Three Ways to Teach Kids About Money

You’d expect to find a group of teenage girls spending their summer hanging out by the pool or earning a few extra bucks by babysitting. But you might be surprised to find them devoting their mornings to learning about budgeting, credit and investing. Yet a sellout crowd of more than 40 young women, most of them between the ages of 12 and 15, gave up a week of summer vacation to attend a financial boot camp sponsored by the Financial Literacy Organization for Women and Girls, in Bethesda, Md.

The camp was a follow-up to a mother-daughter seminar held earlier this year. “The moms wanted us to do something for the girls, especially about budgeting and money management,” says Vernai Dantzler, a Washington, D.C., lawyer who founded FLOW. “Their daughters love to spend money, and they wanted to curb that as early as possible.” The hands-on exercises -- including a game of financial musical chairs designed to indicate scarcity -- gave the girls a rude awakening. “They were surprised at the amount of money they’ll need to be self-sufficient,” says Dantzler.

I caught up with the girls while they were on a field trip to the local office of Morgan Stanley’s wealth management group to get a lesson in investing. I enjoy sitting in on sessions like this to see what works when it comes to teaching kids about money. Investing can be especially challenging because it’s so easy to slip into jargon. Terms such as diversification, hedge fund, fiduciary responsibility and market capitalization can make a kid’s eyes glaze over.

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The FLOW seminar moved along smoothly because it was broken into short takes on stocks, bonds and mutual funds. And it helped that each discussion was moderated by one of Morgan Stanley’s female financial advisers or administrators. Based on my observations, here are three rules I’d pass along to parents and teachers:

Keep the lessons basic. You may be tempted to use big words, but remember that kids have a way of cutting through jargon to get to the heart of the matter. In this group, the teens asked, “Can you tell a company whether you’d rather buy a stock or a bond?” “What’s the difference between a bond and a savings account?” “Are you allowed to tell the company what to do with your bond?” “What’s the Fortune 500?”

Share your own experience. When one of the teens asked the moderator how she had begun her career, it prompted a series of anecdotes from the Morgan Stanley advisers that captured the kids’ attention. One woman had majored in speech communications in college and gained experience working with people by selling sneakers. “Then my mother bought me a share of stock in the utility company, and I left lights on in the house to make money for my company.” She eventually went into a broker training program.

Another woman started out as a professional dancer. When that career ended, she took a job as an office assistant to a friend in the financial-services business. “I started by answering phones and giving stock quotes -- this was before the Internet -- and one day a light bulb went on and I knew I wanted to do this. Every day was different, I could be around people, and I could make enough money to buy ballet tickets.”

Get the kids engaged. The morning ended with a game of financial trivia that had the girls literally bouncing out of their seats. Asked to name the most powerful women in the world, they came up with obvious choices such as Michelle Obama and Hillary Clinton. But they were surprised to learn that the list also includes Indra Nooyi, the CEO of PepsiCo; Irene Rosenfeld, CEO of Kraft Foods; and, in first place, German Chancellor Angela Merkel.

One of the girls is still wondering about one thing. “I asked my dad the other day what a hedge fund manager does,” she said. “I know they make a ton of money, but I still don’t know why.” Welcome to the club.