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Smart money

An innovative and widely acclaimed program created by a U of M professor teaches children the do’s and don’ts of money management.

 By Laura Fenton


How early should children learn the importance of saving money and the role it plays in decision-making?

According to Dr. Julie Heath, University of Memphis professor of economics, kindergarten is the perfect time to start teaching children the basics of financial literacy.

“There’s no reason why it should be anything different than reading literacy,” says Heath, creator of the Smart Tennessee program. “You don’t throw David Copperfield at a first-grader and say we expect you to read this. You give them foundation, building blocks and ABCs and you build on it. That’s exactly what we do, except it’s financial literacy.”

Dr. Julie Heath, U of M professor of economics, gives students advice about financial literacy at Richland Elementary.
Dr. Julie Heath, U of M professor of economics, gives students advice about financial literacy at Richland Elementary.
To fill this niche, Heath created Smart Tennessee, a statewide financial literacy program for public and private school kindergarten through eighth-grade students.

The program, launched in 2006, created a public-private partnership between the state of Tennessee and First Tennessee Bank for funding and curriculum guides from the state Council for Economic Education. These organizations work together through the newly formed Financial Literacy Commission.

“No other state is doing anything like this,” Heath says.

School systems have the option to use the curriculum as a supplement to classroom guides. In addition to receiving the free “Financial Fitness for Life” curriculum and one set of classroom workbooks, each participating school receives $500 to spend on classroom supplies, substitute teacher expenses for when a teacher leaves for curriculum training or however the school deems it best to spend the money.

More than 120 schools in 28 school systems in the state are participating in the program, including all Memphis City and Shelby County schools.

But what is financial literacy?

“Financial literacy is teaching kids how to make good decisions,” Heath says. “Sometimes that is about money. Do you buy the candy bar or do you save it for something bigger? Sometimes it’s about whether to go to college or not.”

Heath and other leaders from the Financial Literacy Commission chose to add a section that encourages saving for college in hopes that more children will be financially able to further their education. The lessons also reinforce the information in the state’s 529 (College Savings) Plan, which encourages parents to save aggressively enough and long enough to pay for a child’s college education.

“For this year, we’ve written some new lessons to focus on college saving,” Heath says. “We’ve prepared some information pieces that teachers can send home with their kids targeting their parents about saving for college.”

But children sometimes connect the lessons about spending and saving to larger issues.

When Heath and a videographer from First Tennessee interviewed children in the program for informational segments, Heath was in awe of the connections some children made with the lessons.

One young boy told Heath that what he learned was that he should not be in a gang. Nowhere in the lessons is there a section about gangs.

“His teacher didn’t tell him that,” Heath says. “This kid made that connection all by himself. And that’s what it is. There are costs to things and there are benefits to things. Sometimes the thing you apply it to is money. Do you save it? Do you spend it? And sometimes it isn’t. Sometimes it’s about something that is much closer to home.”

Although Heath did not use the boy’s interview in the segments (she felt it was not fair to the child to use his comments in the promotion of the program), the child’s honesty brought to light the underlying purpose of financial literacy.

“I don’t necessarily want to teach kids how to be more money savvy,” Heath says. “That’s too narrow. I want to teach kids how to make good decisions about their lives, all of their lives. I want to get to kids where they live. This is a moral thing for me. Yeah, I want to educate them, but I want to give them a chance. This is how I can see to do it.”

Although not all children make such keen connections with the program, students still grasp important lessons about decision-making.

Students learn vocabulary such as “scarcity” and “opportunity cost” and listen to stories about fictional characters Penny and Nicholas to relate the terms to the context of their own lives.

In the first-grade scarcity lesson, children listened to a story about Nicholas and his family having to choose between taking a vacation or replacing their recently broken television. After listening to the story, the children drew pictures of items they keep in their pockets. Richland Elementary School teacher Kimberly Britt then outlined the shape of a pocket on the classroom floor and asked children to stand inside the pocket as the item they drew was called out. With the pocket packed with children and four students still to go, Britt ended the game because no more people could fit inside it. The word “scarcity” then clicked for the children.

“We’ve learned that scarcity means that we don’t have enough,” says 7-year-old Colton Matthews. “Like, if you put millions of things in your pocket, you’re going to have to take something out.”

If the television vs. vacation dilemma were up to Colton, he’d choose the television.

“I would really pick the TV because if they went on the vacation they wouldn’t have enough money to get the TV fixed,” he says. “That wouldn’t really be good because nobody would able to watch TV. All they would have to dto is play.”

Students at Richland take part in financial literacy exercises.
Students at Richland take part in financial literacy exercises.

Since beginning the curriculum last September, Colton has discovered he has a knack for saving. He kept his allowance and extra birthday and holiday money so he can purchase “something big.”

“If something is really, really big and it costs a really, really lot of money, I’m just going to save the money I have so I can get more,” Colton says. “If you really get lots of money, you might be rich. If you save for four or five years, you [just] might get rich.”

Incorporating the curriculum into the first-grade lessons has been easy enough because everything aligns with the guidelines and lessons already required for children of that age, Britt says.

“It only takes 10 to 15 minutes of the day, and any teacher has a random pocket of time that you can fit that stuff in,” Britt says. “It’s really not hard.”

Lessons also focus on more than just math skills.

“It’s a very cross-curricular program,” she says.

Britt relates Smart Tennessee lessons to social studies or language arts topics to reinforce the information in both contexts.

Her first-grade class is the only group of students currently incorporating the program at Richland Elementary and is the first class to use it the full year. With it being a new program last year, she added it just for the second semester. She is interested to see how much more students retain during a full year.

“They’re a smart bunch of kids,” Britt says. “They’ll be able to hold onto it because they can relate it to their own lives.”

In comparing pre- and post-assessments of the children involved with the curriculum, the students had about a 45 percent improvement rate in comprehending the information, Heath says.

Looking back at the more than three years it took Heath to have state officials and businesses join together for the program, Smart Tennessee has become a larger program than she could have ever imagined.

“It grew from there beyond my wildest dreams,” Heath says.

The state gave the program $125,000, which First Tennessee matched.

The program has also caught the attention of school systems, businesses and governments in other states. Heath received questions about beginning the program in Arkansas, Texas and Nevada after the program was featured on CNBC last September.

For as many strides as this program has made in the last five years, Heath is not fully content. Her plans include fully integrating the curriculum into every classroom from kindergarten through eighth grade in Tennessee and requiring standardized testing of the material.

“If we’re ever going to get beyond this being an add-on, then we need to test it,” she says. “If it becomes part of TCAP (Tennessee Comprehensive Assessment Program), then everybody has to do it.”

The material is a requirement for high school finance students, and Heath believes by extending the program to elementary and middle school students, the information will actually stick.

“Maybe by the time they get to that high school class, maybe it will mean something,” she says.

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