Making money fun for students

With his giant cleaver, Karl Ochi chops the lemon in half and holds a segment up to his class. "Do you think I can squeeze juice out of this lemon?" he asks. The class nods. The teacher clenches his fist around the fruit, and liquid spills into the measuring cup below. He marks the level of juice, and repeats his question. More nods. Again, he squeezes and marks the cup.

Cooking school? Not quite. This is Karl Ochi's introductory finance course at George Washington High School in San Francisco, California. Extracting a declining amount of juice from a lemon helps Mr Ochi demonstrate the concept of marginal revenue, an economic tool that his students can apply to their future personal investment and spending decisions.

The issue of financial education has reached fever pitch in the US, where sky-rocketing levels of personal bankruptcy and consumer debt, accompanied by record-low savings figures, have provoked scathing criticism of the nation's lax attitude towards money matters.

US education experts say schools must make lessons in finance a priority to avoid another generation of reckless spenders. A study by the National Bureau of Economic Research found that American students who took a class in personal finance were wealthier and saved more as adults, compared with those who did not receive compulsory education in money matters.

Yet teaching young people about money management is one thing; making those lessons stick so they will apply them as consumers is more difficult. To do that, teachers like Mr Ochi are replacing graphs and formulas with hands-on approaches that make finance relevant and fun. "Economic literacy is rooted in the student's ability to intuitively understand, to 'feel', economic concepts," says Mr Ochi.

And students at G W High cannot get enough of Mr Ochi's lessons. "I come to class just to see what's going to happen next," says one. The teenagers, who hail from a myriad of income and cultural backgrounds, routinely come in the top 1 per cent in state and national finance exams.

By most marks, America is ahead of Britain in getting financial lessons into its classrooms. Vola Parker, of the Personal Finance Education Group (Pfeg), a UK educational charity which is working to develop a UK curriculum standard, says much of the difference comes down to funding. Pfeg, which is funded in part by the Financial Services Authority, the regulator, received operational funding last year of less than £200,000.

In the US, however, President Bush's 2002 Education Bill allocated $385m (£211m) for innovative educational projects, including activities that promote consumer, economic and personal finance education in schools. Funding from financial institutions and other private sources is also much higher.

Ms Parker says she can only dream of having a comparable source of reliable funding for her organisation. "Our funding is renewed every year," she says. "There's no clear, ongoing commitment. We're certainly hearing noises from the Government, but that's all. It doesn't help us when we get interested teachers seeking advice on programmes and we have to tell them we're waiting to hear what our funding will be. It's heart-breaking."