"Applied Math" - I don't see the value of doing this, what am I missing?

[ReneTL]

I just talked to a friend of mine that has a 7th grade student in PS. She's excited about this project they're doing in math and thought we might want to do it also. They're supposed to buy a car that fits their budget. The project includes budgeting, deciding on financing, opportunity costs of financing vs. paying outright, ROI on your money if you finance, etc. I have a degree in finance and I wouldn't dream of introducing present/future value of money, amortizations, ROI, etc. to a 7th grader. (Even if they're just showing them how to use a calculator or an Excel spreadsheet.) I'm wondering if I'm missing something here.

 

Thanks,

Rene

Edited December 2, 2011 by ReneTL
typo!

[Mrs Twain]

Wow. I think that is a great project, even if only for the life lesson of learning how it is better to buy a car with cash than to finance it. I would do it with my kids. It seems to me that a 7th grader could understand calculating how much you would actually pay by financing versus just paying up front in cash, and future value of money to some extent.

[Mommy_of_4]

I remember doing that when I was in middle school. They basically wanted us to know what kind of money we would need to make for the kind of life we wanted. We had to budget for car, house, food, utilities and savings. We also looked at the difference in price if we paid cash or financed something. Nothing really in depth at all. It all just basically touched the surface of things when I had to do it.

[MissKNG]

I think it would be a great project, maybe not for a 7th grader but for 11th/12th graders who are really old enough to drive. I have a Finance degree as well and lots of kids really have no clue on how money works.

[Jay3fer]

I think it's just part of the push to prove that math is everywhere. But, to me, if the sole point is, "math is everywhere so pull out your calculator so you can do some!" then you're missing the point, imo. I would avoid calculators, spreadsheets etc until the high school level, if possible. Even to buy a car. :-)

 

(that said, introducing the concept of amortization may be a nice natural intro to real math like Calculus)

[abbeyej]

Why not in 7th grade? Some 7th graders are 14 by the end of that year. They're within a year of getting their learner's permits in most states. Having some idea of the value of a car (and how they would use the math that they've been studying through elementary and middle school to discover that) seems very wise. I'm not sure why you would object -- the math itself isn't above them, it helps them see how that math impacts their lives, it's something practical that many of them can use in the near future (even if their families won't be buying new or used cars for teen usage, it can help them understand the real cost of the family car as well)... Seems fairly reasonable to me.

 

In a way I wish I *had* had more practical math instead of so much theoretical math as a student. I don't think everything has to be applied and practical by any means, but occasionally working on something like this seems very useful. (And for heaven's sake, wouldn't it have been helpful to many people over the last ten years if they had truly understood how the mortgages they were signing themselves to *really* worked?!? All of those surprised people saying, "What do you mean, I now owe more than my property is worth?!?")

[nmoira]

I have a degree in finance and I wouldn't dream of introducing present/future value of money, amortizations, ROI, etc. to a 7th grader.

I dunno. My 7yo and I had a long talk (her instigation) about mortgages, collateral and interest when reading The First Four Years. She didn't think much of Almanzo after that conversation. :tongue_smilie:

 

I think it's a worthwhile project for a middle school aged child, even if they're using "magic" formulae in spreadsheets. The kids may or may not grasp the math behind amortization, but it certainly doesn't hurt to learn that borrowing money costs money and that the cost varies with both interest rate and the length of the loan.

[boscopup]

I don't think it's ever too early to start teaching how to properly manage money. Debt is such a huge problem in this country, and a good portion of it is people not understanding how much they are paying when they finance things. Buying a car and financing for 8 years? Not a good idea! If you have to finance 8 years to make the payment, you need to find a cheaper car. You can't afford this one.

 

I talk to my 7 year old about comparing costs of different size packaging in the grocery store, and I'll ask him to calculate which is cheaper - the dozen eggs or the 18-pack of eggs... or the 12-taco package or 18-taco package. I remind him that you always have to compare, because sometimes the smaller package is cheaper, and sometimes the larger package is cheaper. My 7 year old won't be buying eggs or tacos himself for a long time yet, but learning now and making this a normal thing is a good idea, because when he is old enough, he'll already think it's second nature to compare prices and not be duped!

 

I also talk to him about why we aren't buying something right away, but are instead saving for it so we don't have to take out a loan, be it a car, piano, TV, or anything else. We haven't touched as much on interest yet, but once he knows the math involved, we'll absolutely go into detail and show how much money he saves by paying cash for the car instead of taking out a loan. He'll see the benefit of waiting on buying a car, or buying a cheaper used car and saving up for a newer used car down the road, etc.

[Walking-Iris]

I think learning about the real world applications of math are very important too. One project may be good for some students but a flop for others. You may not want to learn about financing a car in 7th grade, but maybe there are other money or real world math projects that would be better. Savings account, stocks, comparing charities, budgeting for a vacation, gift, getting the most meals out of 50 or 100$ etc. There's a ton of ways to show young adults the value of money. They may not grow up to be bankers or stock brokers or accountants, but they will grow up and have to pay some bills :lol:

[Roadrunner]

I have a degree in finance and I wouldn't dream of introducing present/future value of money, amortizations, ROI, etc. to a 7th grader. (Even if they're just showing them how to use a calculator or an Excel spreadsheet.) I'm wondering if I'm missing something here.

 

Thanks,

Rene

 

:iagree:another one with a background in Finance.

[nmoira]

:iagree:another one with a background in Finance.

:001_unsure: The finance courses I took in college were far from rocket science, though they were taught like they were (and many of the students believed they were). The underlying concepts of amortized mortgages and loans are not difficult to understand with a bit of guidance.

[Mom22ns]

My 7th grader loves looking at cars and dreaming about buying one. We've had theoretical discussions on this, but I think she would have a great time doing the project. There is nothing difficult about the math and I think it would do a great job of answering the "Why study math?" question.

[KathyBC]

We did a bunch of that in high school: 10th grade, I think. The majority of us would have been 16 at the end of that school year.

 

ETA: I do think you have a point about age. How many 7th graders will grasp present/future value of money? Exposure to applied math is a fabulous idea, though. They could probably do this project again, or something similar, when they're older and cover it in more depth.

Edited December 2, 2011 by KathyBC

[justLisa]

I don't think it's ever too early to start teaching how to properly manage money. Debt is such a huge problem in this country, and a good portion of it is people not understanding how much they are paying when they finance things. Buying a car and financing for 8 years? Not a good idea! If you have to finance 8 years to make the payment, you need to find a cheaper car. You can't afford this one.

 

I talk to my 7 year old about comparing costs of different size packaging in the grocery store, and I'll ask him to calculate which is cheaper - the dozen eggs or the 18-pack of eggs... or the 12-taco package or 18-taco package. I remind him that you always have to compare, because sometimes the smaller package is cheaper, and sometimes the larger package is cheaper. My 7 year old won't be buying eggs or tacos himself for a long time yet, but learning now and making this a normal thing is a good idea, because when he is old enough, he'll already think it's second nature to compare prices and not be duped!

 

I also talk to him about why we aren't buying something right away, but are instead saving for it so we don't have to take out a loan, be it a car, piano, TV, or anything else. We haven't touched as much on interest yet, but once he knows the math involved, we'll absolutely go into detail and show how much money he saves by paying cash for the car instead of taking out a loan. He'll see the benefit of waiting on buying a car, or buying a cheaper used car and saving up for a newer used car down the road, etc.

 

This. I heard DS explaining to DD why you do NOT want to be tricked in to chosing a bigger pile of coins until you count them all. We compare grocery prices to Costco prices often. We do not us a calculator during math of course, but to paint the bigger picture I don't see anything wrong with it. He understands the concept of something at .99 per pound times 5 pounds, or buy a 10 pound bag of something for $7.99 for example. He could do that one in his head but he also knows how to figure out more difficult things with a calculator.

 

We have gone into some depth about credit cards and interest. How it is so easy to swipe the card, but uonce the bill comes if you cannot pay it off, you are charged x amount of interest. DS and DH sat down once and "charged" a $100 lego set, paying only the minimum CC amount per month and I dn't remember the end story, but how long it would take to pay off, or in other words how much you ended up paying for that $100 set you couldn't afford in cash at the time.

 

Personally I want to raise kids who have a grasp of the world and how people abuse money. We spend far more than we produce in this country.

[elegantlion]

We're going to be doing something like this year, on a smaller scale. I might look into the loan issue. My ds is 14, 8th grade. He'll be eligible for permit beginning next fall (excuse me while I :svengo:). We've been teaching him about budgeting since he could walk almost, so I don't think it's out of line. I hope it's not the only math they're receiving, but I think it's worthy project.

 

I remember learning how to write a check in 3rd grade. My nephew, who is very smart, just got his first apartment in college. Had to call his mother to figure out how to write a check for his rent. :001_huh:

 

So yeah, some practical applications should happen in school.

 

Our state recently started requiring a semester of personal finance for all graduates. Personal finance, not economics.

 

Have you seen the length of car loans lately? Last time we bought a car it was like pulling teeth to get them to admit to the price of the car. All they wanted to talk about was the price of the payment and for how long you'd be paying. Seven years? for a car? I can't imagine.

 

Outside of the writing check training, I had little to no training in budgeting and how the world of finance works. My parents thought we were learning it in school, the school wasn't teaching it. I'll be honest it bites to learn it the hard way. Yup, we'll be doing lots of exercises in our schooling.

[missmoe]

Here that same project is taught in ninth-grade. The amount the students get to "spend" on their car is based on their grades. The high your grade, the more money you can spend. I personally feel this is a great project.

 

Perhaps in senior year, we'll have a lesson on renting an apt, buying insurance, and paying for utilities.

[ErinE]

I have a degree in finance as well and I think this is very valuable. Like other posters mentioned, this kids aren't too far from driving and perhaps purchasing their own cars. The basics of interest rates and rates of return are really just multiplying dollars times an interest rate. Building a spreadsheet showing the payback schedule is a matter of multiplying and subtracting; not hard at all. It's not like they need to understand CAPM or Black-Scholes.

 

Personally, I think all children should do personal finance math in middle school and should take a personal finance course their first year in high school. Too often, a college prep program is pursued for a certain field which won't pay very much. Not enough kids are thinking, "If I apply to this really expensive school for a degree that has a low average salary, how am I going to pay back my student loans?" For those kids not interested in college, the same dicussion should be had for vocational training. All children should research three to five different careers, talk to people with those jobs, and really understand the education and expense required. There is far too much ignorance about the realities of life when chilldren graduate high school.

 

My parents had the "cost of life" discussion with me from the start of high school and it was invaluable. For college, I knew how much they would contribute and how long they would pay. I worked throughout high school so I got exposure to salary expectations and work life. As it turns out, I paid for college myself, but I worked hard throughout high school to earn scholarships because my parents were very honest about the cost of getting a college degree.

[ErinE]

:001_unsure: The finance courses I took in college were far from rocket science, though they were taught like they were (and many of the students believed they were). The underlying concepts of amortized mortgages and loans are not difficult to understand with a bit of guidance.

 

I agree. Day-to-day personal finance isn't hard. The more exotic financial stuff isn't necessary for most people. I took a course in options and derivatives, which was lots of fun, but math intensive. One day, a student asked what the squiggly line was on the board. The professor said, "It's an integral." She then asked, "What's an integral?" He turned really red and said, "You were expected to learn about integrals in the math prerequisite you took for this course. Perhaps you need to go back to that class."

 

The entire class got really quiet....

[Bootsie]

My concern would be: does the teacher know how to do this properly? As a finance professor, I have seen a number of instances where this information is taught incorrectly in middle school and high school.

[nmoira]

I took a course in options and derivatives, which was lots of fun, but math intensive. One day, a student asked what the squiggly line was on the board. The professor said, "It's an integral." She then asked, "What's an integral?" He turned really red and said, "You were expected to learn about integrals in the math prerequisite you took for this course. Perhaps you need to go back to that class."

 

The entire class got really quiet....

:lol:

[ReneTL]

Thanks for the feedback - some very good points have been made. We have personal finance discussions around here almost every day and my girls were very involved in our recent car purchase. I know that may be different from many homes, including mine growing up. I agree that budgeting and practical life math should be covered before leaving high school. Ideally I think it should be done by parents, but of course that's the "blind leading the naked" in many cases, so once again schools are left holding the bag. I guess I just want to make sure basic arithmetic is covered and covered well.

 

Peace,

Rene

[abbeyej]

... I guess I just want to make sure basic arithmetic is covered and covered well.

And there I'll agree with you completely. :)

[boscopup]

And there I'll agree with you completely. :)

 

:iagree: But by 7th grade, it should have been covered completely. ;)

[kiana]

I like this project a lot.

 

We actually do some very similar projects in our "Math for Liberal Arts" class at the university, and honestly what we do doesn't require any more math than pre-algebra. If you're using an online calculator, you don't even need that.

 

What you DO need to see is just how dang fast 15% interest stacks up.