We hear a lot about hands-on lessons in science and technology, but it’s not often that we hear about those kinds of experiences in other subjects. This AP story is about a financial-literacy program in a public elementary school in Chicago that gives $20,000 to each 1st grade class to invest in stocks. The kids get to choose and manage the stocks, and in the process learn financial literacy skills such as how to open a bank account, save money, and invest. Here’s a little more about how the program works:
Experts manage a $20,000 portfolio for each class until sixth grade, briefing them regularly along the way, and then begin turning over the decisions to the children. Upon graduation from eighth grade, each class returns the initial investment amount to the school for another first-grade class and donates, invests or pockets the profits. After giving half the gains to community charity programs or school initiatives, each student can then take the rest in cash or invest it in a Section 529 college savings plan, in which case they are given an additional $1,000. Last year, 80 percent of graduates invested their $150 shares in a 529."
Like the founder of the school notes, in an age when the traditional corporate pension is becoming obsolete, it’s increasingly important for students to be taught financial literacy in school. And giving students this kind of hands-on approach to investing really helps keep them engaged and motivated.
I have to say, as someone who plans to sit down with her parents in order to learn how to file taxes in a few weeks, I would definitely have benefited from a program like this. Fortunately, both my parents are knowledgeable about financial matters, otherwise I’m not sure where I would learn these skills. I certainly wasn’t taught financial literacy in school--not in elementary, middle, or high school, and not in college, either. Starting these kids so young could have a huge influence on how they manage their finances in the future.
A version of this news article first appeared in the Motivation Matters blog.