Building Your Future

Classroom Guide for Actuaries

In 2009, The Actuarial Foundation published Building Your Future, a financial literacy
curriculum resource that has been distributed to thousands of teachers across the
country. Because so many in the profession are involved in mentoring and
classroom visits, the Foundation has created this guide to help actuaries more easily
incorporate Building Your Future into their in-class visits.

About Building Your Future

Personal finance is part knowledge and part skill and the Building Your Future book
series gives students a foundation in both. It addresses knowledge by covering the
essential principles of banking in Book One, financing in Book Two, investing in
Book Three, and succeeding in Book Four. The series also addresses the
mathematical skills that students need to live a financially healthy life. Students will
be able to see the real-world consequences of mastering their finances, which helps them understand the
relevance of good mathematical skills. We hope you enjoy this Building Your Future book series.

General Tips on Working with Students

A few thoughts on planning for a successful classroom visit:
Talk with the teacher in advance. He or she can give you insights into students skill levels and what
theyre currently studying. Will students have prior knowledge of basic concepts? Are your materials on par
with their math and analytical skills? Talking with the teacher will also allow you to prepare in terms of
where to be and when, if there are any procedures for entering the school, and what materials you may
need to bring.
Plan an interactive visit. Students can tune out during an extended lecture; its usually far better to find
ways to involve them in an activity. Try to spark a discussion, have students work in groups, or find other
ways for them to be active and not passive.
Dont try to do too much. Remember to account for administrative time (such as taking roll), and
understand that some things will take more time than you might expect, like moving students into groups
and having them report out. Its better to plan for a shorter time and have a few optional discussion points
or activities on hand, than to plan to present too much and have to stop in the middle.
Have fun! Working with students can be a rewarding experience; take a breath, relax, and enjoy your time!

Suggestions by Chapter
Consider the following ideas, presented by book and chapter, when planning your classroom visit:
Book 1, Chapter 1: Savings
Brainstorm a list of items (game systems, personal computers, vehicles or higher education) that require
saving over time to purchase. Research current savings account interest rates and teach the Rule of 72 and
methods for compounding interest. Calculate how much cash students can accumulate if they save $25,
$100, $200 per month for a time period ranging from a year to 5 years.

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 Introduce the Buy Now, Pay Later and Save Now, Spend Later philosophies for making purchases by
having students create Pros and Cons lists related to each philosophy. Compare the total cost of computer
purchased on credit vs. one purchased with cash from funds saved over time. Discuss how the use of
savings accounts can lead to positive purchasing habits and build wealth.
Book 1, Chapter 2: Checking
Survey students about the use of checks vs. debit cards and why they might prefer one payment method
over the other, particularly for online purchases or transactions for certain types of retailers such as gas
stations. Discuss how EFTs (electronic funds transfers) are used by employers and what benefits these have
over traditional paper checks for both the employer and the employee.
Facilitate a debate about paper vs. plastic checking using questions such as: Do people spend more money
with debit cards than they would if they were writing a paper check? Will paper checks soon be obsolete?
Does the use of a debit card/electronic banking make a consumer more or less likely to keep accurate
account records or be overdrawn?
Book 1, Chapter 3: Credit Cards
Show students websites, online commercials or print ads for no interest financing on high dollar credit
purchases often made from furniture, home improvement or appliance stores. Research the number of
people who typically end up paying interest on these types of offers vs. those who pay them off within the
no interest window.
Illustrate the cost of deferred interest with the example of a $399 purchase that promises 0% interest if paid
in 28 months. Calculate the overall amount paid by a consumer who pays the balance within 28 months and
one who waits until the 29th month when an 18% APR is charged for the purchase.
Book 1, Chapter 4: Taxes
Work in small groups to make a list of all the money earned and spent by a typical teenager over one
weekend. Place a checkmark next to each taxable transaction. Determine whether the tax paid was an
income/payroll or sales tax, the amount of the tax on each item and the total amount of tax paid for the
weekend.
Discuss the idea of a flat tax for everything we purchase and a flat tax on everything we are paid. Survey
students to see how many favor the idea. Debate the effectiveness of a flat tax by discussing how it would
affect personal family income as well as the cost of goods and services.
Book 2, Chapter 1: Loans & Interest
Discuss the similarities and differences between taking a loan for a purchase and purchasing something
using a credit card. Research typical loan and credit card rates and compare them. Discuss reasons why
there is a difference at the rate and the types of purchases typically made with these two different types of
financing.
Discuss the meaning of the Shakespeare quote, Neither a borrower nor a lender be, for loan oft loses both
itself and friend. using questions like: Do you agree? Is this idea still applicable today? How would the
world function if no borrowing or lending took place? What are the pros and cons of being both a
borrower? A lender?
Book 2, Chapter 2: Home Loans
List the advantages and disadvantages of home ownership by analyzing costs (mortgage amount, interest
rate, term, insurance, maintenance) and calculating how home ownership can add to net worth. Calculate
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Building Your Future: Classroom Guide for Actuaries

costs and benefits based on the current market. Debate the pros and cons, and survey students about
whether or not they think home ownership is a good investment for their future.
Discuss the importance of a good credit rating when searching for a large dollar loan like a mortgage.
Research current mortgage rates from a variety of lenders, both online and traditional. Ask lenders about
the difference in borrowing ability and interest rates for borrowers with a credit score of 650, 720 and 800.
Book 2, Chapter 3: Auto Loans
Share these facts: once driven off the lot, a car is only worth wholesale price, not retail; during the first year,
cars lose at least 20% of their value the first year; cars lose 15-20% of their value every year after the first;
the average car lasts 7-8 years. Calculate the value of a $30,000 car after 1, 2, 3, 5, and 8 years. Based on
this data, is taking a car loan smart?
Brainstorm all the costs of owning a car and list them. Research the average monthly cost of each expense.
Calculate the overall monthly cost of owning the car. Based on the costs, how far you drive and what the
car is used for, debate whether or not it is worth the expense?
Book 2, Chapter 4: Insurance
Conduct a cost/benefit analysis of having insurance by presenting students with a scenario like: Driving,
you skid on ice and hit a power pole causing it to crash into the roof of a house. Your 2-year-old car is
totaled, you are hospitalized 2 days, and the home sustains $60,000 in damage. Using current rates,
estimate the total cost of the accident if all parties were insured vs. if they were uninsured.
Facilitate a discussion about insurance using questions like: Do you think life, health, auto and home/
renters insurance are fairly priced? Is it fair for insurance companies to charge different insurance rates for
different people, depending on variables like health and driving record? Since everyone is going to die
sometime, why do we need life insurance?

Introducing the Actuarial Profession to Students

It can be hard explaining to middle and high school students what any professional does, let alone a highly
skilled job like that of an actuary. Here are a few key points to cover when you explain what you do and
why students might want to consider learning more:
What is an Actuary? Actuaries are the leading professionals in finding ways to manage risk. It takes
a combination of strong math and analytical skills, business knowledge and understanding of
human behavior to design and manage programs that control risk.
Where do Actuaries work? Actuaries are, of course, heavily represented within the insurance industry. But
theyre also found anyplace that people want to manage risk intelligently and effectively: In government, in
many types of private corporations, as private consultants, and in many other areas such as unions and
higher education.
Is this a good job? Actuary was included as one of the Best Jobs of 2012 as reported in the Wall Street
Journal. According to www.BeAnActuary.org, it is also one of the highest paying: They note that
experienced fellows have the potential to earn from $150,000 to $250,000 annually, and many actuaries
earn more.
If youd like to pull together some additional information on the profession, go to: www.BeAnActuary.org;
the site is also consumer-friendly, so you can send students there directly.

Building Your Future: Classroom Guide for Actuaries

Book 3, Chapter 1: Bonds

Draw a Venn Diagram to show how bonds and savings accounts are similar and different. Have students
imagine they have 5 years to save for something big (college, car, home). Based on what they know, would
they choose to save their money through purchasing bonds or via a savings account? Why?
Book 3, Chapter 2: Stocks
Look up the following stock-related acronyms: NYSE, AMEX, NASDAQ, S&P 500. Explain what is traded on
each of the exchanges and how activity is measured on each by viewing them online or on business
television. Discuss how money is made and lost through the trade of stocks and what risks buyers and
sellers must be willing to take if using this investment strategy.
Review the top 100 performing U.S. stocks from the past year. Categorize these stocks according to
industry. Draw conclusions about which industries seem to offer the best opportunities for investors.
Discuss why these particular sectors have the ability to make more money than others.
Book 3, Chapter 3: Mutual Funds
Create a no-load mutual fund that consists of stock from 10 companies that produce the goods and services
students use most (communication, food, clothing, entertainment). Using the current stock price for each
company, determine the net investment that would be required to purchase a single share of the fund. Track
the performance of the fund for a set period of time and analyze whether or not it was a good investment.
Book 3, Chapter 4: Risk & Diversification
Facilitate a class debate using a question like: Would you rather risk possibly losing money to earn a much
higher interest rate on an investment or would you be willing to accept a significantly lower return on your
investment knowing that you would always retain the principal balance over time? Why are both bad
investment strategies? What would a better approach be for investing?
Book 3, Chapter 5: Inflation
Use this scenario to discuss how inflation changes the amount of disposable income. You were working 15
hours per week at a restaurant earning $9 an hour as a host. The restaurant became less busy because of
higher prices for necessities. Your hours have been cut to 10 per week. Looking at your personal expenses,
what are you most likely to stop spending money on? Why?
Book 4, Chapter 1: Path to Employment
Conduct research to find the average salary for individuals who have attained a bachelors degree. Use that
number to calculate the earnings of an associates degree holder and a high school diploma holder so
students can see the difference in earning power based on real dollar amounts.
Facilitate a class discussion about whether or not it is better to make a lot of money or to work in a career
where you gain personal satisfaction. Ask questions such as Would you rather work at a job you dislike and
make a lot of money or have a job you enjoy but earn less money? Why? Use this as a springboard to
discuss the importance of various aptitudes such as being caring or artistic and what career clusters those
could transfer into so students can select jobs where they will be happy and are also able to make a good
salary.
Book 4, Chapter 2: Paying for Post-secondary Education
Work with students to clarify the difference between a grant, a loan and a scholarship. Facilitate a
discussion about the different ways each can be obtained. Prior to the class, research local scholarships that
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Building Your Future: Classroom Guide for Actuaries

Savings Accounts:

Answer Key

are available to students in your community and share these resources with students so they can see how
easily they can find scholarship resources.
Have students work in groups to create a list of ways they can earn extra money to pay for post-secondary
education (ex: money from part-time jobs), as well as ways they can save money toward post-secondary
education (ex: living at home vs. living on campus, not purchasing a car, etc.).
Book 4, Chapter 3: Making a Living
Ask students if they would rather work around the house as a babysitter, landscaper or housekeeper for a
flat salary of $300 per month or at an hourly rate of $7.25. Have students work as a class to list the pros and
cons of each work scenario so they can see the benefits and drawbacks of both salaried and hourly wage
employment options.
Facilitate a discussion about whether or not students would be willing to take less pay for a job in exchange
for a good benefits package. Generate a list of items students perceive as good benefits that employers
could offer as a way to offset a lower salary.
Book 4, Chapter 4: Making a Life
Have students make a list of the items they purchase with their own money. Record that list on the board
and then label items as wants and needs. Discuss what students could use their money for if they
eliminated spending from the wants column.
Offer students the following scenario for purchasing a pair of $100 jeans. Option 1 is to buy the jeans for
full price and pay cash. Option 2 is to purchase the jeans using a newly opened credit card account. The
store will offer a 15% discount on the jeans if the credit card is used for the purchase. The student will have
30 days to pay for the jeans before an annual interest rate of 21% begins to accrue on the purchases.
Assume that the student is only able to pay half the balance on the $100 jeans at the end of 30 days. How
much will the student pay for the jeans after 60 days? What are the drawbacks of signing up for the new
credit card?
Book 4, Chapter 5: Retirement
Ask students to explain the saying Save for a rainy day. Facilitate a discussion about how this could apply
to retirement planning and ones ability to live the lifestyle they want after they stop working full-time.
Discuss how planning and saving for retirement at an early age (18-22) vs. planning and saving at a later
age (35-40) can impact how long a person must work and the lifestyle the person can have once she/he
retires.
Create a chart to compare and contrast what retirement would look like for a person who saved using an
IRA or 401(k) as discussed in the chapter versus one who has not saved and must live on Social Security
benefits. How does their ability to meet their needs and wants differ?

About The Actuarial Foundation

The Actuarial Foundation, a 501(c)(3) nonprofit organization, develops, funds and executes education,
scholarship and research programs that serve the public and the profession by harnessing the talents and
resources of actuaries. Through an array of educational initiatives, the Foundation is dedicated to minimizing
risk through maximizing education by providing the tools to help improve math and financial knowledge for
all. We are proud to add Building Your Future, a financial literacy education curriculum for teachers and
students, to our library of math resources. Please visit the Foundations web site at: www.actuarialfoundation.
org for additional educational materials.
Building Your Future: Classroom Guide for Actuaries