When teaching students about their future careers, it is important to help them understand several key financial concepts, including a salary compared to a wage, and what that actually means for their pay-stub. Use candy as a concrete way to help younger students understand how the abstract concept of deductions, taxes, and take-home pay.
Teachers looking to establish a foundational knowledge base of financial terms can begin by having students complete the free online lesson, Income & Careers (Lesson 2, Vault on EVERFI.net). Then, use candy to illustrate these concepts for students. Before distributing candy, I recommend setting expectations and letting students know that they will start with a certain amount but that you will be taking some back to help them understand how a paycheck works.
- Give students 1-2 large handfuls of m&ms each, and ask them to count their m&ms (Skittles, Reese’s Pieces, etc. will also work as well as taste delicious). Give everyone the same starting number of candy pieces (recommended to aim for 72 or higher); students can even munch to get to that starting point. This will be everyone’s annual salary. Define the term for students as “payment for work represented as a yearly sum and paid in portions every week, two weeks, or month.”
- Then it’s time to practice our mental math! Ask students “What is our overall total divided by twelve?” Represent this on the board for students. Direct them to divide their annual salary into 12 equal piles. This represents students’ paychecks if they were paid once a month. What is our new total divided by two? This would be students’ paychecks if they were paid twice a month. You can illustrate bi-weekly or weekly payments, but have students maintain their 12 piles of candy.
- Introduce the concept of taxes to students and define the term as, “fees paid on income, purchases, and property to support government programs.” Ask students where they think this money comes from. Yep, that’s right – straight from their monthly income! Depending on how nuanced you’d like to make the conversation, you can introduce the idea of withholding money monthly from your paycheck, or paying taxes in one lump sum at the end of the year.
- For federal taxes, tell students that 1 candy gets removed from each month’s pile. You may want to appoint a classroom tax collector with a baggie to collect these. Share that this money pays for Medicaid/Medicare, Social Security, national security and defense.
- For state and local taxes, tell students that 1 candy gets removed from each month’s pile. Define that these pay for things like state – water and sewer improvements, law enforcement and fire service, education and health services, road and highway construction; local – garbage collection, sewer maintenance, and more.
- Introduce the concept of insurance, and define the term for students as, “money you pay now to protect you from having to pay more money later.” Ask students to share the kinds of insurance they know. They may have heard of car, home or health insurance. Let them know that the cost and type of insurance may vary depending on where they live
- For now, we’re all going to use the same insurance payment – 1 candy per month. You may want a different student appointed as the classroom insurance collector.
- Ask students what other monthly fees they might have as adults. If they struggle to come up with ideas, lead them to think about what they need in order to survive.
- Personal transportation and home utilities will cost students another candy each month
- Remove 1 candy from the overall pile for shelter
- Remove 1 candy from the overall pile for food expenses
- Remove candies for other expenses students suggest – some of these could be removed from one month instead of each like Christmas gifts or summer vacations.
- Be sure to let students know that at this point, they will be able to keep the remaining portions of their “paychecks” for eating at a time you designate. This is a great time to discuss the benefits taxes pay for and how insurance can help. I recommend keeping the tone light, as this is designed to help them understand that the salary they make won’t be the same they take home.
Bonus Extension Ideas
- If students have several candy pieces left in each of their piles, try explaining the concept of budgeting their remaining candies and ask them to budget their recurring expenses (rent, utilities) and their non-recurring expenses (entertainment, travel). Ask them to develop a way to budget their remaining candies, assigning prices to items they suggest.
- Review the number of candies left at the end. What portion of your overall salary did it make up? Explain to students that if this percentage is lower, the salary is enough for your expenses, but if these expenses make up a large portion of your monthly expenses, you might be strapped for cash. Explain the concept of saving some candies for later on – retirement, general savings, “fun money” savings, saving for a family or for future children’s college expenses
You and your students have just explored a paycheck together, along with all the common deductions your students should be aware of. This will provide them with more perspective on their own family’s budget and give them an idea of what to expect when they get a job of their own.
Depending on your students’ level of understanding and facility navigating the web, you may want to have middle school age students them complete a blueprint for their future with the support of “Build Your Blueprint” (Lesson 7, FutureSmart on EVERFI.net).
If you’d like to use the free online lessons from Vault or FutureSmart, you only need to register for an account at www.everfi.com/newteacher. Additional offline resources can be found to support student learning related to both programs.