Real Estate, Mathematics, and Financial Literacy: Tips for Teachers Helping Students Plan for Success
Real estate - including renting, buying and investing - is an important concept for children to grasp, and yet it can feel like too much of an “adult” concept. Particularly for math and economics teachers, having a resource with lesson plans and information about these topics and how they relate to students age-appropriately is helpful. Here are some excellent resources and lesson plans you can use today in your classroom, as well as information about what topics will reach your children best.
I. Understanding the National Standards
II. Early Elementary School (Grades K-3)
III. Late Elementary School (Grades 4-6)
IV. Middle School (Grades 6-8)
V. High School (Grades 9-12)
VI. Additional Information and Resources for Teachers
Understanding the National Standards
First, before you can get into the meat of what you need to be teaching children and when, you need to understand the basic standards and how they apply to the subjects of financial literacy and economics. Learning how to handle money and invest wisely is critical to success as an adult, and the Council for Economic Education has provided a list of National Standards for Financial Literacy. Keeping this list in mind will help you prepare lessons that are in line with what your students can and should be learning. In the resources discussed below, these standards will be discussed more deeply, but in general the standards require students to understand:
- Earning Income - Students need to understand how people earn income and what they can do to increase their income and job opportunities. In addition, older students need to learn about factors like interest, rent, capital gains, dividends, and profits, which can all affect the meaning of income in-hand.
- Buying Goods and Services - Students will need to understand how money is used to buy goods and services, and how people decide which goods and services to spend money on in the first place.
- Saving - Setting aside money for future use is an important concept for students to understand, and it relates to real estate in the fact that people need to save for deposits and down payments.
- Using Credit - Credit options and the use of credit is an important concept for students. Teaching students how to weigh the pros and cons of debt will make them more financially responsible.
- Financial Investing - Purchasing financial assets to create future income or wealth can involve real estate, and is an important concept for students to understand.
- Protecting and Insuring - Protecting one's self and one's financial investments helps reduce the risk of financial loss.
These standards apply to all students, regardless of socio-economic background. Throughout this guide, these resources serve as a basis for the lessons included. For more information about these standards, check out these resources:
· Jump$tart.org - This site lists the competency levels for the national standards to help teachers determine if they are on track.
· Institute for Financial Literacy - Another checklist of benchmarks students need to attain in the quest for financial literacy.
· National Financial Educators Council - This resource breaks down the standards based on age and based on topic to help educators with their planning.
· Common Cents - This quarterly article from the Federal Reserve Bank of Kansas City provides teachers and parents with lessons they can easily implement with their students. It covers all concepts and grade levels with a focus on money and economics specifically.
Real Estate, Math, and Financial Literacy Concepts in Early Elementary School (Grades K-3)
In early elementary school, the concept of a major purchase like buying a home is almost impossible to understand. Students of this age have very little concept of money and its value. As such, much of the literacy and real estate teaching here simply sets the foundation for future study. You aren't going to teach students about home buying and real estate investment in kindergarten, but you can teach them some basic economic concepts that will help them grow.
Key Concepts for Early Elementary Students
From grade K through grade 2, students are not yet ready to learn advanced economic concepts. Instead, they need a basic introduction to the ideas of buying, selling, and earning income. They also need to understand the fact that they have needs and wants, and they must grasp their power to make choices that affect those needs and wants.
Students in this age range need to be able to understand that:
· Numbers are a symbol for quantity
· People have different wants and need to choose between different things they may want
· People sometimes have to be able to tell the difference between "needs" and "wants."
· We can choose the type of lifestyle we want
· We use goals to help us reach that lifestyle
· Our understanding of money affects the decisions we make
· Saving money require a plan
· Banks and financial institutions can help us grow our savings
· If we borrow, we have to pay it back
· We can choose a profession and use that to earn money
· Before we act, we need to think to help lower risk
Many of these concepts are not highly mathematical in nature, but they are still critical to a clear understanding of real estate investment, purchasing and profitability. They are also key to economic and financial literacy, so they are worth spending time on.
Lesson Plans for Early Elementary Students
Here are some lesson plans that you can use to cover these concepts in your lower elementary classroom.
· Learn to Earn When You Tend to Spend - Students in grades 2-3 will learn the meanings of spending and earning, which math function is associated with these actions, and how change is made up to a dollar.
· Financial Literacy Lesson Plan - This lesson plan set is for grades Pre K through 2 and covers making spending decisions, spending plans, earning money, and the definition of money.
· Fieldtrip to the Money Factory - This lesson plan and video shows young students where money is made.
· Alexander, Who Used to Be Rich Last Sunday - This lesson plan for grades K-2 uses a picture book to discuss the concepts of spending and saving money.
· Betty Bunny Wants Everything - This Q&A from another popular children's book discusses the concept of want, choice and scarcity in a kid-friendly way.
· Bunny Money - Max and Ruby, two loveable storybook bunnies, explore the concepts of money, saving and spending in this picture book.
· My Money - An educational workbook for early elementary students about the basic concepts of income, money and saving.
· Money Activities for Kids - A collection of fun activities you can do in the elementary classroom to reinforce the idea of money and its uses.
As you can see, these lessons do not touch the topic of real estate and home buying specifically, but they cover the basic money concepts that students need to understand before they move on to an understanding of buying and selling real estate. Without this foundational understanding of earning money, spending money and saving money, students cannot move on to the more advanced concepts of home buying.
Real Estate, Math, and Financial Literacy Concepts in Late Elementary School (Grades 4-6)
In later elementary school from grade 4 on, students are able to grasp slightly more challenging concepts of money, spending and saving and can start to apply them to real world situations. This is a great time to introduce the idea of lending and interest, as well as some basics about investing. Students may be able to understand some slight concepts about home buying, but the focus is still on money management and income earning topics.
Key Concepts for Late Elementary Students
According to the financial literacy standards, late elementary students should be learning:
· That life involves making decisions, and those decisions require planning
· The habit of saving needs to start early
· Rainy Day (emergency) accounts are important to plan for
· The difference between saving, investing and sharing
· Different jobs and businesses have different lifestyles and require different preparation
· Understanding loans and contracts in real estate and sales decisions
· Credit has benefits and risks that need to be understood
· Credit has penalties if not repaid
· We can use insurance to protect our valuables from risks
Again, many of these concepts are not highly real estate specific, but the concepts of financial literacy are pointing students a bit more to the concepts of buying and selling real estate and investing in general. Teachers can set the foundation for better understanding of these concepts with strategic lesson plans on these topics.
Lesson Plans for Early Elementary Students
· Lemonade Stand Game - This online game allows upper elementary students to plan and run a virtual lemonade stand for 30 days with the goal of making money.
· Money Management Foundation - This lesson plan set for grades 3 through 6 covers allowances and spending plans, money responsibility, saving and investing and comparison shopping.
· Econ Explorers Curriculum - This free curriculum resource from the Federal Reserve Bank of Chicago explores economic concepts on a kid-friendly level.
· How Credit Works - A key concept in real estate is the mortgage, and in order to understand mortgages students must understand credit. This lesson will have students make a "loan application" with a family member.
· Think Before You Buy - In real estate and investing, you must think before you buy. This lesson plan for grades 5 and 6 will focus on teaching students to think before spending their money.
· Play CA Stock Market Game - Investing requires an understanding of the risks in the markets. The CA Stock Market Game gives students virtual money to invest in stock market in a computer-based environment. The money then grows or shrinks based on the student's investment decisions and the real-world markets, helping students understand investment.
· Using Credit - Uses the book Not for a Billion Gazillion Dollars to introduce the concept of debt and credit. Designed for grade 5.
Real Estate and Financial Literacy Concepts in Middle School (Grades 6-8)
In middle school, typically grades 6 through 8 or 9, students have a bit more reasoning capabilities. These students are on the cusp of getting their first jobs and having their first real money to spend, so this is a critical time to teach about money, investing and real estate concepts.
Key Concepts for Middle School Students
According to the financial literacy standards, middle school students should be learning:
· How to create and use a budget
· How compound and simple interest work
· How retirement accounts help people plan for the future
· Why saving is critical for success in life
· Harder work leads to a greater reward
· Our decisions have a positive or negative effect on our credit history
· There is a difference between positive and negative debt
· The relationship between insurance premiums and insurance coverage
· Lack of insurance carries specific risk
· How investments can grow with compound interest
Lesson Plans for Middle School Students
The real state and finance concepts studied in middle school set the stage for in-depth study in high school. Here are some lesson plans from authoritative sites that can help you prepare your middle school students for what they will be learning in coming years.
· Financial Basics Lesson Plan Set - This comprehensive list of 14 lesson plans covers everything from making money and budgeting to buying a home and using credit wisely. For grades 7 through 8.
· Money Math: Lessons for Life - This set of four lesson plans from TreasuryDirect focuses on important economic and investment concepts.
· Investments: The Gift that Keeps on Giving - This lesson plan will help middle school students see the types of investments available to them as young people.
· Mortgage Calculation Lesson Plan - This lesson plan, available for grades 7 and up, focuses on teaching students how to calculate the cost of a mortgage using a variety of factors.
· Real Estate Tycoon - This math and economics project for grades 6 through 8 asks students to design, "build" and "sell" a house, following the investment profits of the stock market to determine their profitability.
Careers in Real Estate - Students will research the career potential for various real estate related positions. Designed for grade 8.
· Mortgages - This BrainPOP movie and related lessons will help middle school students understand what mortgages are and how they work. Teachers can also create a quiz from the video content.
· Life Is About Choices and Choices Have Consequences - This lesson plan focuses on a number of financial choices, including mortgage, home buying and foreclosure, that a student may face in his or her life, and the long-term consequences of those choices.
· Mortgage Loan Calculation - Introduce the concept of a mortgage with this loan calculator and math worksheet.
· Calculate Down Payments as a Fraction - Use the down payment and cost of a home to study fractions in a real-life scenario. This lesson is for grades 6-8.
· Money Math - A middle school math curriculum focusing on financial literacy topics.
· Home Buying: Terms of a Mortgage - A middles school math unit exploring the terms of a mortgage.
Real Estate and Financial Literacy Concepts in High School (Grades 9-12)
High school is the time when you need to dig deeply into financial literacy and real estate concepts. These young adults can and should understand the concepts of buying and selling real estate, leveraging investments and using interest to their advantage. In the high school years, students can delve a little deeper into the idea of investing in real estate, planning for a home purchase, shopping for a mortgage, and other real-estate related topics that they will face in just a few short years as adults.
Key Concepts for High School Students
According to the national standards, high school students should understand important adult concepts of home buying, credit and lending. Some of these concepts include:
· The makeup and protection of your credit profile and history
· How mortgages work and what factors allow you to get a mortgage
· How to plan for a home purchase, including budgeting
· How to leverage investments to grow your income
· How to analyze housing options, including buying versus renting
· How to analyze different credit and lending options
· The benefits and drawbacks of interest on a credit account
· How income and employment are related
The concepts taught to high school students are quite similar to the concepts taught to adults, but the framework is different. With high school students, you are talking about the near future, whereas with adults you are talking about their current state.
Lesson Plans for High School Students
As you can see, these lesson plans focus on real-world experiences that students will need to be prepared for as adults. There is a stronger focus on home buying and investing in the 9 through 12 grade years as well.
· Financial Planning Unit Plan - This high school lesson plan unit has 22 lessons on money managing, home buying, investing and more.
· Can I Afford This House - This high school lesson plan helps students learn to evaluate whether or not they can afford a house that is actually for sale in their actual location using an Internet-based search and math concepts for budgeting.
· Buying a Home - A high school lesson plan that walks students through the process of buying a home.
· The Math of House Buying - This advanced math lesson plan looks at the math behind buying homes and getting mortgages.
· The Business of Interest - This lesson teaches students what interest is and how banks use it to make money.
· Credit Reports and Credit Scores - This lesson focuses on teaching high school students about their credit report and credit score and how it affects their ability to get credit.
· Pop Goes the Housing Bubble - The "Housing Bubble" was an interesting real estate concept in recent years, and this lesson plan looks at how it affects the real estate markets for today's high school students. While not math specific, this lesson plan is important to understanding real estate investment.
· A Beginner's Introduction to Real Estate Investing - For students with an interest in real estate investing, this series of video lessons could be helpful.
· Steps to Purchase a Home - This lesson plan puts students in groups and takes them through the steps of purchasing a home, including planning for a budget and the needs of a family.
· Renting Vs. Owning a Home - This lesson for 9-12 grade looks at whether renting or buying a home makes the most sense for people in various stages of life.
· Credit: Buy Now & Pay More Later - Introduces students in grades 9-12 to the cost of credit and what using a credit card means for their financial future.
· Buying vs. Renting - Another lesson teaching students to make the best choice between buying and renting a home.
· Mortgages and Interest - A lesson plan on mortgages, interest and the concept of compound interest for students in grades 9 through 12.
Additional Information and Resources for Teachers
Sometimes, teachers need to improve their own understanding of specific concepts before teaching them to students. This is particularly true for finance related concepts, and for math teachers who are given the task of teaching personal finance or economics courses, but may not have training in these subjects. If you are finding your own ideas about mortgages and home buying or real estate investment are lacking, here are some resources for more information.
· Types of Mortgages Explained
· The Different Types of Interest Explained
· Renting vs. Buying Calculator
· Advantages and Disadvantages of Buying a Home
· How to Start Investing in Rental Property
In addition, here are some resources where you may be able to find additional information on investment and real estate topics, as well as lesson plans that do not fit within the specific standards discussed above:
· Why Teaching Financial Literacy Matters
· 40-Plus Resources for National Financial Capability Month
· Money As You Grow
· Online Economic Lessons
· The Mint.org
· Finance in the Classroom
· 5 Lessons Monopoly Teaches us About Finance and Investing