An economics and finance homeschool curriculum for middle school-aged kids

As I have mentioned here before, I have worked in economics and finance for decades. I started off managing portfolios for high net worth investors, worked as a government economist, then managed a multibillion-dollar portfolio of government debt as the head of a government agency. My husband and I now own a financial technology company that designs accounting and operations management software for large, international corporations. It is this background that gives us the flexibility and resources to homeschool our daughter.

It is often shocking to me how many adults know next to nothing about personal finance or the economic policies in this country that influence their financial success and happiness. They sign mortgage contracts, automobile loans, student loans, credit card agreements – you name it – without understanding what those contracts even say. This puts them in the position to “trust” the bank that prepared those statements – a party that profits off their ignorance. These are decisions that could truly destroy their lives if poorly executed, too, as we saw in the 2008 housing crisis. They also vote for politicians that enact policies that destroy small businesses and advance trillions of dollars in spending legislation with no thought whatsoever of the taxes that would be required to pay for it (or the consequences for younger generations).

Understanding how to make, grow, and shelter money are some of the biggest obstacles to social mobility that exist in our society. If you can master these concepts, you can have a radically different lifestyle and opportunities.

I vowed that I would not raise a daughter who could not hold her own against a bank, no matter what field she chooses to go into professionally. She would know how to build generational wealth for her family and for the causes that matter to her personally.

One of the things I love about homeschooling is that it empowers us to do exactly that. I can build curricula for topics that are not necessarily covered, or covered well, in traditional schools. Personal finance is one of those topics. Another (that I will post about later) is an overview of the law and knowing your rights in different situations. I am posting this because I want to help other families to do the same for their children.

What I am including below is going to be our first round on finance and economics in our homeschool. It’s directed at kids who are getting ready for pre-algebra and can handle mathematical concepts like interest and growth trends (which require a solid understanding of percentages). I anticipate using famed economist Thomas Sowell’s textbook Basic Economics for high school, among other things. An understanding of mathematics is the limiting factor on what you can achieve in any economics or finance course. By high school, a student should be able to use computer programs to develop an amortization schedule, etc. But for a younger child, all you want to do is let these concepts wash over them. There is always time for more advanced discussion as they mature. The goal here is to give them a strong foundation to build on later.

I have included videos from YouTube, some of which are up to an hour long, but most are far shorter. I tried to find topics that a child might find interesting to show how these concepts are applied in many different contexts. For example, I get into how criminal enterprises use legitimate businesses to launder money and how wealthy people exploit international tax havens. I think it’s important for kids to understand that the way our financial system functions is not “fair,” that we have a fundamentally political economy, and that people who have a profit motive are not your friends, especially when they are doing a sales job on you ahead of an important transaction. Also, these topics are just fun. There is a video from the show Breaking Bad, but it is totally appropriate for kids, as long as you are not sheltering your kids from the fact that drugs and drug dealers exist in this world.

If you buy these books new, you should be able to get through this under $50. You can likely also find these books at your public library or through interlibrary loan if you do not want to spend any money at all. For the projects that involve following the financial markets, I would recommend using the CNBC or Bloomberg websites. I would recommend making flash cards for the “concepts to understand.”

The course is effectively divided into three segments: economics, high finance, and personal finance. You will use the books below in the order they are listed, skipping the first few chapters of the third book. The point to emphasize here is you are starting with how economic decisions are made at the “big picture” level and then working your way to how decisions should be made at the household level.

By the end of this course, students should be able to craft an intelligent business plan and construct a budget.

Textbooks and Other Educational Resources

Economics for Beginners (Usborne)

Money for Beginners (Usborne)

Finance 101 for Kids: Money Lessons Children Cannot Afford to Miss (Walter Andal)

Lessons

Week 1 – What is Economics? What is an Economy? What Do Economists Study? How Do You Do Economics?

Concepts to understand – trade-offs, scarcity, economy, model, forecast, data

Week 2 – Not Enough to Go Around

Concepts to understand – resources, consumption, supply, demand, opportunity cost, utility, production, labor, capital, specialization, trade versus bartering

YouTube –

Drought and Famine

Week 3 – Markets

Concepts to understand – market, creation of value, black market, law of demand, law of supply, invisible hand, trends, market failure

YouTube –

Black Market Economics: What Drives the Underground Economy?

Breaking Bad, Saul Teaches Jesse How to Launder Money

How the Swiss Protected Hitler’s Gold

Week 4 – Making Choices

Concepts to understand – behavioral economics, Homo economicus, incentive, availability bias, similarity bias, herding, price bubbles (manias), price crashes (panics), framing bias, choice architecture (nudging), risk (calculated risks / speculation versus gambling), trade-off between risk and reward, Tragedy of the Commons (ethics)

YouTube –

The Top Five Most Bizarre Bubbles

Week 5 – Production, Profit, and Competition

Concepts to understand – business, competition, profit, revenue, cost, raw materials, wage, warehousing, shipping, marketing, sunk cost / “knowing when to stop”, economies of scale, diseconomy of scale, marginal analysis, competing on price / technology / quality, productivity, assembly line, creative destruction, monopoly, anti-trust laws and regulations, oligopoly, externality

YouTube –

Intellectual Property

Yum! Brands: The Company Behind KFC, Taco Bell and Pizza Hut (discuss “the illusion of choice” – where it seems like consumers have a lot of options on what to buy, but the options are all produced and owned by the same company; also true of news media companies, which is why the news feels like political propaganda now, and commercial banks)

Creating a Monopoly

Week 6 – Economic Systems

Concepts to understand – economic system, tax, market economy, Industrial Revolution, laissez-faire, capitalism, planned economy, communism, mixed economy, right-wing versus left-wing

YouTube –

Communism and Socialism

Week 7 – Macroeconomics

Concepts to understand – macroeconomics, policy, gross domestic product, recession, inflation, unemployment, wages, government spending, welfare, essential services, infrastructure, government borrowing (bills / notes / bonds), interest rate, depression, workers’ rights, poverty, poverty trap, inequality

YouTube –

The Rise of Labor Unions

Haymarket Strike

Modern Marvels: The Evolution of the Assembly Line

Zimbabwe’s Currency Crisis: The Worthless $1 Trillion Bill

Week 8 – International Trade

Concepts to understand – trade, import, export, free trade, globalization (winners and losers), comparative advantage, trade barrier (tariffs and non-tariff barriers), trade war, trading bloc, World Trade Organization, containerization, communication

YouTube –

Ultimate Port in China

Week 9 – Big Questions (And a Few Answers)

Concepts to understand – sustainability, corruption, economic causes for wars, game theory, Rawls’ “Veil of Ignorance” thought experiment, Amartya Sen and famines, conspicuous consumption and influencers, discrimination

Week 10 – Economics Final Project – Develop and Present a Business Plan

Identify a problem that exists in society and invent a product or service that would address that problem. Create a company that would provide that product service.

Answer the following questions about your new business:

• Would you need any production facilities? If so, where would you choose to locate them and why? Would you be close to shipping hubs or the raw materials you require? Where would you find labor? Would your labor have to be skilled or unskilled? If skilled, would you need to train them or would you recruit them from a specific pool of talent? Would your labor pool have to relocate to work for you, and if so, what incentives would you provide them to do so?

• Where would you find the capital to start your business? Would you try to borrow money or take on investors? If you take on investors, how would you reward them for your participation, and how would that impact your own financial success?

• Who would be your primary competitors? Would you choose to compete with them on the basis of price, technology, quality, or production?

• What partners would you need to bring your product to market? How would you find them and pitch to them?

• How would you market your new product or service? What is your primary market or target demographic?

• How would your business need to interact with the government or politicians? Are there any laws that need to be amended or passed to make it easier for you to do business?

Week 11 – How Money Works

Concepts to understand – medium of exchange, store of value, liquidity, fiat money, counterfeit money, currency, exchange rate, reserve currency

YouTube –

How Do They Actually Print Counterfeit Money?

Look at a dollar bill under a magnifying glass or microscope to spot all the features meant to deter counterfeiting. Do the same with a personal check (look at the signature line to see the “line” is, in fact, text).

Week 12 – The Story of Money

Concepts to understand – objects that have historically been used as currency (portable / durable / uniform), coins, gold, silver, banknotes, gold standard, financial instruments, stocks, bonds, derivatives

YouTube –

The Rise and Fall of the Gold Standard

The World’s First Paper Currency: Ancient China

Week 13 – In the Bank

Concepts to understand – commercial bank, lending, money creation, deposit, central bank, why do banks charge interest, bank run, limits on withdrawals, deposit insurance, how Islamic banks are different from western banks, crowdfunding, credit unions, building societies, peer-to-peer lending, offshore tax havens, shell company, investment bank, underwriting, stock exchange, broker

YouTube –

How the Wealthy Hide Billions Using Tax Havens (Panama Papers)

Week 14 – Earning and Borrowing

Concepts to understand – earning versus borrowing, employee versus employer versus contractor / freelancer, contract, negotiation, supply and demand in the labor market, minimum wage, union, overdraft, loan, collateral, credit rating

Week 15 – Spending, Growing, and Giving

Concepts to understand – budgeting, living beyond your means, insurance, current account, savings account, assets versus liabilities, diversification, mutual funds, donations, fundraising, good versus abusive philanthropy

Week 16 – Governments and Money

Concepts to understand – income tax, corporate tax, sales tax, capital gains tax, inheritance tax, wealth tax, value-added tax, progressive versus regressive taxes, tax breaks and “loopholes,” borrowing versus printing money, the relationship between government spending and inflation, why central banks must be independent from political influence, quantitative easing versus interest rate hikes

Week 17 – Big Questions

Concepts to understand – the pros and cons of working with cash, how are cryptocurrencies changing the market and moving currency management beyond borders, wealth and happiness / how much wealth is “enough,” is inequality actually undesirable, protesting with money / consumer power

Week 18 – Finance Final Project

Research and make a presentation on how bitcoin has disrupted the marketplace for traditional currencies. Answer the following questions:

• How does bitcoin work? How are bitcoins created and traded? Who is responsible for tracking what various people own?
• Why would other countries feel threatened by the increased use of bitcoin? Is bitcoin a legitimate threat to reserve currencies?
• What about bitcoin makes it difficult for governments to regulate? How might bitcoin be more useful than cash in black markets?
• What drives the value of bitcoin? Some people have argued that bitcoin is a speculative bubble – do you agree, why or why not? Do you think more people hold bitcoin because they intend to use it as a currency or because they feel it has speculative value?
• What is the difference between owning bitcoin directly and having exposure to bitcoin through a more traditional investment vehicle
• What unique risks does owning bitcoin pose versus traditional currencies?

Week 19 – Introduction to Credit

Concepts to understand – loans, types of collateral, forbearance, bankruptcy, debt forgiveness, predatory lending

Topic to discuss – How do differing attitudes toward spending impact personal relationships? Can a person who is frugal with money be happy with someone who spends money freely or even recklessly?

Topic to discuss – What clues might help you spot a predatory lender or a financial scam? (research on the internet)

Week 20 – Dealing with Credit

Concepts to understand – credit cards (discuss the difference between a commercial bank credit card and a store credit card / card from online platform), cash advance, student loans, automobile loans, down payment, installments, balance, credit history, credit score, willingness versus ability to repay money, character, co-signer, debt capacity

Week 21 – Save Your Money!

Concepts to understand – “rainy day” funds for emergencies or unforeseen expenses, savings versus checking versus brokerage accounts, debit cards, certificates of deposit, maturity date

Week 22 – The Stock Market

Concepts to understand – share, stock, exchange, shareholder, broker, dealer, dividend, earnings per share, annual return, performance

Research project – Select some companies that produce goods or provide services you enjoy. Look up their ticker symbol to see how their stocks have performed over time. Do a Google search for news that has impacted the performance of the company’s stock. See if you can identify who the largest investors in that company are and why they like its stock.

Week 23 – Other Kinds of Investments – These are to research on the internet

Concepts to understand – investing in real estate for income versus speculation, investing in commodities, fringe asset classes like art and wine

Week 24 – Hedging Investments and Short Positions – These are to research on the internet

Concepts to understand – there are ways to make money when asset prices decline too, short versus long positions, paired trades, derivative investments and betting on the direction of an underlying asset versus, individualized versus systemic risk, adding a margin account to a traditional brokerage account

Week 25 – Personal Finance Final Project – Developing a Budget

Create a monthly budget for your family:

• What is your family’s monthly income from all sources?
• Tally up your family’s recurring monthly expenses, such as the mortgage, servicing existing debt, estimated utility costs, food.
• Identify expenses that your family can control and expenses that are fixed. Make a recommendation for reducing expenses that are within your control. Can your debts be restructured for more advantageous terms?
• Calculated how much money your family will have left over at the end of the month. Decide whether that money is at risk of being needed in the near future or whether it can be saved or invested long-term. Make a recommendation about how it might be put to work.
• What expenses linger that may only occur infrequently (for example, having to make a payment for income taxes)? How might your family save for those expenses, and what options exist for investing that money in such a way that it might be available when it is needed?
• Identify future spending goals (for example, saving for college) and ways to invest for those goals.

(If you live in a state where you have to send your homeschooling work product to an evaluator, I recommend developing a fantasy budget rather than using your household’s actual data. If not, it might be nice for your kids to get a granular understanding of how your household works and the sacrifices you make to allow them to have the things they need and want. This can be a character-building exercise too.)

As I find cool stuff on this topic, I will likely go back and edit this post. That’s it for now.