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Generations: The Money Class

Efforts to teach personal finance skills in schools have been good, but they should be tweaked to emphasize planning instead of daytrading.

My first exposure to the stock market was as a ninth-grader in Mr. Kronenberg's civics class. He announced a contest in which students would each be given $10,000 in imaginary money. We were to trade stocks, subject to certain parameters, for a month. The person with the largest portfolio at the end of that time would be declared the winner.

Unencumbered by a social life, I had time to spare for scanning S&P guides at the library and for hanging around the ticker at a local stockbroker's office. My all-out effort did not result in my winning the class contest, but it did lead to the gopher job at the brokerage office that launched my successful career as a financial advisor.

These memories of my financial adolescence were unearthed by two recent news events. First was an announcement by the Securities Industry Association that their stock-trading simulation, The Stock Market Game (, was celebrating its 25th year. Since 1977, the Securities Industry Foundation for Economic Education (SIFEE), an affiliate of the SIA, has partnered with the National Council on Economic Education, various state agencies, financial services firms, newspapers and educators to expose millions of students to the world of stock trading.

According to Robert Strong, executive director of SIFEE, the extensive reach and longevity of the program can be attributed to a few factors. First, the idea of managing a six-figure portfolio (fictional or not) tied to real-world stock prices is exciting. Second, there is tremendous support by the partners, which offer such assistance as teacher training, materials, and both paper and online portfolio management systems. Finally, SIFEE has made an effort to broaden the lessons taught by the game to include not only stock price fluctuations, but also such subjects as economics, language, arts and math. This has helped the program maintain a position among all the components vying for valuable classroom time.

You be aware of SIFEE's efforts, but you are likely to hear even more about the need to teach personal finance skills to our nation's students. I make this assertion mainly because of the second news story to catch my attention: The preliminary financial settlement the SEC, NASD, NYSE and several state agencies reached with wirehouses whose research analysts worked in environments rife with conflicts of interest.

Buried in the details of the tentative agreement was a requirement that most of the charged firms pony up a whopping total of $85 million for “investor education efforts intended to arm future investors with the knowledge and skills necessary to navigate Wall Street.” To give you an idea of just how much money that is, SIFEE's entire annual budget is only about $3 million.

SIFEE's coffers could grow as a direct result of the settlement, and rightly so. The popularity and longevity of The Stock Market Game is a testament to its cost-effective success. I am proud to say that my firm has been a contributor to SIFEE, as your company probably has, too. I also shudder to think what my career path would have been had I not been exposed to an early version of the game in school.

But my hope is that settlement funds aren't relegated just to short-term stock-trading simulations. Although the experience gave me and countless other students greater awareness of money and the stock market, I wince when I see how closely some students' “strategies” resemble those of now-bankrupt daytraders.

Our industry's focus is moving from trading stocks to financial planning and wealth management. So should our approach to educating future workers, taxpayers and investors. As a complement to SIFEE's successful program, I hope that a company or organization can implement a personal finance exercise that teaches day-to-day money skills, yet is as fun and classroom-ready as The Stock Market Game. Maybe a video game that is equal parts Monopoly and Life, with a good dose of The Millionaire Next Door thrown in. Add 3-D graphics and the ability to “vaporize” excessive taxation, and we financial advisors will become heroes in the eyes of even the most apathetic teenager.

Writer's BIO:
Kevin McKinley
is a CFP and vice president of investments at a regional brokerage, and author of Make Your Kid a Millionaire — 11 Easy Ways Anyone Can Secure a Child's Financial Future.

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