Lesson Goal

Teach students how adults use different accounts to save money on taxes, invest earlier, and build long-term wealth. Show them the principles they can apply now.

1. Taxes Are a Real Cost

• Every dollar you earn gets split: you, future you, and the government.
• Smart adults reduce how much goes to the government legally by using special accounts.
• That saved tax becomes investment fuel.

8th grade analogy:

If you had to give away 25% of all the candy you earn at Halloween, but there were special boxes where you could stash candy where the “Candy King” can’t take it, wouldn’t you use them?

That’s what tax-advantaged accounts are.

401(k): The Adult Starter Wealth Machine

• A 401(k) is a workplace retirement account.
• Money goes in before taxes, so you pay less tax today.
• That money is invested (usually in stocks/bonds) and grows for decades.
• Many employers add free money (“employer match”).

Key principle for students:

If someone offers you free money to save, you take it. No exceptions.

457(b): The Government & Nonprofit Version of a 401(k)

• Works almost the same as a 401(k): pre-tax savings, tax-free growth.
• But: you can withdraw earlier without penalties if you retire/leave the job.
• Public school employees often have access to these.

Why teach this to 8th graders?

Many will grow up to work in schools, hospitals, or public service. Knowing this early gives them an advantage 99% of adults didn’t get.

Roth IRA: Pay Taxes Now, Pay $0 Later

• Opposite of a 401(k). You pay taxes now.
• But all growth and withdrawals later are completely tax-free.

Principle they should remember:

If you’re young and not making much, taxes are low → Roth can be powerful.

HSA: The Single Most Powerful Wealth Account Adults Have

This one matters—even to middle schoolers—because it teaches stacked advantages.

• Pre-tax going in
• Grows tax-free
• Spent tax-free for medical needs
• Can invest inside it

This is called “triple tax advantage.”

Compounding: The “Cheat Code”

Show them an example:

• $100 invested at age 13 becomes ~$1,000 by age 60 at 7% growth.
• $100 invested at age 25 only grows to ~$430.

Time matters more than amount. Starting earlier always wins.

7. The 3 Wealth Rules They Should Internalize

1. Save before spending (adults call it “pay yourself first”).
2. Use tax-advantaged accounts whenever possible.
3. Start early, invest consistently, ignore noise.

This frames wealth as a discipline, not luck.

Quick, Engaging In-Class Activity (20–25 minutes)

Part A — “Which Account Wins?” Race

Give groups example adults:

• Alex uses a 401(k).
• Jordan uses a Roth IRA.
• Sam uses an HSA.
• Casey saves money in a normal bank account.

Each group gets:

• $1000 income
• Tax rates
• A simple expected growth rate
• A scenario (medical bill, early retirement, etc.)

They calculate who keeps the most money in each scenario.

Questions for students:

• Why is starting early more important than being rich?
• Which account advantage (pre-tax, tax-free growth, free employer match) seems most powerful?
• Why do most adults misunderstand or ignore these tools?

Drive home the idea:
Wealth is built by habits, not luck.
Adults who follow these systems win.
Kids who learn this early win even bigger.