The classroom economy program is an effective and enjoyable way to teach your students fundamental financial literacy components without altering your curriculum.

Implementing the program is an easy three-step process:

1. Before the school year starts, you spend a few hours gathering materials and planning how to customize the program for your school and your own classroom.
2. During the first month of school, you spend some classroom time introducing the program and training the students to complete their tasks.
3. Throughout the year, you monitor the students' progress and provide support and guidance when necessary.

As they perform their tasks, the students will be helping you manage the classroom and, in the process, learning valuable skills—such as responsibility, the value of saving, and delayed gratification—that they will carry with them throughout life.

The beauty of the program is that you don't need to teach these lessons; rather, your students will experience them and learn for themselves.

Core objectives for students in Grades 9–10

Through My Classroom Economy, students are able to:

• Take part in a simulation of real-world economic activity.
• Learn the value of earning a paycheck, as they bank the salaries from their jobs.
• Learn how to budget their spending, balance a checking account, and make scheduled payments.
• Understand the importance of sound recordkeeping.
• Discover the importance of saving money for future goals.
• Describe the purpose of paying taxes.
• Explain the benefits of holding insurance.
• Find out that every decision has an opportunity cost.

At these grade levels, students begin to learn more advanced financial concepts. Students now have the options of purchasing certificates of deposit (CDs) and insurance policies. With increased sophistication, more emphasis is put on financial planning and budgeting.

Planning and preparation

Begin planning your classroom economy before the school year starts.

• Choose the jobs and advanced topics you will make available to your students, and customize the syllabus to your classroom.
• Prepare the materials you will need for the classroom economy activities. You can download and print the materials or order a free kit.
• Start gathering rewards for students to purchase at auctions.

Allow 2 to 3 hours to choose jobs, bonuses, and fines, and an additional 2 to 3 hours to prepare all of the materials.

Introductory activities

On or near the first day of school, briefly introduce your students to the classroom economy program and provide them with your customized syllabus. Instruct the students to read the syllabus as homework, and follow up with a question-and-answer session within the next few days.

Collect job applications from students interested in holding a classroom job (in addition to their job of being an exemplary student). Approximately 1 week later, assign jobs to students and provide short training sessions.

A few weeks later, review the advanced topics section of the syllabus and remind the students to be prepared for insurance and investments.

Allot a portion of 3 to 4 class periods to complete these activities. Keep in mind, this time does not all need to be taken from your curriculum schedule, because it can replace some of the time you would otherwise spend explaining your class rules and establishing procedures.

Ongoing activities

Every month students earn paychecks and bonus money. They also pay fines, rent for their desks, and electricity bills, and they purchase prizes at auctions—all with classroom economy currency. They also have the opportunity to invest expendable income and purchase insurance policies.

Although students may need more time and guidance at the beginning of the school year, they typically will become more efficient at banking as the year progresses. To avoid interfering with the curriculum, we encourage you to have students perform classroom economy tasks during transition periods, such as at the beginning and end of the class period. You might also allow students to work on classroom economy activities if they finish curriculum materials early.

Tax Day

Once a year, around April 15—the tax filing deadline for their parents—the students file an income tax return based on the taxes they've paid throughout the year. Students may need to pay additional taxes at this time, or they may receive a refund check. Encourage students to earn tax credits throughout the year through charitable giving.

Year-end wrap-up

Bring the classroom economy program to an end by encouraging a group discussion and giving students a chance to reflect. Distribute certificates to highlight student successes, and provide opportunities for classroom celebrations.

Allow approximately 1 class period for the year-end wrap-up.

To start the classroom economy program, you'll need to select:

• A set of student jobs.
• A level of monthly rent.
• A list of opportunities for bonus money.
• A list of fines for violating class rules.
• The advanced topics you wish to include, such as investing and insurance.

Your selections for bonuses and fines can be drawn from the lists we've provided or based on your own classroom rules. As an option, you may choose to involve your students in creating the bonus and fine lists.

Once the lists are ready, use them to create a customized syllabus to distribute during the first few days of the program.

You'll also want to familiarize yourself with how taxes are handled in the classroom economy.

Giving students the opportunity to invest their money is an advanced topic in the classroom economy. You can choose whether or not to include this option in your classroom. But it does deliver an important concept: the time value of money.

At this level, students can purchase certificates of deposit (CDs) that provide flat rates of interest depending on the term, meaning how long the student must leave the money invested.

Students have the option of purchasing homeowners' insurance to cover the desk they rent or own. Students who buy insurance are protected from the "property damage" that could befall the class each week; uninsured students will need to pay for repairs.

The first step in preparing your materials is to customize the syllabus to outline your own version of the program.

The next step is to gather supplies and compile materials for students. You can download the materials or order printed copies for free. Gathering and preparing materials will take approximately 2 to 3 hours.

Supplies

In addition to the materials we provide, you may wish to purchase or gather the following items.

Student folders

Put the following items into each student folder:

Bank box

Create a bank box where students can deposit their bonus/fine slips after they update their bank logs. We suggest using a shoe box with a slot cut in the top; this would be easy to use and would store the slips safely.

Visual displays

In addition to the syllabus you give to each student, you may want to create additional visual displays for easy reference throughout the year. (If you have Visual Display Artist as one of your classroom jobs, the student or students holding this job can create these displays.)

Some suggestions include:

Other materials

For the activities throughout the year, you will need the following materials:

Auction prizes

Think ahead about items your students might like to purchase at the classroom auctions and involve the class Auctioneers early in the year. Encourage them to gather both tangible and intangible rewards.

Examples:

End-of-year rewards

In the year-end wrap-up, you could allow your students to pool their money and purchase a class reward, such as:

• Holding a class party.
• Watching a movie in class
• Wearing a hat in class.
• Holding a class outdoors.

Teachers may want to include additional modules and conduct more detailed discussions surrounding some classroom economy topics. These are not recommended for teachers implementing the program for the first time. Be certain your students understand the underlying curriculum components before adding these modules.

Real estate investments

Taking property ownership a step further, allow students to purchase the deeds to other students' desks. In this situation, a student whose desk is purchased now pays the rent to a landlord instead of the bank. We recommend you insist the rent remain at the bank's original price so that landlords can't force students out of their desks by driving up the rent too high!

Inflation

After returning from a break in the school year (e.g., winter or spring break), raise the prices of students' desks based on inflation. You can also raise their salaries, but we suggest you raise the price of the desks more than any salary increase to stress the importance of saving and outpacing inflation. Depending on your students' math skills, you can make inflation a flat amount (e.g., $50) or a percentage of the current economy (e.g., 3%).

Disaster relief

Require students to pay a fixed amount (e.g., $100) for disaster relief. This can be especially effective if you are studying disasters in science or social studies. For example, if you are studying hurricanes in science class, you can pretend there is a hurricane in your classroom and everyone must pay to fix the damage.

Emergency funds

Help students prepare for their future by establishing an emergency fund. Assist the students in determining their monthly expenses, and then encourage them to build a nest egg that is greater than or equal to that amount. The overall purpose of this module is to teach students the importance of saving in a liquid investment such as a bank savings account, so they are prepared for unexpected situations that can occur in life. By building an emergency fund, students will be prepared to pay their bills, even if they do not receive bonus money or if they lose their job. Keep in mind, anytime students use their emergency fund, they will have to devise a plan to replenish it.

Advanced insurance

If you are already using the Grades 9–10 insurance program and would like to add a level of sophistication, try the Grades 11–12 program.

Investing

In place of (or in addition to) the certificates of deposit (CDs) available in the Grades 9–10 program, you may consider allowing your students to invest in a simulated portfolio of stocks and bonds. An interactive investment simulator used in the Grades 11–12 investing program gives students an opportunity to learn about asset classes, volatility, and the value of a long-term investment plan.

On the first day of the program, you briefly explain the rules and expectations of the classroom economy as you would with any classroom management system. You then give the students a syllabus they can take home and read as homework.

• Familiarize yourself with the classroom economy syllabus and customize it as needed for your classroom.
• Create student folders to be handed out at the start of class. (Items to include are listed in Preparing Materials.)
• Create any customized visual displays of your jobs, bonuses, and fines lists if you desire (posters, bulletin boards, etc.). Or plan how students can create these.

Welcome the students and inform them that they'll be earning and spending money throughout the year. Let them know that they will each be paid, in classroom dollars, for holding the job of "exemplary student" and that they can apply for additional jobs or a business license to increase their earning potential.

Hand out the folders you created and ask the students to take out the syllabus. Assign them a due date (potentially within the next few days) for reading Part One of the syllabus.

On the first day of the program, you explained the rules and expectations of the classroom economy and asked the students to read the classroom economy syllabus as a homework assignment. On day two, you go into a little more detail and answer any questions the students might have.

Review the syllabus and be ready to answer student questions.

Ask students to take the syllabus from their folders. Answer student questions and ensure they understand the following key concepts:

• Money is earned in up to four ways:
  • As a salary for holding the job of "exemplary student" (applies to all students).
  • In bonus rewards for good achievements.
  • As a salary for holding an additional classroom job (optional).
  • By creating your own business (optional).
• At this point, money can be spent in four ways (two others, insurance and certificates of deposit, will be discussed later):
  • Paying the monthly rent for the student's desk. The rent is $800 per month, but desks can be purchased for a one-time payment of $2,400.
  • Paying an electricity bill of $150 a month, which can be reduced through the energy-saving efforts of the class.
  • Buying items or privileges at auctions, which are held approximately monthly.
  • Paying fines for not following classroom rules.
• The rental agreement they'll find in their student folders symbolizes their entry into the program. Collect the signed forms, sign them yourself when you have time, and return them to the students to hold in their folders as a binding contract.
• Students interested in applying for a job in addition to the exemplary student role may do so.
• Students interested in starting their own businesses may apply for a business license.

A critical component of the classroom economy is the combination of bonuses students can earn and fines they can incur for their actions. To maximize the effect of the system, it is best to reward or fine a student at the time of the action. To do so, simply hand a student a bonus/fine slip

Depending on the nature of the action, you may want to fill out the bonus/fine slip yourself and hand it to the student discreetly. On the other hand, when a student does a good job, you may want to publicly praise him or her. For example, you might say something like, "Great job, Tina. I love how you helped Dave with that problem. Thanks for your help! Please fill out this slip for a $100 bonus for quietly helping another student."

The complete process of handing a student a bonus/fine slip is outlined below:

Once you collect all the students' job applications, business license requests, and any needed recommendations, take a few days to plan the job assignments. It's best to make the assignments in class about a week after the students apply.

Because the Auditors hold so much responsibility, it is important to choose carefully among the applicants for those positions. Use the recommendations to help guide your decisions.

Once the Auditors are chosen, you can move down the list of your other jobs, perhaps starting with those you consider most important in your classroom management.

Prepare a simple job offer letter for each student. (Our template has blanks for the job title and the student's name.)

Finally, plan an assignment that students can work on quietly at their seats. While the class works, you can train small groups of students on their job responsibilities.

Inform the students that those who have applied for specific classroom jobs will be receiving offer letters.

Deliver the job offer letters. Each student who receives one should sign the letter and place it in his or her folder.

Next, train the students for their jobs. Help the entire class to begin the assignment you prepared, then pull individual students aside for training according to their roles. More detailed training is spelled out below for Auditors and Bonus/Fine Administrators.

Note: After you review the business license requests, we recommend meeting with the students individually to briefly discuss your expectations about how the businesses will be conducted in your classroom. You can do this at any convenient time over the next few weeks.

Between the first Payday and the first Bill Day, we suggest you revisit the syllabus to discuss the advanced topics with your students.

• Assign Part Two of the syllabus as a reading assignment for students the night before.
• Prepare to discuss investing with your students.
• Show the insurance simulator (found on Your Economic System: Insurance) to the students.

Ask students to take out their copies of the syllabus.

Answer any questions and ensure that they understand the following key concepts about Bill Day (the first of the month):

• Students are required to pay two monthly bills:
  • Rent for $800.
  • Electricity for $150 (unless adjusted by the Electrician for energy conservation).
• Certificates of deposit (CDs) are available for purchase.
  • CDs pay interest, meaning that students who invest in them will get back more money than they put in.
  • CDs can be purchased only on Bill Day.
  • They can be bought only in increments of $100.
  • The longer the term of the CD, the higher the rate of return the student will receive.
  • The 8-month (full term) CD is only available on the first Bill Day.
• Insurance policies are available for purchase:
• Students can choose between monthly payments and a yearly policy, or skip buying insurance altogether.
• Policies are available only on Bill Day.
• The insurance simulator will be operated about four times a month to determine whether the class has suffered property damage, and if so, how much. When damage occurs, students who do not have insurance must deduct payment for repairs from their savings accounts. Students with insurance will not have to pay for repairs.

Remind the students to work hard to earn bonus money before the first Bill Day so they can take advantage of some of these advanced offerings.

Payday should take place around the 15th of each month. We recommend that, starting with the second Payday, you hold an auction after the students are paid so they can spend their hard-earned cash—and so they can instantly see the rewards of good budgeting. The auction serves as a powerful learning component. Students must be careful to budget adequately for the bills they will need to pay at the end of the month.

Note: On the first Payday, the students probably won't have worked long enough to earn their entire paychecks, but they should receive the full amount anyway because they will need to pay their bills soon.

Make sure the Auctioneers have gathered the items for sale and are prepared to put them up for bidding.

On the first Payday, you'll need to explain how the process works. The steps are below.

After an auction, some students will feel overwhelmed because they got caught up in the action and spent most or all of their money. This can be a tremendous learning opportunity.

You could use some of the following questions to guide a discussion:

• What made you keep bidding even when the price was getting so high?
• How do you feel now about the item you bought? Was it worth it?
• What concerns do you have about the amount of money you spent?
• How will you go about rebuilding your savings?
• Will you be able to make rent the next time it is due?
• Will you change the way you bid at the next auction?

• A rental agreement and a bill payment log should already be in each student's folder.
• Have unpaid bill notices on hand in case anyone cannot pay his or her bills.
• Have deeds available in case someone is ready to purchase a desk.
• For the first Bill Day, prepare to explain the process to the class.

On the first Bill Day, explain to the students that paying bills is one of their most important financial responsibilities. It's so important that, unless they pay their bills, they won't be allowed to participate in the next auction on Payday.

Emphasize the importance of planning and watching their spending so they'll always have the rent money ready when it's due. Show them how they can keep track of bills and plan ahead using their bill payment logs.

Remind the students that they can escape rent payments altogether if they can save $2,400 to buy the deed to their desk. Strongly encourage them to do this.

Allow the Electrician to report on electricity usage and provide suggestions about how to lower next month's bill.

Also, remind the students that they will need to pay taxes in April and should consider contributing some money toward this. You can also encourage them to earn tax deductions by making charitable gifts. Suggest that they review the tax document you placed in their folders at the beginning of the year and keep track of their contributions throughout the year.

On each subsequent Bill Day, ask if anyone can purchase his or her desk that month. If a student can do so, celebrate him or her and make a show of handing over the deed.

A student who owns the deed to his or her desk should write "Paid in full" on his or her bank log each subsequent month.

Follow-up discussion

Paying bills is a strong indicator that students are succeeding in the classroom economy program. If a student can't pay bills, it is important to get him or her back on track as soon as possible. The unpaid bill notice is a mechanism to keep you informed about students who fall behind so you can reach out to them. You can encourage these students to participate in more activities so they'll earn enough bonus money to catch up on bills and get in on the Auction Day fun.

Students are required to pay annual income taxes on or around April 15. On this day, students complete their tax returns and determine if they owe additional money, have paid their taxes in full, or have earned a refund.

Throughout the year, students had the option of withholding (paying) taxes from their monthly paychecks. They also had the opportunity to earn tax credits by donating items to the auction or performing community service. Each action garners a $100 tax reduction.

Introducing taxes

Explain to students that federal income taxes are collected by the U.S. government to help pay for national programs such as the court system, the military, interstate highways, and all the hundreds of other services that Americans use. Similarly, in the classroom economy, taxes are collected to pay for students' salaries.

Plan a time near the end of the year for students to reflect on what they have learned in the program and for you to tie everything together.

It is also a time to celebrate the students' successes and reward them for their hard work.

Certificates

We recommend you give each student a certificate for participating in the program. The certificate will reinforce their achievement and could be a talking point for them in a future college application or job interview.

Feel free to use our certificate template.

Class rewards

Allow students to pool their classroom money and purchase a class reward, such as:

• Holding a class party.
• Watching a movie in class.
• Wearing a hat in class.
• Holding a class outdoors.

Debriefing session

In addition to rewarding the students, the year-end wrap-up is a great opportunity for students to discuss what they have learned from their experiences. Conducting a debriefing session is a great way to accomplish that goal—and also helps reinforce what they have learned.

Here are some questions you can ask to guide the discussion:

• What did you learn from the classroom economy this year?
• Why do you think those lessons were important?
• What would you do differently if you could?
• What was your favorite part of the classroom economy?