US NEWS & WORLD REPORT: How Teachers Are Bringing Financial Literacy Lessons to the Classroom

Elementary school teachers share how they're getting kids excited about saving and investing.

Millions of Americans don't understand the basics of budgeting or saving for the future.

Some kids get money lessons at home, but many parents lack financial knowledge or confidence themselves. Junior Achievement's 2015 Teens and Personal Finance Survey sponsored by the Allstate Foundation found that millennial parents, ages 18-34, are the least confident about explaining money management to their kids, many of whom are currently in lower grades.

Unfortunately for those kids whose parents can't or don't teach them money skills, these lessons aren't part of many school curricula. The Council for Economic Education's Survey of the States found that only 20 states require high school students to take an economics class to graduate and even fewer states require a course in financial literacy. But teachers who do cover financial concepts such as saving and investing find that students even as young as elementary school can grasp – and get excited about – money lessons. "When kids know how money works, they are more careful with their spending and take better care of their things that cost money," says Kristi Ekern, a fifth-grade teacher in the Denver metro area.

In some cases, kids take their newfound money knowledge home and help school their parents. "Children tell me they speak in the evenings with their parents, and parents are listening to the kids when they're evaluating investments," says Neme Alperstein, who recently retired from teaching the fifth grade in Queens, New York. During her 28 years of teaching, she used a program called the Stock Market Game, a virtual investing platform provided by the SIFMA Foundation, to teach students about investing by creating a hypothetical investment portfolio and following real stocks.

With back-to-school season in full swing, U.S. News talked to several elementary school teachers about their strategies for teaching financial literacy to kids.

Show the impact over time. A two-week unit focused on money followed by the next subject matter isn't as effective as yearlong financial lessons. When kids see stocks fluctuate over time or learn to allocate money over time, it helps reinforce those lessons. Over the course of the school year in Leon Lewandowski's Santa Barbara, California, third- and fourth-grade classrooms, Lewandowski uses a free teaching program called My Classroom Economy, which simulates real-world experiences with printable materials, including Monopoly-like money.

"[Through the program] students apply for jobs, go through an interview process, get jobs, can be fired, get raises and rent their desks," Lewandowski says. With the program, students also learn that buying their desks cost more upfront but can  over time. Some even buy other students' desks and rent them out for extra income. Last year, some students misplaced their paper currency, so Lewandowski plans to introduce a banking system in his classroom economy this year with a few fourth-graders serving as bankers.

Use real-world examples. Even if students' stock portfolio doesn't hold real money, following stocks in actual companies lets kids explore their interests and see how current events and the global economic climate impact stock prices. "It's very interesting to see a child's perspective of the world based on stock choices," Alperstein says. "One of them says, 'I'm really into the environment. Did you know they have something called green stocks?' Or, 'My uncle is having surgery so I'm looking into the medical sector.'" Alperstein even had a television in her classroom so students could watch the ticker tape on CNBC.

Relate finance to other subjects. Money has an obvious relationship with math skills and can be easily taught with lessons about compound interest, counting paper bills or calculating how much money is left over after paying expenses. Lewandowski has a number of things students can "buy" through the classroom economy, including a class party costing $2,000 in play money. "I remember near the end of the year, students coming together and trying to figure out how to come up with $2,000," he says. "It was beautiful to see math in action."

Of course, financial literacy also ties into other subjects such as history and language arts. "At the same time that we get our economics society set up [similar to what Lewandowski does in his classroom], in social studies I do my Colonial America Unit," Ekern says. "Eventually, as the colonists begin getting taxed by the king, our kids start having to pay taxes as well." Similarly, Alperstein teaches her students that the colonialists traded in livestock rather than company stocks like we do today.

Don't underestimate kids' intelligence. Keeping money lessons too basic and glossing over realities, such as payroll taxes and high real estate costs, does kids a disservice. They'll need to plan for these things in the real world, so discussing them early on gives them a head start. Lewandowski encourages students to think creatively about income streams at a young age. "Because we live in Santa Barbara, which has high housing costs, they [the students] don't get enough money to pay their rent [on their desks]," Lewandowski says. "[In the classroom economy] they have to earn their money other ways. Some get second jobs or bonuses." Another real-world lesson: When one student in the classroom economy doesn't get a job or start a business to generate income and cover rent, they have to be subsidized through income taxes from other students.

Starting money lessons early and giving students the tools to navigate money in the real world helps them make savvier choices as they mature, including buying a first car and choosing a college. As Ekern says, "Kids are really smart and understand a lot more than grown-ups often think they will understand about money."