Promoting financial literacy
We're investing in the next generation of investors
Vanguard has always been a steadfast advocate of saving and long-term investing, and that commitment goes beyond management of capital. We're also committed to investing in human capital—specifically, children who are growing up in a world with a dizzying array of financial products that can extract a steep price from the uninformed.
Educators are recognizing how important it is for students to learn how to be financially smart, not just in high school, but as early as kindergarten. And yet, according to the 2016 Survey of the States administered by the Council for Economic Education, only 17 states included a personal finance course as a prerequisite for high school graduation.
Vanguard has stepped in to help by developing My Classroom Economy. The program gives educators tools to provide fun, experiential lessons in understanding economic trade-offs and financial management.
A proven concept
The concept—a simple classroom economic system—is used by thousands of teachers across the country.
How does it work? Students create a microeconomy by taking on classroom jobs to earn "dollars," which they use to rent their own desks. They can get bonuses for academic performance, outstanding behavior, or extracurricular activities and incur fines for dishonesty, disrespect, or breaking other classroom rules. Those who save more than their rent are able to purchase items or privileges. In this way, they learn about trade-offs and good decision making.
As participants get older, the complexity of the program increases, requiring budgeting for multiple bills. At the high school level, students can use a simulator to experience 32 hypothetical years of investing results during the course of the school year.
A no-cost program
My Classroom Economy is available online free of charge for kindergarten through 12th-grade classes. Since its introduction in 2011, the program has reached schools in all 50 states, helping 16,700 educators teach personal financial literacy to 504,000 students. Almost 36,000 kits have been printed directly from the website.
What would society look like if all high school graduates knew how to budget, resist impulse buying, and save more than they spend? We're hopeful after hearing from students such as a fourth-grader at Madison Simis Elementary in Phoenix, Arizona, whose teacher began using the program in 2012.
"I learned that you should get your needs taken care of first," the boy said. "It's nice to have what you want, but first, you have to get what you need."
That kind of insight explains why the program supports Vanguard's core purpose: "To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success." My Classroom Economy gives future investors that "best chance" by teaching them the basics of establishing a sound financial future.