Podcast: Play in new windowInvite to the PwC-KWHS Podcast Series for High School Educators on Business amp; Financial Obligation.
I’m Diana Drake, managing editor of Knowledge@Wharton High School, and today we are going over the crossway of technology and financing. Technology is drastically altering the method consumers deal with individual financial deals, everything from online banking and virtual wallets to bar code-based mobile payments and cryptocurrencies. We are here to explore exactly what that altering landscape appears like, and what the technological shift indicates for the future of money management and financial ability. Also, how can teachers prepare trainees to use these high-tech tools to handle their financial resources responsibly and effectively?
This is part 4 of our four-part technology and finance conversation with Wharton International Management professor Mauro Guillen and PwC Partner Elizabeth Diep. Here, we help high school educators prepare their students to utilize technology to manage their money.
Below is an edited transcript of the conversation.
Knowledge@Wharton High School: Educators, naturally, are really serious and likewise thinking about discoveringdiscovering how they can prepare students to utilize innovation to handle their money. I’m hoping that we can check out for a minute methodsmanner ins which the classroom learning experience requires to adapt to this altering landscape of technology and individual financing.
Innovation is everything about making life much easier and faster however that may not always be a goodan advantage when it pertains to teaching thorough cashfinance. For instance, innovation can’t make up for an inadequately established budget plan or cash management strategy. Patricia Page from East Greenwich High School in Rhode Island asks, how as teachers, do we ensure that the conceptual time-intensive framework requiredhad to efficiently use modern tools does not get overlooked in the scan, choose and done mindset?
Elizabeth Diep: I like the scan, choose and done mentality. That’s reallyquite how we work nowadays. But I’ll say that today’s high school trainees have matured in a world surrounded by technology. They’re most likely more comfortable [with it] than they are strolling into a library asking for a harda paper copy of a book. I don’t think they would understand how to do that since they have actually accessed everything either on their clevercellular phones or through their computer systems, etc.
. When it concerns financial literacy and assisting young grownups comprehend the basics behind the innovation, the challenge is, how do we make a connection in between the lessons that the trainees discover in front of the screen and the real-world spending that they’re dealing with every day? The great news is that there are lots of programs being developed today that integrate both worlds.
I’ll offer you an example. There is a brand-new app that’s called JA Build Your Future. It’s an app that helps teenagers, their parents and teachers break down the expenses of achieving career objectives into actually easy-to-understand numbers. So, if you want to go to college, it will take a look at how lots ofthe number of years you’re away from going to school, what a saving plan might be, what loans you would take. It establishes a budget plan for you in a really easy method, [with a] terrific interface. Which’s simply one of numerous other apps out there [that] teach traditional lessons about spending, saving, making and how [to] share that cash with a neighborhood.
I’ll put in a shameless plug for an excellent program that we have established at PwC — — it’s called “Earn Your Future.” This is a financial literacy program focused on teaching trainees ways to end up being more financially literate. We have actually established an entire monetary literacy curriculum. And as part of PwC’s “Make Your Future” commitment, which is a multi-year, $190-million financial investment in United States education and financial literacy, PwC has actually developed our own monetary literacy modules. It’s really to offer it for students and for educators complimentary of charge and focus just on this — — the easy ideas around saving and investing, saving for college, how do you save for your first house and getting a loan. This is the core knowledge base that would make numerous of our students more accountable financial users.
KWHS: Technology can be a great tool for instructors to assist students comprehend complex monetary topics. How can digital tools and simulations that reproduce things like online mobile banking and investing platforms be used most efficiently in the classroom?
Mauro Guillen: For high school trainees, I would focus the attention on the five key monetary choices that they require to make in their lives. These are, which college to attend — — there’s the expense of college and there are numerous methods of moneying your education. How about conserving for retirement? Okay? Purchasing a house — — so, getting a home mortgage — and buying a vehicle – a car loan. And after that possibly the most crucial one these days is ways to utilize your charge card in a wise method so that you do not accumulate too much charge card financial obligation.
I would recommend high school teachers tell the students, fine, go on the internet, and go to an auto dealership online. Choose a car that you would like to purchase. Every dealership in the United States these days has a calculator [on their website] So, they tell you this is the rate of interest at which you can obtain money [and you] pick just how much of a deposit you desirewish to make on this car. Do you want to pay the automobile over three years or five years? Likewise, other qualities of the car can be factored in.
Ask trainees to go through that workout of seeing how much they can pay for — — what kind of automobile they can manage. Inquire then to change a few of the variables in those calculators, like the rate of interest. Or go from paying the automobile in three years to 5 years and see exactly what impact that has on just how much money you require to spend every month and just how much cash you wind up spending on that automobile. Do the exact same thing for college. Do the very same thing for conserving for retirement.
If you go to the websites of business that provide these products, these days all them have a monetary calculator that is particular to that certain purchase or that specific concern. And I would encourage the students to explore that and to see how it works, and how, if you alter the interest rate or you change the variety of years, or you change the value of what you’re acquiring, how the regular monthly payment modifications, right? Or when it comes to retirement, how much do you actually needhave to save if you desire to continue having the exact same standard of living when you retire as when you were working.
What high school students needhave to understand is the value of money and more specifically the time-value of cash. That is to state that money today deserves much more than money in a year from now or in 5 years from now. They needhave to believeanalyze all of those variables and how they connect. I believe it’s most convenient if you do it with specific things that they are very likely going to purchase eventually in their lives. They’re going to [choice] a pension strategy. They’re going to acquire a car. They’re going to acquire a house.
KWHS: That’s excellent recommendations. One of our teachers, Elim Carpenter of Royal Learning Center in Los Angeles asks, what are some great online consumer cash management sites and resources? I have to put in my own shameless plug for Knowledge@Wharton High School, which we will undoubtedly have that resource readily available together with these podcasts. But we have lesson plans and articles and all kinds of things that explore various different locations of customer moneyfinance. And it’s an excellent resource for both teachers and for trainees. Would anyone else want to recommend other?
Guillen: As I pointed out, you can also put your trainees in the genuine life scenarios like going online to buy a car. Go on the internet and [choice] a pension strategya pension, and see exactly what type of decisions you needhave to make in order to have the ability to afford those things.
Any of these simulators, any of these financial calculators — — especially those particular to a specific choice that you have to make in your life, can be really beneficial and they can serve an extremely essentiala crucial pedagogical function in the class. I would encourage all the instructors to help students understand exactly what are the repercussions over the long run of the financial decisions that they make today.
For example, [the type of] vehicle you buy depends on a variety of variables like, exactly what are the current rate of interest, for how long do you wantwish to be paying down the balance on the loan and so on. It’s vital is essential to educate young individualsyouths financially because they remain in high school. They’re 14-, 15-, 16-, 17-year-olds but within a couple of years they’re going to be making huge choices in their lives … They’re going to have to begin making decisionsdeciding for which they need to be prepared since they are complex choices. And there are so manynumerous ramifications. Making the wrong decisions early on in your life — — for example, building up charge card debt — is something that can be highly troublesome and can haunt you for 10 years or for 15 years.
Diep: It’s a fantastic example and a great idea going out and taking a look at what a vehicle would cost. That’s something that a great deal of trainees would be extremely interested in. And what are those must-haves versus those nice-to-haves? That’s something that we spend a little bit of time speaking to the primaryprimary school kids about. I believe at the high school level it’s even more important, due to the fact that we start talking about this concept of exactly what’s luxury versus exactly what’s requirement and really identifying the differences in between those two. Due to the fact that … that’s exactly what gets you into the trouble of having obtained this credit card debt — — just how much of that was for necessities and how much are those things that I most likely didn’t truly need?
Having those conversations is crucial, and having those at a really early phase is very vitalcrucial. One other website that I would just include for the instructors to look into is something as easy as Yahoo Financing. Yahoo has a lot of fantastic tools taking it to the next level and begin thinkingthinking of, well, exactly what am I going to do about savings, even if it’s a little portfolio that you can automate it and manage with a safe investment amount? That has been a fantastic tool that we’ve used in some cases at the high school level to simply imitate exactly what an investment portfolio will look like and what a $1,000 dollar investment can do for you if you continue to handle that.
That’s an excellent way to see how your cash would grow by either saving it and making some conserving choices or financial investment choices for yourself.
KWHS: What I’m hearing is teaching the monetary ideas is truly crucial. However that experiential knowing and getting trainees to engage in different ways in these ideas is what assists them stick.
An increasing number of young adults are ending up being victims of identity theft because they over-share through social networks, file sharing and cell phones, this has huge implications for their customer profiles, especially their credit scorescredit report. Besides stating the issue, how can educators prepare trainees for this kind of danger?
Guillen: What needs to be conveyed to these young people is that everything in life revolves around your reputation. I think they understand this since they understand that, well, you have a credibility as a good person and there are specific things that you can enjoy in terms of having good friends and so on. So, they see that the type of credibility that you produce yourself and your social relationships, whether they are digital or in person, has an impact.
But they needhave to comprehend that this translates likewise into the financial part of your life. That constructing a strong, clean credit record is actually vital. That accumulating credit card financial obligation or perhaps worse, defaulting on — — or not keeping up with your payments — — it’s a huge mistake, right? It’s better to in fact recognize that there’s a problem and tryattempt to take a seat with whoever you owe the moneythe cash to, to see how you can leave that circumstance than to just say, ‘oh, I’m going to skip a payment’, because that remainsremains in your credit report for a verya long time.
It’s essential is necessary for them to comprehend this basic concept — — that everything is about track record. Not just in social relationships but also when it comes to monetary matters. And, yes, social networks — — mobile phones — it has become so simple to share details. And all of us know that you can get into a lot of problem, for instance, if you share intimate photos, with a really great pal of yours because that individual perhaps is not a good friend of yours a bit later on, and after that utilizes that imageimage of you to basically undermine your reputation in whatever community or social network you occur to be operating in.
It’s vital to educate young individuals about the significance of personal privacy. The issue with new technology, particularly smartphones and mobile innovation, is that it’s so simple to share every intimate information about our lives. And personal privacy is importantis necessary. It’s a possession that you have. You are the master of your fate to the extent that you share things that you desire to share with Possibly you only share [specific things] with your household or with your closest buddies.
This is importantis very important to keep in mind. And along these lines, I think it’s important for them to comprehend that progressively, banks and other types of financial companies are utilizing evidence from social networks sites to determine credit scorescredit rating. There are a great deal of startups that are attemptingattempting to establish the tools for credit history based not a lot by yourself habits however rather on your social network … and what kinds of things you and your good friends do.
It’s extremely vital to communicate to high school students that whatever they do online, whatever they do as part of a social media network, whatever they do as part of a digital community will probably have an effect, not simply next week or the week after however most likely over the next five years or 10 years. If something goes wrong, it’s very challenging to obtain rid of that bad credibility on your credit ratingcredit history.
KWHS: So, the digital footprint also impacts your monetary profile?
Guillen: High school students will comprehend that you need to be extremely mindful about the kind of digital footprint that you leave behind.
KWHS: Exactly what does technological innovation in individual finance mean for the future of cashfinance? And how can we finest prepare young individuals for this brave new world?
Diep: It comes down to a great deal of other things that we have actually spoken about currently. However the fact is that technology has actually really accelerated the pace and the frequency of change, not just in business however likewise in our lives. Today, life and work activities tend to overlap and … there’s this digital finger print that we’re sort of overlooking there that we have to thinkconsider.
Since all of our trainees will utilize the technology as a tool for managing info, it becomes essential for us to hone these lifelong knowing abilities but also foster flexibility in career courses and self-confidence in how are we using this innovation, how are we utilizing the information that we’re posting out there. In classrooms around the country, teachers play such a crucial function in preparing the students to end up being accountable residents, in assisting them thinkthink of exactly what it suggests to post the information out in the data world. What does it indicate to utilize these tools and exactly what is it that is occurring behind the tools? Exactly what are the ideas that they are basically applying?
That’s why I believe all of it returns to — — do the students understand the core concepts of exactly what the tools are doing? Exactly what does this merger of technology and individual finance really imply? I think for young people it’s just understanding and having a foundation in financial literary. Understand what budget plans are. Comprehending the concern around balancing a checkbook and the truththat, at the end of the day, that’s you balancing your budget plan and everyday lives … and how does that translateequate to exactly what we do day in and day out.
In order to get there, we have an obligation to invest time with this generation and prepare them to be economically literate at an extremely young age. And I think that [we need to do that at a] more youthful [age] than ever because technology has offered them access to manage their financial resources at an earlier age than it ever has previously. To take a line … it does take two to tango. Educators and high school instructors have a responsibility to become so much more highly wise to be able to share [their] experiences and to be able to share those ideas with the trainees — — and to put it in words that they comprehend, which is actually through the technological tools that they’re using in their mobile phones and in their apps. That’s how they comprehend it.
The better that we have the ability to incorporate those 2 worlds, the much better we’ll get some of these messages through to them that will assist them use the info properly.
Guillen: So, to echo what Liz has been saying, perhaps [do this] by emphasizing that primary, you requirehave to be financially literate. You requirehave to comprehend the fundamental principles. You require to understand how it works. And number twosecond, innovation’s an extremely effective tool. However it’s a tool that can hurt you or it’s a tool that can improve your standard of living that can liberate you.
There’s nothing fixed about innovation. We see that social media networks are fantastic, but sometimes they get some people into a great deal of problem. We requirehave to educate young people that technology is not simply excellent or just produces good repercussions. It depends on how you utilize it and for what purposes. You need to start, as Liz was emphasizing, with financial literacy, with a basic understanding of how it works — — once again, primarily through experiential techniques or simulations. People of that age will be more responsive to those methods of learning than just seeing a formula on the board regarding how compound interest works, for instancefor example.
KWHS: Thank you both a lot for this intriguing exploration into the crossway of innovation and personal finance.
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