By: Paul Chon
America is a terrible example for personal finance, having over $21 trillion in national debt, making it the country with the most debt. Japan is in second with $12 trillion in national debt, which is still a $9 trillion difference in national debt between America and Japan. So, how can anyone learn how to use money wisely in a country with so much debt?
For students in Teacher Michael Cummins’s AP Government class, they learn about personal finance through a groundbreaking 10% theory. This 10% theory is that people can live off of only 90% of their money and still be satisfied, Cummins said. People will then be able to not worry about money later in life, Cummins added.
“So, the first step in this is to put 10% of all your money somewhere [and] the rest of the 90% you can do whatever as long as that 10% gets saved,” Cummins said. “The theory behind this is [that] no one’s life is made worse by living at a 90% level. If people in the whole country would live by this, they would be saving so much more, not using credit cards, getting student loans they don’t need, or getting a car that’s too expensive for them.”
Cummins encouraged his class to live off of 90% of their money for a month. After a month, Cummins gave his students the choice to put money in a fund, he said.
“So, [students] hand over an amount of money, and 30 days later they can get it back. I think 85% of the class handed over at least a dollar,” Cummins said. “[After 30 days], I show [them] data that tells over the lifetime of the stock market what usually happens such as [the stock market] increasing over 8% per year, and the chances that the stock market could go down. Then, they fill out deposits slips and everything. It looks relatively official,” he explained.
Now, these students don’t have to worry about money later in life because Cummins’s theory taught them personal finance, and the importance of saving. However, this stock project is just a little solution to a huge problem in America, Cummins said.
“[My students] could save money for 10 years and never have to think about [money] again,” Cummins said. Later he said, “I wish we had a stronger educational personal finance in any part of America, and I’m doing my small part here with real money that these kids really got.”