FINANCIAL EDUCATION
Money skills are best learned young
By Kate Brumback
- ASSOCIATED PRESS
Updated: 07/20/08 7:03 AM
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- At Camp Cash: Teddy Copeland, 15, and Nicholas Sella, 14, use spreadsheets to calculate interest rates.
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While his friends spend their money on video games and candy, Nicholas Sella saves most of his $8 weekly allowance, investing part in stocks and stashing the rest into a savings account.
But as the current credit and mortgage crises demonstrate, not everyone is as financially prudent as this 14-year-old from Tuscaloosa, Ala.
“Kids need to get involved with money and they need to handle it,” said Bob Nusbaum, a financial planner in Pittsburgh, who said exposure can start as early as age 4 or 5. “Parents need to involve their kids in financial decisions as soon as they are old enough to grasp it.”
Jan Brakefield, an assistant professor at the University of Alabama, ran Camp Cash at the school for the first time this summer and hopes it will become an annual program. Nicholas Sella, who owns stock in Deere & Co., Altria Corp. and McDonald’s Corp., was one of 18 middle schoolers who attended the two-week money management camp.
“I just believe that at this age it’s more likely to stick with them for life,” Brakefield said.
Once kids hit high school, she said, they are more interested in spending money on dating and trendy clothes and gadgets. She said good financial instincts — saving, delayed gratification, investing — need to be instilled before that point.
Through in-school and after-school classes, special events, camps, rallies and conferences, a Floridabased company called YoungBiz ( www.youngbiz.com ) teaches teenagers about business, entrepreneurship and personal finance. “It’s all about empowerment, whether it’s entrepreneurship or financial literacy,” said Bonnie Drew, the company’s senior executive vice president. “When you believe that you are smart enough and capable of making decisions about your employment and your finances, you will make better decisions.”
Monetta Financial Services’ Young Investor Fund is a mutual fund designed to help kids save money for college or other big purchases and to teach them financial literacy. About half the fund’s assets are in funds that seek to track the S&P 500 Index and return a good profit, while the other half is invested in large companies kids know — like McDonald’s, Walt Disney Co., Apple Inc. and Coca-Cola Co.
Monetta ( www.monetta.com ) sends its young investors age-appropriate materials and has a Web site with educational games. “I seriously believe that the only way kids learn about financial literacy, which is a pretty dry topic, is to get them directly and actively involved,” said Bob Bacarella, president and portfolio manager for the Wheaton, Ill.-based company.
That is the key to all these approaches — they use fun methods to teach useful skills. Unlike consumer science classes of the past, where teachers lectured on mortgage payments and balancing a checkbook to bored students who didn’t see immediate applications in their own lives, kids can get excited about following the stock prices of their favorite companies or touching and spending small amounts of money to learn about purchasing decisions.
While all these tools are useful to get kids thinking about money management, parental responsibility plays a huge role because young people tend to mimic their parents’ financial behavior, said Paul Golden, spokesman for the National Endowment for Financial Education.
NEFE ( www.nefe.org ), based in Greenwood Village, Colo., has a seven- unit curriculum geared toward high school students that is free to schools.
