Vanguard Rolls Out Free Basic Financial Education Program to Schools

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K-12 students learn how to earn, budget, save, and delay gratification in My Classroom Economy (http://www.myclassroomeconomy.org), a financial education program that Vanguard is offering free to teachers.

“If young people learn early on how to save and live within their means, they have a better shot at creating financial security as they become older and need to make more difficult financial decisions,” said Vanguard CEO Bill McNabb.

Say you’re a fifth-grader, and it’s the first day of school. Your teacher starts with some surprising news: This year, you’ll need to pay rent for your desk.

Fortunately, you can earn a “salary” for the rent by doing a classroom job or earning bonuses through exceptional performance. And if you’re a good saver, you can do more: bid at class auctions—or even buy your desk and never pay rent again.

Those lessons about earning, budgeting, saving, and delaying gratification are at the core of My Classroom Economy (http://www.myclassroomeconomy.org), a new financial education program that investment management firm Vanguard is offering free of charge to teachers. The program uses fun, experiential learning and a simulated microeconomy to teach K through 12 students how to make wise money decisions. My Classroom Economy, which meets many common core curriculum and personal finance education standards, introduces more complex financial life skill concepts as students grow older.

“The basic tenets of financial responsibility—saving adequately, living within your means, and delaying gratification of purchases—are important at any age. But if learned early on, these principles can help more young people create financial security as they become older and need to make more difficult financial decisions. My Classroom Economy is designed to help teachers supplement what many parents are doing at home to teach their children smart money skills,” said Vanguard CEO Bill McNabb. “Outreach of this type is a natural extension of Vanguard’s long history of providing ‘plain talk’ financial and investor education.”

Vanguard teamed with award-winning educator Rafe Esquith to create the program and make it available to teachers throughout the United States. My Classroom Economy is based on teaching concepts developed by Mr. Esquith, who has taught at Hobart Boulevard Elementary School in Los Angeles since 1984 and is widely recognized for his innovative and successful teaching techniques. He is the author of books There Are No Shortcuts, Teach Like Your Hair's on Fire, and Lighting Their Fires.

“If more kids are financially responsible and they become better citizens, we all win. Having more people gain an understanding of money will help all of us and our economy,” Mr. Esquith said.

My Classroom Economy builds on Mr. Esquith’s work with an interactive program that includes an instructional website (http://www.myclassroomeconomy.org) featuring teacher guides and downloadable student materials. The program is a simulated economic system in which students earn school "dollars” by completing classroom jobs and performing exceptionally. They use their salary to rent their desks. They can earn additional income by completing extra-credit assignments, achieving exceptional grades, or participating in extracurricular activities. They can also be fined for not meeting classroom expectations regarding schoolwork or behavior.

At the end of each month, students may spend their discretionary income at a class store or auction where grade-appropriate items like markers, small toys, and lunch with the principal are sold. Students assess their budget, bills, and income to determine how much they can spend. Alternatively, they can choose to save money by not buying at all or delaying purchases. With their savings, they can eventually buy their desks outright and thus stop paying rent. Supersavers can also purchase the desks of other students and earn rent themselves.

The program adapts to the increasing sophistication of students as they grow older. For instance, middle school students begin paying for electricity and taxes in addition to their rent, requiring them to budget for multiple expenses.

High school students can purchase certificates of deposit and desk or car insurance. They can also open a classroom investment account using a custom-designed investment simulator to choose a diversified asset allocation among stocks and bonds. Students are taught to think of investing as a long-term proposition by experiencing 32 years of returns within a single school year.    

My Classroom Economy meets many of the common core state curriculum standards developed by the National Governors Association Center for Best Practices and the Council of Chief State School Officers. It also meets several of the personal finance education standards developed by the Jump$tart Coalition® for Personal Financial Literacy.

Vanguard’s unique ownership structure, in which the management company is owned by the Vanguard funds, enables the firm to maintain a client-centered focus. Vanguard seeks to take a stand for all investors, treat them fairly, and give them the best chance for investment success.

About Vanguard
Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment management companies. Vanguard manages more than $1.84 trillion in U.S. mutual fund assets, including more than $200 billion in ETF assets. Vanguard offers more than 170 index and actively managed funds to U.S. investors and more than 60 additional funds in non-U.S. markets. For more information, please visit http://www.vanguard.com.

URLs in release:
My Classroom Economy: http://www.myclassroomeconomy.org
Rafe Esquith: http://www.hobartshakespeareans.org/
Common core curriculum standards: http://www.corestandards.org/the-standards
Jump$tart: http://www.jumpstart.org/
Jump$tart national standards: http://www.jumpstart.org/assets/files/standard_book-ALL.pdf

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Linda Wolohan
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