By Tina Snell, Staff Writer
“People deal with money issues every day,” Mike Kaluza said. “When students leave school, it’s imperative to know how to manage money. I don’t think people realize just how important that knowledge really is.”
Kaluza, teaches business at the Little Falls Community High School. Among other classes, he also instructs students on personal finance. He feels it is one of the most important things a student needs to learn.
The nine-week course introduces students to basic money management skills. When they leave, hopefully they will be able to make informed decisions concerning their personal finances.
Kaluza said he was most surprised by the number of students who didn’t understand how they would pay back their credit cards. He said they had very little idea of where the money came from to start with, didn’t know it would cost more to pay back than what they borrowed in the first place and that the longer they took to pay off their balance, the more it would cost.
Kaluza said he stresses the importance of good credit and that one’s credit will determine the interest rates they receive on future loans.
In his third year of teaching personal finance to juniors and seniors, Kaluza said he doesn’t use a textbook.
“With all the changes in the banking laws and procedures, a textbook is soon obsolete,” he said. “I can find all the relevant articles I need online.”
The college credit course Kaluza teaches is now being financed through a $21,630 grant from the Minnesota Office of Higher Education. The money will help to support postsecondary education and activities which promote financial literacy and debt management in not only Little Falls, but also in Staples, Brainerd and Crosby-Ironton school districts.
“College courses offered at Little Falls cost the district money,” said Kaluza. “The grant will help defray those costs.”
By the end of the course, students will be able to use a checking and savings account, create a monthly budget, formulate a financial plan, both short and long term, and obtain and understand a credit report. They will also understand how credit cards work, develop a plan to reduce debt, understand insurance options and learn the importance of meeting financial commitments.
Kaluza begins his course with budgeting. He explains both the importance of that and of saving.
“I had the class make a grocery list and estimate the cost of purchasing the food. We then went to Coborn’s and priced the groceries,” he said. Some students did well, some didn’t, he said. Many students overestimated the cost of their groceries, but still had a difficult time coming up with the money to pay for them.
Payroll taxes are also disected.
“A lot of the kids don’t know about withholding,” said Kaluza. W-4s and W-2s are explained, along with interest income on savings and the possible taxes still owed at the end of the year.
The course covers banking services such as certificates of deposit, the difference between banks and credit unions, debit cards and the purpose of checking accounts. He said not all are right for everyone.
Since only about one-third of his students have checking accounts, Kaluza has them practice writing checks. They learn about check registers and bank statements. He said there was a lot of frustration when their accounts didn’t reconcile at the end of the month.
A debit card is usually connected to a checking account, so those are looked at, too.
“Capacity, character and capital are what a loaning agency looks at when it comes to credit,” said Kaluza. “I teach my students about the types of credit and their advantages and disadvantages.”
Also looked at is how to establish a good credit history and how to read a credit report. Kaluza explains what occurs when someone cannot pay back a loan or misses payments and how that affects one’s credit.
Credit cards, buying a vehicle, types of insurance, cell phones, identity theft, housing and more are also looked at.
The grant’s focus and a large part of the class concentrates on the cost of college. Kaluza suggested every student fill out a free application for federal student aid (FAFSA) because there is no reason to let the lack of funds stop one from attending college.
“There is money out there for student loans,” said Kaluza. “The application asks for three colleges and FAFSA will sent the information on the application to those colleges who in turn sent a financial aid letter to the student.”
But, when the student graduates, those loans are due and must be paid back.
“When the class is over, my students are better able to analyze the financial world,” said Kaluza. “They are better able to criticize advertising and learn what is best for themselves and their financial future.”