Before Mario Gage and his brother, Myles, were old enough to go to school, their mother gave them an early lesson in how to handle money.
“I taught them to save a little, spend a little and give some away,” says Michelle Gage, who underscored the concept by having them sort cash into three jars clearly marked for charity, savings and spending. “It was important to me that they knew how to manage money. I know how much money I blew as a child, and I didn’t want them to do the same.”
By the time Mario was heading into 2nd grade and Myles was ready for kindergarten, Gage says she had heard about Ariel Community Academy, a school that not only took such lessons seriously, but delved deeper into savings by teaching students how to invest a cash portfolio. “Ariel took my savings jars to another level,” says Gage. “My kids come home and they are talking about [money management] with me. They respect money and know you have to do something with it.”
Ariel Community Academy, created in 1996 under the district’s Small Schools Initiative, is the only public elementary school in Chicago—and maybe the only one in the country—that combines financial education with a real life component: a $20,000 investment fund for each entering 1st-grade class.
“I don’t think there are any other programs like ours that give kids real money, especially in public elementary school,” says John Rogers Jr., founder and CEO of Ariel Capital Management, an established, Chicago-based money management firm that also founded the school.
Nationally, financial education or, as it is sometimes referred to, financial literacy is gaining a foothold in elementary and secondary education. Last year, a study by the National Council on Economic Education found that more states are requiring districts to offer high school courses in personal finance and to create academic standards that include financial education. Some states—like Illinois, New York and Kentucky—are requiring high school students to pass at least one personal finance course in order to graduate.
Indeed, Illinois was the first state in the nation to make a personal finance course a high school graduation requirement, says Joanne Dempsey, the executive director of the Illinois Council on Economic Education.
1st grade gets $20,000
While Ariel’s kindergarteners are exposed to concepts related to money and work, the school’s official economic education curriculum begins in 1st grade, when the class receives a $20,000 fund. Between 1st and 5th grades, students learn the basics of economics, investing and money management while professionals do the heavy lifting of plotting strategy and picking stocks. Parents and students also receive a quarterly statement that shows how the fund is doing.
Then in 6th grade, students put what they’ve learned to work. First, students apply to sit on a junior board of directors, then, the director of the program, Connie Moran, and a team of teachers, make the selections. “The kids asked us to choose board members,” says Moran. “They wanted to make sure that board appointments were not a popularity contest.”
The board, made up of 12 to 14 students, decides which stocks to buy and where to donate their class’s annual philanthropic gift. To keep classmates and their families informed, the board communicates regularly by e-mail, issues quarterly financial statements and publishes an annual report.
Moran acts as an adviser but notes that students run the show. “I don’t tell them what to pick,” she says. “They choose by doing a lot of research, asking questions and talking about their decisions. If they should pick a bad stock, they just do. I want them to understand there are risks [and] to realize that maybe they needed to do more research.”
Upon graduation, students roll over their initial $20,000 to seed a fund for the incoming 1st-grade class. Any remaining profit is divided in half. One portion is donated to a charity selected by the students; the rest is distributed among the graduates themselves, who can opt either to receive cash, around $145, or deposit it into individual college funds that Ariel Capital Management will add to, up to $1,000.
So far, Ariel’s two graduating classes in 2005 and 2006 have each earned approximately $10,000 in profits. Last year, only three out of 35 graduates opted to cash out.
Mario, now 14, who graduated in June, wasn’t one of them. “I decided to reinvest because [Ariel] would match your money,” he explains. “You take $100 or $200 and you can spend that in two minutes. The money that I’m reinvesting is growing. This makes much more sense.”
Moran is the academic brains of Ariel’s financial education program, hired four years ago to teach investment and money management classes, and help teachers work financial concepts and principles into their lessons. Teachers also attend workshops hosted by the economic education department at the University of Illinois at Chicago.
“I want what I do to be integrated into the curriculum,” says Moran. “I don’t want it to be just a separate class.”
Students in Fai Anderson’s 8th-grade class, for instance, analyze companies’ financial statements, create algebraic equations that measure growth and study long-term performance with charts and graphs. “I take what Connie is teaching and do the math end,” Anderson explains. “For instance, my kids read graphs or determine the slope of a line to see if a company is growing and making a profit.”
Even students in kindergarten get a taste of the curriculum, which is modified for younger consumption. Monica Delgado’s kindergartners have “jobs”—watering the plants, keeping the classroom clean or passing out supplies—that introduce them to concepts of work, earning wages and valuing money. Every two weeks, students are paid and can use their earnings to purchase fruit snacks, stickers or other treats from the classroom “dollar store.”
Delgado also talks to them about earning income and gifts and borrowing and lending.
“Parents tell me that they are surprised when their kids tell them, ‘You are depositing money, mom.'” she says. “The kids know the right language. When they are 5 and 6 years old, they absorb this information.”
Indeed, over time, financial vocabulary and financial and economic principles become second nature. “This is great when this happens so early on,” Rogers says. “If you take French at an early age, you will get it. The same thing happens with economics and finance.”
‘That Dow thing’
Rogers says the idea to launch an investment program came to him after he participated in two events: a young leaders program that encouraged attendees to come up with innovative community-based programs and a symposium on the lack of individual savings and investment across the country. “I thought to myself, ‘Hey, I’ve got a public school. This would be a great way to address this issue and teach youngsters, too—especially children of color.'”
He teamed up with executives from Nuveen Investments, who were also looking to do more in public education. Ariel Capital Management and Nuveen each contributed $80,000 to seed the initial investment to set up funds for every class, and then both firms manage and invest the funds until students reach 6th grade and take on responsibility themselves.
Principal Lennette Coleman says the program has had a positive impact on overall performance at Ariel, even though students do not take tests geared to measure their knowledge and skills in economics.
“We have seen a profound increase in math and science across the grades,” says Coleman. “And students are much more involved in financial literacy projects and talking about [financial careers] instead of just talking about being in show business or a sports jock.”
Moran says she knows the program is effective just by listening to the students. “I hear them talk about opportunity costs. I hear the little ones come to school excited because they saw ‘that Dow thing we talk about in school on TV.'”
Students are also influencing their teachers and parents. “I know math, but I didn’t know investment and finance,” Anderson admits. “I will be keeping in touch with [graduating 8th-graders] to see who I want to invest my retirement funds.”
Michelle Gage says she has picked up a lot from her sons. “Before, I was not picking stocks, someone else was doing it for me. But now I am,” says Gage, who started her own investment club for women.
In the meantime, Mario and Myles are building on what they’ve learned.
“I have my own portfolio, and I plan to build it and become a stockbroker,” says Mario, a freshman at the University of Chicago Laboratory High School.
Myles, now in 7th grade and a member of his class’s junior board of directors, cautions: “It’s fun, but you have to know what you’re doing.”
To contact Debra Williams, call (312) 673-3873 or send an e-mail to firstname.lastname@example.org.