When he was in the sixth grade, Ned S. got his first taste of the stock market. As part of a project for his math class at Germantown Friends School in Philadelphia, Ned and his classmates "invested" in corporations to see if they could make a few bucks. Ned and a partner bought shares in Aramark, Comcast, Microsoft, Wal-Mart and a once-obscure energy company that had become page-one news, Enron.
At the conclusion of their yearlong effort at portfolio management, Ned and his partner ended up with about the same amount of money they had when they started. "Some things went up and some things went down," recalls Ned, who will enter the ninth grade this fall. The pair had bought Enron right after the company declared bankruptcy in the hope that the shares would rebound. They didn't.
What lessons did Ned take away from his exercise? "Try not to buy topsy-turvy stocks; get the most even ones. Don't take a big risk and you might make some money."
That's a pretty worthwhile message for a boy to absorb at such an early age. Ned probably didn't know it, but this project marked his first formal participation in programs aimed at improving his financial literacy.
Schools, companies and nonprofit organizations around the country, including educators at Wharton, say helping children and teenagers learn the rudiments of free markets, entrepreneurship, credit, spending, saving and investing is one of the most important, yet usually neglected, components of a young person's education. Places for kids to learn about money and business abound, but typically these are not among the regular curricula at schools. Often, parents have to take the initiative and enroll their children in financial literacy programs.
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