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Financial Literacy: A New Direction for Colorado. Dr. Teresa Yohon Colorado State University. Objectives. Introduce financial literacy and economic concepts Provide lessons that can be used in the classroom Provide resources in the financial literacy area. Introduction.

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Financial literacy a new direction for colorado

Financial Literacy: A New Direction for Colorado

Dr. Teresa Yohon

Colorado State University


Introduce financial literacy and economic concepts

Provide lessons that can be used in the classroom

Provide resources in the financial literacy area


  • Colorado Financial Literacy standards (DRAFT)

  • Jump$tart 2006 Literacy test

    • Can also complete online


      What are the difficult financial concepts for students?

Economic way of thinking from financial fitness for life teacher guide ncee
Economic Way of Thinking(From: Financial Fitness for Life—Teacher Guide, NCEE)

  • People choose.

  • All choices involve cost.

  • People respond to incentives in predictable ways.

  • People create economic systems that influence choices and incentives.

  • People’s choices have consequences for the future.

Wants vs needs
Wants vs. Needs

  • Wants are the unlimited desires that you have for goods and services.

  • Needs are goods and services that you require to survive.

    Economists are moving away from using “needs”. There are only wants!

Financial literacy a new direction for colorado

What is a Necessity?

Pew Research – What Americans Need 2006-2009

What has decreased in value as a necessity?

--Car -- Clothes dryer --Air conditioning

--TV -- Home computer --Cell phone

--Internet -- Cable TV --Microwave

--iPod -- Dishwasher --Flat screen TV

Financial literacy a new direction for colorado

Opportunity costs

Opportunity cost: the value of the best forgone alternative to any decision.

Tradeoff is the idea that you have to give up something to get something else. The tradeoff can be money, time, or completing a different activity.


Scarcity: when the available resources are insufficient to satisfy your wants.

Economic decisions need to be made.

Economic decision making
Economic Decision Making

Define the problem

List alternatives

State criteria (what’s important to you)

Weigh criteria

Evaluate alternatives

Make a decision

Emotions and finances
Emotions and Finances

A + B = C

Activating Belief Consequences


Bad test?


Self Worth


Love and Marriage

Thoughts, feelings, and behaviors


Should I Use Credit or Not?

Staying Afloat Financially in the 21st Century

Emotions and finances1
Emotions and Finances

Teaching ideas:

  • Collect ads that promote easy credit to lure customers to purchase

  • Create a list of things that may appeal to consumers (e.g., attractive people, being part of a group, vanity, etc.)

  • Develop a list of consumer purchasing incentives and how they use emotions

Economic way of thinking
Economic Way of Thinking

SNL skit:

Financial goal setting from nefe
Financial Goal Setting (from NEFE)

S.M.A.R.T. Goals—

  • Specific – knowing exactly what we want – i.e., $1 million investment portfolio

  • Measurable – ability to track progress

  • Actionable – knowing the steps needed to achieve the goal – i.e., by saving and investing our money

  • Realistic – being in the realm of possibility – i.e., $1 million is within our saving and investing abilities

  • Timely – knowing when the goal will be achieved – i.e., 2017

Types of goals
Types of Goals

  • Short-term (0 to 2 years)

    • Where does the money come from for short-term goals?

  • Intermediate-term (3 to 10 years)

    • Where does the money come from for intermediate-term goals?

  • Long-term (15+ years)

    • Where does the money come from for long-term goals?

The typical millionaire from building wealth dallas federal reserve
The Typical Millionaire (From Building Wealth, Dallas Federal Reserve)

1. Most millionaires inherited their wealth.

2. Most millionaires earn more than $500,000 per year.

3. College graduates earn about twice what high school graduates earn over a 40-year work life.

4. People who are self-employed rarely become millionaires.

5. All millionaires wear expensive clothes.

6. Millionaires usually drive new cars.

7. Many millionaires drop out of college to start work.

8. It is impossible to save enough to be a millionaire.

Building your wealth
Building Your Wealth

Building Wealth (Typical Millionaire list from this resource)

Link to all Federal Reserve educational materials

Accounting equation
Accounting Equation

Assets =

Liabilities + Owner’s Equity (Net worth)

What are Wealth-creating assets?

  • Possessions that generally increase in value over time or provide a return

    Introduce: Depreciation

Balance sheet
Balance Sheet

  • Assets (things owned by a business)

    • Current (things to be used by a business within a year)

    • Fixed

  • Liabilities (things owed by a business)

    • Current (things owed by a business within a year)

    • Long-term

  • Owner’s equity or Net worth (difference between assets and liabilities)

Building net worth
Building Net Worth

John is the president and CEO of a software company. He owns 60% of the stock in the company. He loves helicopters and built a pad next to his house so he could land his new helicopter on the property. He has a mortgage on the house and a loan for the helicopter. Create a balance sheet that shows John’s assets and liabilities.

Financial literacy a new direction for colorado

  • Credit for Beginners


    • Worksheet #1

  • Credit Card Mystery


  • Update students knowledge of:

    • Bankruptcy

    • Credit card rules

    • Credit reports

Other credit lessons
Other Credit Lessons

Information on Student Credit Cards


    Who is credit worthy?


    Free credit reports


Credit worthiness
Credit worthiness

Use cases and ask students if the person if credit worthy (example)

  • Capacity

  • Character

  • Collateral

Growing money
Growing Money

Compound interest:

Present Value:

The present value is the total amount that a series of future payments is worth now.

Looking at present value



Future value
Future Value

Retirement and future value


    Simple future value calculator


    Compound interest calculator


    Value of higher education




Lesson: Benefits of Investing Early



  • Banzai

  • Practical Money Skills

  • Council for Economic Education

  • Smart About Money


  • National Endowment for Financial Education

  • What’s My Score

  • It All Adds Up

  • LifeSmarts

Wrap up

  • Questions?

  • Resources

  • Workshop spotlight

Light bulbs