Let’s face it: finance can be intimidating. Whether you’re trying to finance a home, save for retirement, or start a business, all the jargon, acronyms, and numbers just keep coming at you.
Professor Michael Roberts gets it. Which is why he is on a mission to help students as early as high school understand that finance doesn’t have to be difficult if taught well. “I hope for generations of people in this country and beyond who are financially proficient and confident engaging with the financial system,” said Roberts, Wharton’s William H. Lawrence Professor of Finance.
One Set of Principles
Driven by this image of finance as a life skill, Roberts is developing an innovative student-focused curriculum that integrates personal and corporate finance concepts, and promotes the exploration of how these concepts are applied to challenges students will face throughout their lives.
This summer, more than 300 high school students enrolled in four separate sessions of Wharton Global Youth Program’s on-campus Essentials of Finance program in Philadelphia, got the opportunity to experience Professor Roberts’ approach to financial education.
That approach espouses that there is only one finance. “People like to bifurcate finance into personal and professional, or personal and corporate. But there’s only one set of finance principles, and the way individuals should make financial decisions is really no different from the way companies should make financial decisions,” noted Roberts. “My approach to teaching finance is to show how we can distill financial decisions down to their essentials — costs, benefits, and risks. Once we understand these essentials, the math is trivial (arithmetic most of the time), and the correct decision much clearer. By emphasizing principles and their application, students are prepared to tackle virtually any financial challenge they may encounter — a critical life skill in an ever-changing financial landscape.”
Essentials of Finance has Wharton Global Youth students engaging in a variety of practical applications, including constructing a retirement savings plan; financing a college education, car lease, or home purchase; making capital budgeting decisions; and allocating money to different investments such as stocks and bonds. Through in-class discussions, small-group breakouts, and out-of-class case work, students are taught how to “think financially.”
Roberts embraces an integrated and practical approach. “I like to teach by illustrating through applications,” said Roberts. “We’ll talk about investing in stocks and bonds and I’ll say, ‘What does it mean to own a stock? How do you make money or lose money? Then I’ll point out that the flip side to buying a stock or a bond to save money is that some company issued that stock or bond to raise money to invest. We’re looking at two sides of the same coin.”
As academic director, Roberts taught a few of the Global Youth Essentials of Finance classes in June and July. He considered his curriculum debut to be an experiment, from which he could gather student feedback and observe reactions to assess what worked and what didn’t.
Dr. Wayne W. Williams, program leader, handled the day-to-day Essentials of Finance instruction, along with instructor Madeline DeWoody. The material, suggests Williams, was empowering. “The students were engaged in the curriculum throughout the entirety of the course,” noted Williams. “It was fascinating to teach the course in a conversational way and to help students realize their biases. Really smart students want to get the calculations correct, when in reality the course emphasized the importance of using the calculations for decision-making.”
To conclude the course, Roberts and the instructors created a final assignment that incorporated many of the program’s financial principles. Students worked in teams to create a “buy” pitch for an actual publicly traded company, like Johnson & Johnson. Financial statements, created by accountants and used by financial professionals, became that bridge between personal and corporate finance. By evaluating the statements, students developed stronger skills in financial analysis.
Making Finance Education Accessible
While many of the Essentials of Finance students have taken advanced math classes, few have explored finance so deeply.
“The entire experience exceeded all expectations,” said Marcos Membreno, a rising senior at Trinity Preparatory School in Florida. “We started off with personal finance and mortgages and then transitioned into the corporate world and financial statements and related predictions. I could see how personal and corporate finance differ and the same tools you use to make the calculations for both. Also, the use of application was very different from how we learn in high school. We had a whole project based around using all the different tools and concepts we learned to be able to make a stock evaluation. It was great to do that evaluation as a team.”
Fellow Essentials of Finance student Vincenzo Francia, a rising senior at the British School of Milan, appreciated exploring the core elements of finance. “We first took a more mathematical approach that got our brain going, then onto working into finance and then thinking in a more abstractive way about the implications of these numbers,” he said. “It was a good full immersion in the world of finance.”
Since the completion of Essentials of Finance in early August, Roberts has thought carefully about his summer 2022 information gathering from instructors and students.
One of his key takeaways: students were surprised that finance can be both interesting and easily understood. And the average 15-year-old can grasp and apply most any financial concept. “The delivery must recognize from where the students are starting, which is often with no background whatsoever, and ensure that they are continuously engaged,” said Roberts. “Coupled with high-quality materials, great teaching paves the way for students to succeed.”
He calls the “experiment” a smashing success on which he hopes to build not just here at Wharton, but more broadly across the country. “There is a desperate need for high-quality financial education in high schools,” he said. It’s a market gap that he hopes to help fill.
— Diana Drake
Posted: August 19, 2022