Perhaps an elective class would be in order.

Once children have discipline everything else falls into place. Without it, all the PF classes on earth won’t help.

One was crap. It was about how much it costs to have a baby. They had us go shopping for strollers, cradles etc. They completely ignored that most of those things can be hand-me downs, presents, etc. Instead of having us go baby shopping and looking at cute stuff, they should have had us make a a monthly budget based off of an average income for a families with parents of different ages. Don’t indulge the baby fantasy with shopping and carrying dolls. Show the cold hard facts, you don’t have enough money to keep the kid in diapers, let alone a cradle.

My class that worked was personal finance. We learned how to make out a check, how to endorse a check. We learned how to bargain for a car. How to manage credit wisely. And how to compound interest. The hard part was that at that point the 10% interest shown on the forms was very unbelievable, the economy was pretty bad back then.

I took a lot from that class, I did manage my credit wisely. I kept a good rating. And it has helped me all along.

If a child gains money, he or she will believe it was due to something he/she did (ie, that he/she is “good” at picking stocks). Most ADULTS fall into this trap, let alone 6th graders.

The market is not perfectly efficient; you’re right. But the market is not systematically inefficient. Therefore, gains for Average Joe are still mostly due to chance. There is plenty to teach kids about finance. The reason you and others are leaning toward stock picking is because it is “fun”. But unfortunately it is fun in the same way that picking red or black is fun.

All I’m saying is: be very careful when structuring such a program. I think it is much safer from a “teaching the right lessons” perspective to stick to long term, buy & hold mutual fund and index ETF strategies. You can still show that historically this gains significantly more than inflation and savings interest.

To briefly respond to the comments so far. By the way, I am hoping to create a short kit, available on this website, help readers jumpstart small PF netroots teams to go into their community (schools, churchs) armed with say, the 5 most important PF lessons. If you’re interested in helping out or running test groups, drop me an email by clicking on my username.

Jeffrey Strain, I recall in my interview that David mentioned some of the books The Motley Fool had written for teenagers, dealing with CC’s and other topics. He said that they knew that parents were buying those books for their children, that the children we’re actively seeking them out. David definitely wants to help tackle the problem of teaching financial literacy, but I don’t think he is any farther along than the web PF community.

Rachel, I love the idea of a retirement game.

To JD, instead of a scholarship, why not help fund sending kits out to GRS readers to teach PF in their community. It’s what I *we* are doing with our netroots! I’m already working on this anyways!

MWarden, it is my understanding that the children check their stocks monthly, for the most part. Further, I think running a long-term game which rewards “Buy n Hold” is superior to a game that rewards luck. An added bonus is that stocks are demystified. Yes, efficient market hypothesis says you can’t beat the market, but the market isn’t actually efficient. For most folks, index funds are the best way to go. As for the children listing reasons to buy stock, I’m sure the market knew that, but for the children to utilize their knowledge that they knew to buy stocks is a lesson Buffett would be proud of.

What I know about money now I’ve learned in recent years. As an expat, I’ve moved in and out of different countries financial systems and have had to learn about each by trial and error. I now insist on teaching my children the fundamentals. There are online sites with games to help them understand and they have had an allowance and have been making their own transactions since they were small. We’re now at the check book and credit card stage. I have had to build credit here from scratch myself in the past 3yrs and I shall teach them to do it the same way that I have – without going into debt.
Our High School also offeres a PF option which I intend to make them all take before they graduate!

Thanks Mom and Dad, for being patient with me and letting me learn in the real world how money works for us, not the other way around.

I will definitely include any future children in family finance matters, if only because real world experiences teach so much more than academic ones.

You have to remember that these are kids and you need to do something that keeps their attention. Heck, most of this stuff is so boring that most adults don’t take the time to learn it or do it because it’s “too hard”.

I would think that even if the kids come out with even the most basic understanding of finance would be better than nothing. And as far as it becoming gambling, I think this would actually deter that if you did it over the long run because it would show that those kinds of trades don’t work over any length of time.

Now for a substantial dose of cynicism…
I doubt a good financial curriculum will ever be introduced into the public school system. Debt is probably our nation’s most profitable industry and the large lenders WANT a climate of “putting it on the card”. If we teach children about how credit cards and exotic mortgages can put you into massive debt, they will grow up wary of using them. Bad for business.

If I were to design a curriculum of this type, I would start the students with a mountain of debt and force them to work out of it. It would be as uncomfortable and difficult as possible, hopefully searing into their brains that owing money is bad.

That said, it sounds like this is part of a math course, not an economics course. The math teacher probably wants to focus on the mathy parts like making a graph, calculating rates of change, that stuff. Better than nothing I suppose.

A better investment of time is to teach kids the responsibility of learning about basic personal finance: how to write checks, consequences of handling debt and how to spend and save wisely and what is means to their future.

Such material can be simple enough to be taught to all students and have a greater impact on the betterment of their future.. cheaplee

Those “cues” that help them pick stocks… that Marvel had a good comic and UA had a developing shoe enterprise… these are things the market already knows better than a 6th grader and prices have already adjusted accordingly. It is unlikely that any gains are due to more perfect information held by the 6th grader (or any individual of any age) than the market in whole.

I have seen numerous colleagues throw money away while they exhibit behavior very similar to pure gambling/speculation. Even if they think they’re making money or breaking even, they typically do NOT find gains greater than the market as a whole when transaction fees and taxed short-term capital gains and other distributions are factored into the equation.

I think it is important to learn about stocks because that is what mutual funds and index ETFs are composed of, but I think there is a delicate balance between investing and speculation, and in general investing in individual stocks and even the fundamental premise behind CAPS is the latter rather than the former.

My father started a college fund for me and my sister when we were born. We received an allowance at age 5.

Once we got old enough to understand our college fund in simple terms – which was actually mutual funds thru TRowe Price – my dad would review its performance every month with us. If we were having a good run he’d show us in the daily newspaper how much more we made that week! (the 80s were good there for awhile).

This covered soft investing, which I appreciated. My dad likes stocks too but hasn’t had much success overall and didn’t want to risk “my” money.

Along with basic PF, I think opening a Roth or a money market acct, etc in a child’s name with you as the custodian is a great way for a child to see what’s what.

My dad also sat me down and would compare my funds performance vs my local savings acct with the paltry interest rate but would explain why I need both liquid and long term.

My dad was a banker who didnt believe in debt. I learned more from him as he lived his life, instead of actually hearing the lessons he told me directly.

You should get in contact with a local HS home ec. teacher and see if she would let you experiment with her freshman class and see if you can build a program. I bet you would only have to meet with them once a week for a few class periods. Four years from now would be plenty of time to come up with a small, but substantial scholarship for a student.

Actually, if you got this to work well you could go to other schools and distribute the program – you could teach kids all over about money and make some as a special interest speaker/program.

One thing I’ve been kicking around as GRS begins to make a little more money is starting a college scholarship of some kind. I’m not sure how to make it work, though. But then I think that a scholarship would only benefit one kid. I’d rather try to reach more. But how? That’s something to think about for the future.

I also took a class in PF last summer (online), which was well-timed with my starting to read this blog and others. I really wished I’d had something like that in high school, or even college. I definitely think it’s a great thing for people to learn, especially with the mortgage disaster – how many people wouldn’t be in their current situation if they weren’t so PF-illiterate??

They should have all the options we have with some Monopoly money and getting a paycheck with bills to cover every two weeks. Plus 401K options, stocks, savings, bonds – all that kind of stuff to show you how to really work your paychecks. 3% raises on the paychecks, random promotions, all that kind of stuff changes the way you look at money. You could start the kids off as Freshman and at graduation the student who wins could get a special scholarship funded by a bank. (Although I think to keep it fair you would need to put a cap on the income generated from stocks to keep one kid from lucking out with a run away gain!)

I think AT THE VERY LEAST they should have a basic 1 semester REQUIRED Home Finances course that tells you things like – just because your mortgage payment is $800, does it mean that you can afford the $300 in insurance and $200 in taxes each month? That house payment is REALLY $1300 and it’s sad that so many people can’t seem to grasp these simple concepts.

It would work well for balancing accounts, covering bills, paying for a child, saving for retirement – all kinds of things.

RDS

http://financialvalues.blogspot.com/

I honestly don’t remember anything as valuable being taught in school.

Personal finance isn’t difficult and any student can easily master it (much easier that algebra). You just have to capture the student’s attention to want to learn it. Name the class “How to become a millionaire before all your friends” and I bet every kid in school would want to take the class.