About 15 years ago, personal finance expert Susan Beacham walked into a McDonald's shareholders meeting with 63 second graders in tow.
Her purpose? To teach them about investing, of course.
The children watched as investors sampled new products, hung out with Ronald McDonald, and learned that McDonald's was a global corporation from a Happy Meal toy featuring Snoopy wearing a sombrero.
"I learned that when McDonald's makes money, I make money," one of the students wrote in a thank you not to the CEO. "That's what being a shareholder means."
While Susan's ambitious fieldtrip might have raised a few eyebrows, she maintains that making sure kids as young as pre-K are exposed to how finance works in a tangible way is critical to helping them manage money later in life.
It's why she founded Money Savvy Generation, a program dedicated to "helping kids get smart about money."
We recently checked in with Susan to get her story. Here's what she had to say:
On how the idea for Money Savvy Generation came to her ...
Fifteen years ago, Susan was nearing the end of an 18-year personal finance career in which she'd helped high-net worth families make good decisions with their money.
There was one day when she was meeting with a woman whose husband had just died; they had four children under the age of 10. The woman's husband was a trader on the stock exchange and had managed all of the family's finances with little to no involvement from his wife. Susan recalls being the only other woman in the conference room full of men during a three hour meeting in which this mother was given a crash course on personal finance. Susan observed as the woman kept glancing at her clock and at her watch, and realized what none of her other colleagues in the room had at the time.
She had to make the bus.
"In that moment I knew this wasn't working for me," Susan says. "She was learning about money in a point of crisis for her. It wasn't on her daily plate of things to do."
At the time, Susan had two daughters: one in preschool and the other in first grade. She resolved that they would never be in the same situation as this woman.
Then Susan's bank was bought out by another, and she was given the option to stay or to take a severance package. She took severance thinking it would give her the chance to reset her life and spend time with her children. Only, the time off made her antsy. And it wasn't long before the gears in her head were turning again.
"I had the wonderful idea that if I could teach prostitutes how to manage money, I could get them out of the business," she says. The only problem was, she didn't know any prostitutes.
Who she did know were first graders. She decided that if her then-first-grade daughter could learn Latin and abstract math concepts, she could learn about money.
So Susan reached out to her daughter's school and soon had five first-grade classrooms to experiment with. She had no experience developing a curriculum, but luckily the teachers were happy to back her up; Susan found they were eager to learn what she had to share, too.
And she was excited by the results.
"Over time, I learned that they absolutely have the ability - brain power, the grey matter - to learn about money."
On the early challenges ...
There was plenty of trial and error for how Susan developed her curriculum. The biggest lesson she learned early on was that abstract concepts were a challenge for the kids; they needed tangible, concrete examples for what she was talking about. Next, she had to make sure that the teachers were going to be confident about what they were teaching so that they would be good stewards of the program.
Finally, she had to manage the parents.
With children from low- to moderate-income neighborhoods, she didn't hear any guff from parents. They knew that the key to their children stepping out of poverty was having a solid grasp of money.
She began getting negative feedback from other parents who thought money lessons should be coming from them, and that the kids were too young to be learning about more complex concepts like investing. She'd invite them to sit in the back of the classroom and listen in, and eventually she'd win over the parents, too.
During the final lesson, she invited parents and grandparents to come in for a press conference during which they played the money experts and the kids were the reporters. She was tickled when the grandparents brought in the very first items they'd ever bought with money they'd saved as children and the boxes they used to save money in.
"All the sudden I had parents saying I get this, I got this, I'll take it from here."
On challenges today ...
Initially, Money Saving Generation had a lot of support. Susan talked to BusinessWeek, and USA Today named her special Money Savvy Pig piggy bank (more on that later) as one of the best products of the year. She was featured on Oprah, Dr. Phil and the Today Show.
But she says they still haven't scratched the surface on making personal finance education for young children universal. People still seem stuck on waiting until high school to teach kids about money, because teenagers are closer to being independent and will need to know how to keep a budget and how credit cards work.
Susan thinks this logic is flawed.
"We don't skip teaching how to be a good citizen in first and second grade because they won't vote for a long time."
She believes that by starting early, she'll be able to eradicate financial illiteracy.
On the Money Savvy Pig ...
Susan realized early on when teaching the first graders that they really needed hands-on tools to learn abstract concepts.
So she went to the grocery store and bought cups that she twist-tied together in sets of four. Each cup was to represent a different money goal: Saving, Spending, Donating and Investing.
She had the kids draw pictures of their goals on one side of the cup, telling them they were now too smart for one-slotted piggy banks. The kids loved their banks, but their design wasn't sturdy enough and soon cups were lost and banks were broken.
Susan needed a more lasting concept.
That's when the Money Savvy Pig came to her in a dream. One ear up, one ear down, four slots.
"I had no clue how to make it," she says. "I learned a lot about injection molding."
She eventually manufactured her dream pig. During a show at the Merchandise Mart, she was set up next to a table selling Beanie Babies. A woman came up to her table and started asking questions about the bank, and then told her, "I want you to know my pastor told me we'd be given an invention that would change social ills."
From that moment, Susan says she realized that there was a greater power at play in her work, and that she was ready to go all in.
On bad money habits she hopes to change ...
Susan wants kids to stop spending for the sake of spending. She wants them to stop, think and reflect before they buy something.
"I want to make sure that kids think saving, donating and investing is just as much fun as spending."
She also wants to head off instant gratification. This means she's not only teaching children, but also parents who are quick to buy odds and ends at the dollar section at Target, rather than helping kids understand the value of waiting and saving.
One technique she uses is to have children draw a picture or make a list of things they want so they can talk about needs versus wants. Those lists can go to parents who can use it the next time their child has done great work at school or there's a birthday. By stopping, thinking and writing a list, kids might find that what they wanted a month ago is not what they want today.
"We're teaching how our needs and wants change," she says. "We teach them how to prioritize."
Children need to gauge, "Do I really want this? Will I really use this? If I get it, will I want it tomorrow?"
On how hard it is to reverse habits in children and teens after they've been established ...
"It's harder but not impossible," Susan says. "It's much easier to shape than to change."
When children are very young, they think moms and dads are geniuses, Susan says. You're their definitive resource, and you help them develop all sorts of good habits: washing hands, saying please and thank you, brushing teeth.
"Now let's say you never had these discussions until they were in eighth grade. Not so easy," she says.
At that point, it's your kids jobs to start looking at you as if maybe you're not that smart; plus they're more influenced by their peers by then, too. It becomes more challenging to instill good habits. High school is even tougher, but still possible. The mistakes they make in college will be tough, but they'll still look to you to fix them.
"When parents are working with their kids when it comes to money - as long as they stay honest, don't use money to control their child, and share money mistakes they've made - they're going to have a pretty good shot at teaching them good money habits at any age."
When you use money to control - offering a kid $5 for cleaning their room, paying for straight As, giving them cash to attend college classes - then you're setting up expectations and entitlement.
On mistakes parents make when talking about money with their kids ...
One thing that doesn't work is taking care of the money situation, Susan says.
"A kid goes off to college and they've been told, 'I got it - your tuition, room and board. You just get good grades. I got it.' That's a huge mistake."
The biggest mistake at any age is not allowing your child to have skin in the game. The only way kids are going to ask questions and make informed decisions about money is if it's their money. They need a budget with boundaries to bump up against.
Parents need to make sure their kids have control over some money so that they feel a sense of responsibility. If the kids don't, they'll spend it all day long. If they do, they'll build up the muscle and be frugal.
On the most important personal finance lessons parents can teach their children ...
Money Savvy Generation just published a book called OMG: The Official Money Guide for Teenagers, which outlines the most important money management lessons kids should learn before setting off on their own.
- Budgeting choices
- Savings and investing
- Ways to pay (which outlines the differences between credit, debit, cash and checking and also includes information about fees)
- Credit and credit cards
- Identity protection
Connect with Susan and the Money Savvy Generation on Facebook.