“When are we ever going to need to know any of this in the real world?” If I had a dollar for every time I heard that as a math teacher, I’d be on an island right now sipping on something sweet. Nevertheless, I had to think long and hard about it because the truth is some concepts can be specific to different fields. Lucky for me, financial literacy is one that I’ve always found joy in teaching teens. I know that if my passion really pours into my students, they will learn important skills to succeed in life.
In this lesson, I engage learners by practicing concepts such as percentages, decimals, and regrouping through the lens of car shopping. Because, what preteen or teen is not thinking about buying their very own car, right?
What’s Money Without Financial Literacy?
Want to be an athlete, singer, rapper, artist, professional dancer, author, motivational speaker, etc.? Well, guess what! In order to make sure you are getting what you deserve, you must have some business sense. And if you don’t want to blow through your money in a year but rather multiply it, you have to know how to spend wisely.
For this lesson, I looked up actual prices of cars at a local dealership. I had students choose what kind of car they would prefer. Some chose the fancier ones while others were a bit more conservative. I had students calculate the tax as 6% but if your child struggles with percentages you can provide them with the amount. Conversely, if your child is comfortable with percentages and wants a challenge, you can turn it into a decimal such as 6.75%. To make it more relevant to your child, you can use your local tax rate. That would also make the most sense for older learners who are comfortable with the mathematical equations but wanting to see the financial outcomes of their decisions.
The Cost of Financing
After that, students will figure out how much they would end up paying for the car overall if they decided to finance it. They would simply multiply the monthly payment amount by the number of payments required. Then, add the down payment to the total amount. Again, you can add whatever supports are needed for your child. If they struggle with problem solving or word problems in general, you can set up the number sentence for them and have them fill it in and solve ($____ x ___months + $______=_____). For more advanced learners, you can ask them to figure out how much the car will be overall and see what they come up with. Use the second version without the hints and give them verbal clues as needed.
Save First, Spend Less
Next, your child will compare the amount of money that can be saved by subtracting the total cost after tax from the total cost of financing the car. It will prompt a discussion on considering less expensive options and saving up beforehand instead of financing a more expensive car. You can also discuss credit scores and let them know that these scenarios factor in good credit. The poorer the credit score, the more interest is paid. As teens, they usually do not have credit, which also results in a higher interest rate if approved. They can put together a plan of how much money they would need to save each month to be able to afford the car they want in the future. For older learners, be sure to have them look up additional fees on your state’s motor vehicle website such as title, registration, licensing fees, etc.
Additional Practice with Math Concepts
For extra practice with multiplying decimals, you can have your child figure out how much it would cost to fill up each car with gas. They will simply multiply the current gas price by the car’s fuel tank capacity. It may be fun for them to also search current gas prices in different states and compare how much it would cost to get around in different places. You can incorporate this into a unit study and have your child pick a number of different states to explore. They can create a plan for visiting by looking up hotels, car rentals, attractions, restaurants, etc. Then, they can create a budget for how much each trip will cost.
This quick lesson teaches learners that saving up for a car or buying a used one is a better financial decision than taking out a car loan. They work with percentages and decimals to see how much money they will end up saving if they purchase it with cash instead of credit. They also get to estimate the cost of gas to give them a realistic idea of what owning a car means.