After GameStop’s stock price recently soared (opens in new tab) as a result of a social media-fueled buying frenzy, John Pelletier, director of the Center for Financial Literacy (opens in new tab) at Champlain College (opens in new tab) noticed something odd happening: His 16-year-old son’s friends were suddenly clamoring to hear Pelletier’s thoughts on finance.
“The good news is it’s a newsworthy event about how you can make money investing,” Pelletier says. “Unfortunately, it may not be the best example of how to invest, but it’s creating excitement and engagement in investing.”
The GameStop buying surge was powered in part by young influencers promoting the stock on social media channels such as Reddit, Discord, and even TikTok. Their followers could then make micro investments of $25 or so using apps that allowed them to buy portions of a share of stock if they didn’t want to buy a full share.
The story of what Pelletier calls a stock market “flash mob” has drawn intense interest from technology-savvy K-12 and college students, even prompting the rapper Ja Rule to warn them (opens in new tab) via Twitter to be careful.
The whole affair reminds Pelletier of when The Wolf of Wall Street came out in 2013. “That movie got people interested in investing for all the wrong reasons,” he says.
But even if the Gamestop saga does not serve as anything close to a sound investment model, Pelletier believes educators should not waste the attention the incident has garnered. Instead, it can be used to teach financial literacy, and make such money-related classes and lessons a bigger part of their curricula.
Teaching and Engagement Resources
There are free online resources with ready-to-go financial lesson plans, videos, and classroom exercises.
TeachFinLit.org (opens in new tab) is geared toward high school students and offers detailed lesson plans, complete with videos and outside sources, on topics such as budgeting and spending and credit and debt. For middle school and high school students, Pelletier recommends Next Gen Personal Finance (opens in new tab), which also offers a wealth of free multimedia financial curriculum resources, in addition to providing online personal development courses in finance geared specifically to teachers.
“What you want is fun, engaging classroom activities, and videos or things of that nature,” Pelletier says. He adds that making your lesson as real-world based as possible helps build student interest.
As with many subjects, much about the way financial literacy is taught in schools goes beyond what is done in individual classrooms. “There are only six states in the country that require high school students to take a standalone personal finance course before they graduate,” Pelletier says.
Other states have financial literacy standards but leave it to local districts to decide how to implement those. “We know based on surveys in those states, it's hit or miss who's getting what,” Pelletier says.
Additionally, students who attend school in wealthy districts are more likely to receive financial literacy education than those who attend school in poor districts, according to a report (opens in new tab) by Next Gen Personal Finance. Schools in which financial literacy is not taught are more likely to have large minority student populations.
“I personally think it's a social justice issue,” Pelletier says. “It's least likely to be brought to the students who need it the most. I know a lot of people hate mandates, but if you don't require it, what we do see is it's hard to get taught.”
Important Financial Concepts
In contrast to the get-rich-fast philosophy behind the excitement around Gamestop, Pelletier stresses long-term investing. “My view of investing is slow and steady wins the race,” he says.
He often tries to illustrate this when he talks with students by explaining compounding interest. For example, Pelletier tells students what will happen if an 18-year-old invests $10,000 in the S&P 500 Vanguard Index Fund and leaves it alone for 50 years. Assuming the index fund averages a 7.2 percent annual return on investment, which is conservative, that person will double their money every decade. Ultimately they will end up with $320,000 by the time they retire at 68. But Pelletier says many students, and those older than them, have trouble understanding compound interest.
Another common mistake is that few students realize how the decisions of where to attend college and what to study have huge financial implications.
“I would argue probably one of the top three most important financial decisions you'll make in your life is made when you're like 18,” Pelletier says. Thinking around these decisions are often too short term. “I can get this degree in two ways: One is a cheap way. One is not a cheap way, but I really like the school with the lazy river.” Student loan debt is often not part of the thought process.
Focus on Behavior Not Just Concepts
Pelletier notes that finance is one of those topics in which knowledge isn’t always enough. “You can have somebody who aces a class on financial literacy that fails in life in their behavioral choices,” he says.
He likens it to teaching students topics such as safe sex, nutrition, and substance abuse prevention in which even the best classes will not elimate all risky behavior. However, by prioritizing financial lessons, Pelletier believes educators can make a difference.
While not much time is spent in K-12 educating students about money, once they graduate, it will be an important topic for them. “Not a day will go by that they're not thinking about money. How to make it, how to spend it, how to save it,” Pelletier says. “And yet it's like the least thing you're taught in school.”