

The first lesson would be:
PAY YOURSELF FIRST

 

[Goonie]

Maybe a couple of simple things that the old man taught us kids: "If ya ain't got it, don't spend it!" & "Save yer money!"

It worked for him and Ma...and thus far it's working for us kids....especially me since I was able to FIRE at 50.......well, actually 3 days short of 50!

 

[frayne]

Time value of money
Cost of debt
Budgeting
Investing/Index Funds

Bonus mantra; Don't spend money you don't have, on stuff you don't need, to impress people you don't like.

 

[F-One]

Like Goonie suggested but Start off the class with the SNL skit about "Don't buy stuff you can't afford"

http://danwho.net/mp/index.php?id=snl_dontbuystuff

 

[Goonie]

Like Goonie suggested but Start off the class with the SNL skit about "Don't buy stuff you can't afford"

http://danwho.net/mp/index.php?id=snl_dontbuystuff

That's a good one!

 

[2soon2tell]

I believe you need to give your class a track to run on by teaching them what they need to do and why and the order they should be accomplished. I know many here are not big fans of Dave Ramsey and I believe his specific mutual fund recommendations are in sometimes wrong but I beleive he has the fundamentals of personal finance correct.

Ramsey's book Total Money Makeover would make a good textbook for an intro to personal finance IMHO.

2soon

 

[Rich_by_the_Bay]

If your learners are really inexperienced, I'd tune them in to "making saving painless" by discussing automatic payroll deductions, bill pay, electronic transfers, and other means to "set it and forget it."

With my own adult kids, tuning them in to target retirement funds was helpful, too. They don't have time, interest, or desire to learn about the fine points of investing, so at least that gives them an easy out which should do quite well for them.

 

[saluki9]

I have taught several courses on personal finance and investing. Trust me in that there is no way you can start too basic. Most of us greatly overestimate the level of understanding most people have.

I always start with how money, banks, etc work. Also, you would be SHOCKED to know how many people could not explain what a share of stock is, or what a bond is.

 

[Wealth Health]

Time value of money
Cost of debt
Budgeting
Investing/Index Funds

Bonus mantra; Don't spend money you don't have, on stuff you don't need, to impress people you don't like.

Co-sign. Or people you don't know...

 

[travelover]

One point that I think is critical is to keep the message simple (KISS). We tend to spend a lot of time talking about squeezing out that last 1%, but to a beginner it all starts to get hopelessly complex and they end up with analysis paralysis and do nothing. When I started out investing I subscribed to Money Magazine and couldn't figure out why the "buy"recommendations changed every month.

I try to coach youngsters on investing with this simple advice

Start as young as possible, even with just a few dollars

Invest automatically with payroll deduction or automatic transfer

Invest in a total stock market index fund (usually recommend Vanguard) just to ensure easy follow through.

KISS

 

[sgeeeee]

Peaceful,

Check your PMs.

 

[Joss]

I just scanned through the response to this point and didn't see anyone mention:

Balance/record your checking acounts on a spreadsheet program to capture ALL your annual expenditures.

It is impossible to do accurate planning without good spending data. And it is surprising how many people only guess at what they are spending and where.

 

[Sue J]

Can you include some info on how to keep a checkbook? I'm surprised at how many people cannot manage to keep a checkbook and reconcile with their bank statement or their online bank. This is probably why so many people end up bouncing transactions and incurring bank fees. It's just simple addition and subtraction and being diligent about recording transactions.

Also a basic overview of what makes up a FICO score, why you need to keep your score high and how events like late payments effect your score.

 

[Orchidflower]

I actually have some empirical experience with this one as I took a course in Personal Investing last semester. Let me say that it was one of the MOST beneficial courses I ever took in my life. I loved every minute of this course--even arriving a half hour earlier than it started to make sure I had a seat right in front.
This course started me reading the Wall Street Journal daily, reading articles from Kiplinger's and Money (not just the cool articles on subjects I was interested in)--and I mean reallly reading them--also reading various books on investing and, gulp! even studying how to read financial reports like prospectus' on my own now as I cannot find a course on that in my local area.
Many of the students--who had little investing experience like I--said the same thing. Most of us were older, although this was taught at the local excellent community college, and most of us were already degreed, but this course was just the very thing we all needed.
Some had alot of experience already with investing, and this was just a brushup course. But they, too, loved this course.
If you are interested in doing some real good for your fellow man and community, I cannot encourage you more than to yes! do teach your course. I will forever be grateful that I signed up for that course in the very last semester the Dr. was teaching ever. He retired after that, and was on a plane the next day for South Carolina to live after 30 teaching years.
There are so few people who want to teach this type of course--and so few really qualified--and your contribution would benefit so many. Please teach this, yes!!!!!