Teaching Financial Independence The Building Blocks of Financial Literacy
Teaching financial literacy to teens and young adults is critically important regardless of whether they have a disability or not. Financial literacy is a complex behavior that is the cornerstone of independent living. Simply put, financial literacy is the understanding of one’s finances, the use and value of money, and how to navigate various financial systems (e.g. banks, credit card companies, the I.R.S., a company’s payroll system, and social service entitlements). Financial literacy is a behavior consisting of a series of basic building blocks. These building blocks should be addressed early in a child’s education and include behaviors such as number recognition, counting, identification of denominations of coins and bills, and basic arithmetic skills (i.e., addition, subtraction, multiplication, and division). Without these basic building blocks in place, a student will struggle with more complex financial literacy behaviors such as setting a budget and reconciling a check book or credit card account. By the time a student reaches high school they should be ready to learn these higher level financial literacy skills.
Value of Money an Abstract Concept
However, higher functioning students with autism spectrum disorders (ASDs) or students with intellectual disabilities may struggle with learning the basic building blocks. Adaptive skills must be taught to compensate for areas of disability. For example, if a student has difficulty with arithmetic skills, then he or she must be taught how to use a calculator.
A much more difficult concept to teach is the value of money. Money is an abstract concept that is difficult to grasp especially for students with an autism spectrum disorder or an intellectual disability. Money is actually very strange. It has no inherent value like a precious metal such as gold or silver. You cannot make anything out of it. It is actually a promissory note backed by the federal government. We exchange it for goods and services. The government promises or backs it value. VanBergeijk and Cavanagh (2012) describe a system for teaching elementary school age children the value of money while simultaneously reinforcing not only financial literacy skills, but other independent living skills as well. The system incorporates the use of positive reinforcement, a token economy, specific savings plans and goals, and the use of natural and logical consequences. Use of this system not only teaches the basic building blocks of financial literacy, but also helps the parent gauge if his or her son or daughter is able to understand the value of money.
Academic Curriculum is Needed
A key factor in teaching students with disabilities financial literacy is the need for the lessons to be concrete and real. It is meaningless to a student if the money used in a class is merely Monopoly™ money or a hypothetical checkbook he or she is balancing is simply an academic exercise. The lessons are too abstract and do not generalize outside the classroom. The lesson becomes salient and relevant when the money belongs to the student. The student focuses and pays attention if there are real world consequences to not learning these skills. In addition to an academic curriculum where general skills are taught in the classroom, a budget and banking advising system needs to be put in place. In a budget and banking advising system, the student meets on a weekly basis with his or her advisor, sets a budget for the week (this often involves a discussion of wants versus needs) and reviews his or her bank account. The availability of on-line banking information in real time helps with the immediacy of teaching fiscal cause and effect. Part of the teaching that occurs during the individualized advising centers around the natural and logical consequences of overspending (e.g. you decided to buy a pizza on Friday night with your friends; therefore you could not afford to go to the movies on Saturday). The advisor can check the student’s weekly expenses on-line and compare this information to the student’s weekly budget. These small “failures” to stay in budget are important teachable moments that are concrete and real.
Professional Help May be Necessary
Financial literacy permeates all aspects of a young person’s life on their road to independence. It impacts vocational, independent living skills, social and recreational, and travel training skills. If a student with a disability has not yet mastered the basics of financial literacy as well as the more complex skills such as budgeting and banking, then the family should consider a Comprehensive Transition and Post-secondary program where such skills are taught and practiced. Research the programs very carefully to determine if they have concrete course outcomes that detail the objectives of the course so that they result is real, observable, and measurable behaviors that the student demonstrates (See Table 1 for an example). Find out if there are opportunities to practice these skills in other classes as well as outside the classroom’s structured environment.
Vocationally financial literacy starts with being able to complete W-4 forms, understanding a paycheck with deductions, paying taxes, and setting up direct deposit. It involves understanding the difference between salaried versus hourly work. Understanding the importance of benefits such as medical insurance is crucial. Finally, some forms of employment, particularly in the retail field, require employees to have a good understanding of money and even the ability to use a cash register to determine the correct amount of change to give back to a customer.
Personal Budgets for Independent living
Independent living is the goal for most young people. This will require them to learn how to set up and manage bank accounts, create a personal budget, and generally manage all of their finances. Learning about the costs of independent living is paramount. Which is more expensive buying a house or renting an apartment? When should one consider buying property? If a student is planning on renting an apartment – how much rent can he or she afford? Should he or she consider getting a roommate to share expenses such as groceries and utilities? How should those costs be split and negotiated? What qualities should one look for in a potential roommate? Learning about the costs of independent living-developing a monthly budget to pay bills, how to pay bills, etc. should all be a part of the curriculum.
Financial literacy even impacts upon a young person’s social and recreational life. Students with disabilities need to practice restaurant skills with their peers in the real world. This involves practicing including taxes and a tip. Negotiating how much each person should pay is a skill. For those students who are uncomfortable or unable to calculate this manually, they should download an application to a smartphone which will help them with the calculations. Teachers can provide support and feedback during the process.
Traveling to and from work and for recreation purposes is yet another aspect of financial literacy. Some students with ASDs and intellectual disabilities will learn to drive a car. The cost of owning and maintaining a vehicle need to a part of the financial planning process. This must include budgeting not only monthly car payments and insurance, but fuel, maintenance, tolls and parking as well. A travel training curriculum should incorporate not only trip planning and the execution of trips using various modes of public transportation, but the financial aspects of transportation are also essential to learning financial literacy. Comparing costs of various travel options should include not only which mode of transportation for a particular trip, but it should also include a discussion concerning the management of payment. Some forms of payment might be more expensive for the exact same mode of transportation. For example, it is considerably more economical to buy a monthly train pass if one is traveling 5 days a week to work as compared to purchasing a single ticket on the train from the conductor. The timing of travel can also impact the cost. Do the students know the difference between traveling off-peak versus peak times? Actual practice handling payment is imperative for students with disabilities. Practice purchasing tickets online, at stations, at a kiosk, on a train etc. Finally, students should explore the financial impact and availability of discounted travel for people with disabilities and Access-a-ride availability in their home communities.
A Few Suggestions
Despite best efforts, some students with ASDs and students with intellectual disabilities will not be able to comprehend the value of money, staying within a budget, and having spending limits. These students may always need assistance with their finances. In the short term, the students who struggle with managing their money may need more concrete structure to cue their spending habits. Instituting an envelope system for the student can be helpful. The student still plans a weekly budget with his or her advisor, but does not have access to the funds all at once. The money is placed in a sealed envelope which the proper amount of money in it. On the outside of the envelope the student or the advisor would write the date, time, and purpose of the money (e.g. to purchase a ticket and a snack at the movies). Some students will be able to handle a week’s worth of expenses in discrete envelopes. Others will need the envelopes to be distributed just prior to leaving for a specific activity.
Contacting a professional financial advisor should be a part of long term planning for students who have extreme difficulty with financial literacy. A professional financial planner can discuss with the family the merits of a special needs trust and how those funds should be disbursed. This is typically out of the purview of a high school transition program or a CTP.
Financial literacy is a cornerstone to independent living that can be taught in an organized and concrete approach. For those students who are not yet ready to transition to college or post-secondary vocational training, a Comprehensive Transition and Post-secondary (CTP) program with a strong financial literacy curriculum is an option to consider.
Patricia Cappellino, M.S., is the Director of Independent Living Services, Gina Frisina, M.S. is the I.E.P. Coordinator, and Ernst VanBergeijk is the Associate Dean and Executive Director, at New York Institute of Technology Vocational Independence Program (VIP). The Vocational Independence Program is a U.S. Department of Education approved Comprehensive Transition and Postsecondary (CTP) program. www.nyit.edu/vip. The authors also administer Introduction to Independence (I to I) a seven week summer college preview program for students ages 16 and up.
References: VanBergeijk, E. O. and Cavanagh, P. K. (2012, November) Teaching financial literacy: A key aspect on the road to independence. Exceptional Parent, pp. 28-30.
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This post originally appeared on our January/February 2013 Magazine