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Financial Literacy

5 Money Habits to Teach Your Students This Year

Teachers, we salute you. You work hard every day to make sure your students have the education they need to succeed in the future. And whether they say it to your face or not, your students can tell when you care about them. Your dedication makes an impression that lasts way past graduation.

Yet another way to show your students that you’re invested in them is by helping them navigate the often-confusing world of personal finance. Remember when you were trying to learn how to be an adult and found yourself staring at an unbalanced checkbook, saying “Why didn’t I learn any of this stuff in school?”

It’s true—personal finance isn’t taught in schools nearly enough, and it’s really taking a toll on young people these days. With a $1.5 trillion student loan crisis and a nation full of people who are trapped in a cycle of monthly payments and living paycheck-to-paycheck, it’s easy to see that something needs to change.1

And you can be that change by starting your students out on the right foot with a few simple financial tips!

What Every Student Should Know: The Five Foundations

The Five Foundations are Ramsey Education’s basic steps that any student can and should follow in order to kick-start their money success! If they follow these tips, they’ll be way ahead of the game when they get into the real world—and who knows, they might become millionaires before age 40!

Foundation #1: Save a $500 emergency fund.

It might sound like a huge deal to get a middle or high schooler to save even $50, especially if they’d rather spend it on Forknife (Forthright? Fort-knight? What the heck is it called?). But with 500 bucks in the bank, they’ll feel confident knowing they can handle a flat tire, a cracked phone screen, or whatever disaster might come their way. And it’s actually not as difficult to save money as they might think—there are plenty of creative ways to stack that cash.

To save $500 fast, your students can:

  • Save any allowance, birthday money or Christmas money they get from family.
  • Have an online auction or yard sale for old stuff they don’t want anymore.
  • Become entrepreneurs by advertising their babysitting, lawn care or dog walking services.
  • Get a part-time job during the school year (if their schedule allows).
  • Talk about their money goals with their parents and ask if there’s any paid work they can do around the house.
  • Tutor other students in academics, music or whatever else they’re good at (this can sometimes pay $20/hour!).
  • Work full time during their summer vacations as a lifeguard, camp counselor, etc.

Remind them to create a budget for any money they earn. They should put as much as possible into a savings account or money market account that’s just for their emergency fund. It might be hard to keep from dipping into their savings at first, but once they have that $500 emergency fund in place, they will feel super accomplished—and then they can have more flexibility on how they spend their earnings.

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Are you a teacher? Help your students win with money today!

Here’s a fun fact: According to a study done by our Ramsey Research Team, students who completed a personal finance course in high school were over three times as likely to say they’d rather have $500 in the bank than a smartphone! Seems unbelievable, right? That just goes to show how much of an impact personal finance education really makes on students.

Foundation #2: Get out of debt. 

You might be thinking: They’re teenagers! What kind of debt could they possibly have?

Unfortunately, debt can still be a problem even for your students. Some of them might already have car payments, a credit card, or an ever-growing amount of IOU money they need to pay back to their parents or friends (yes, that counts as debt). And that can really put a damper on their future plans!

That’s why the next step after the emergency fund is to make sure they get rid of any debt they have as quickly as possible, using the debt snowball method.

What’s the debt snowball and how does it work?

No, it’s not a fun, winter-themed activity. It is, however, a simple and motivating way to get rid of debt! Here’s how it works: Your students start by making the choice to stop going into debt. They should cut up their credit card (if they have one) and start using a debit card and cash only. Then, they list all their debts in order from smallest to largest. They’ll pay as much as they can on the smallest debt, while still making the minimum payments on their other debts.

When the smallest debt is paid off, they roll that payment into the payment on their next smallest debt. That way, they’ll pay off their debts quickly and gain momentum, which will give them the push they need to keep throwing all their extra money at those payments until they don’t owe anyone a single cent.

Getting and staying debt-free will give your students a leg up on their future financial plans and will lay the groundwork for them to cash-flow their college degree (more on that later). And if they haven’t accumulated any debt yet, give them a high five and have them skip right on to the next step!

Foundation #3: Pay cash for your car.

Maybe your students haven’t bought their first car yet, but they’re probably going to need one so they can stop asking their mom to drive them to the mall to hang out with their significant other. When the time does come to get their own set of wheels, they need to pay with cash.

A decent used car will cost about $3,000, which might sound like a ton to a teenager. If they break it down, though, they could save $300 per month and have enough to buy the car in just 10 months! If they saved $200 per month, they could buy their car in 15 months. That’s not too shabby.

When they put in the work it takes to save up for the car before they buy it (what a concept, right?), the purchase will mean even more to them and will probably inspire them to be a lot more careful on the road. Plus, they won’t have to worry about payments so they can focus on their next financial step!

Foundation #4: Pay cash for college.

Alright, we know this is a big one. But contrary to popular belief, it is actually possible to get a college degree without taking out any student loans. Imagine what your students’ futures could look like without that burden weighing on them!

To fund their college degree without loans, your students can:

  • Apply for scholarships. College-bound students today have plenty of scholarship resources. Especially in high school, they should apply for as many as possible. The more applications they fill out, the better their chances of getting funds! They should also take their GPA and ACT and SAT scores seriously, since those can be deciding factors for colleges in giving partial or full-ride scholarships.
  • Find a school they can afford. Your students need to keep in mind that tuition at public, in-state schools is way less expensive than private, out-of-state colleges. They should also consider starting out at a community college until they can afford to transfer. Remind them that in the end, where their degree comes from is not as important as the degree itself.  
  • Fill out the Free Application for Federal Student Aid (FAFSA). This is the form colleges use to determine how much financial aid students can receive. Students can fill it out on a yearly basis to get as much money as possible. This aid can come in the form of scholarships and grants (which they won’t have to pay back) or loans (which they will have to pay back). So be sure to warn them not to sign up for any loans they might be offered!
  • Complete a work study or teaching assistant program. Many colleges offer these programs that allow students to work their way through college, even as undergraduates.
  • Have a part-time job during college. If they can’t get into a work study or teaching assistantship, a regular old part-time job in their college town will help them pay for their degree.

If your students really stick to it, they can avoid graduating with a mountain of student loan debt and start adulthood off on the right foot.

Foundation #5: Build wealth and give.

What if your students had their car and college paid for and were free to start investing at a young age? If a 19-year-old invested $2,000 per year (or $167 per month) until the time they were 26 and then let the magic of compound interest do the rest of the work, they could wind up with over $2.2 million by the age of 65! That’s not a bad way to retire.

If your students can be free to pursue their dreams and goals without the stress of debt, that’s amazing. And if they can start building wealth early so they can leave a legacy for their future family and show incredible generosity to people in need—that’s even better!

As their teacher, when you give your students the tools and knowledge they need to win with money while they’re young, you start a ripple effect—and you never know how many lives it could change.

Want to get more info on The Five Foundations and how you can bring them into your classroom (no matter what subject you teach)? Learn more here.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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