September 3, 2000

For more than twelve years we have homeschooled our four children. For more than twelve years our children have hated math. It’s not that our kids can’t do math. They can. They have an adequate grasp of the basic skills but it is a subject they have never enjoyed and one they shy away from rather than explore. And because of their less than enthusiastic attitude, they have never felt particularly math-confident or at ease doing complicated computations. But recently that changed.

What caused the change? How did it happen? Well, it wasn’t because of another new math book in the house. Our bookshelves were already overcrowded with titles like "The I Hate Mathematics Book," "Arithmetic Made Simple" and "The Joy of Mathematics." And it wasn’t because we hired a tutor or found some exciting new math computer game. The motivation was simple, basic and very 21st century: Money, more specifically, "Managing Their Own Money." And the means to do that which caught our kids interest and charged them with excitement like nothing mathematical had ever done before was: The NASDQ, The Dow Jones Average and The NYSE. Our children became stock market investors.

My husband, Ralph, has always been the one in our household to manage the family finances by paying the bills and deciding how surplus funds should be spent or invested. When our children were born, he set each of them up with their own money market account into which he deposited money they received as gifts and any income they earned or had saved themselves. By the time our three oldest children were in their teenage years they each had accounts worth several thousand dollars.

With the possibility of college nearing, Ralph began to feel an intense responsibility and need to manage their funds more aggressively than he had been doing. For several years he had been investing in the stock market with our family’s excess income while our children’s money was still in money market funds where it was earning a low but steady 3-6% interest. At the same time even a conservative mutual fund was yielding 8-12% and sometimes well over 20% interest per year. He began to struggle with decisions on how to best invest their accounts. Should he invest their monies in mutual funds, individual stocks or both? What would bring them the best yield? What was the best approach? These questions weighed heavily on his mind.

Ralph and I had many discussions together about what would be the best thing to do. We came to the conclusion that we should talk to the kids and ask them if they wanted to participate in the care of their own money. We have always valued our children’s opinions and consider them to be mature and capable people. We felt it could be a very beneficial experience for them to become actively involved in the management of their money. We explained to them the problem their Papa was having and how he could use their input and help. If they were interested in getting involved then they could learn how to invest, manage their own money and take over the responsibility of trying to make their accounts grow. Their response was a decisive "yes!"

They wasted no time taking up the challenge. Overnight, it seemed, CNBC became family viewing as we all followed that channel’s daily money shows, commentaries and interviews with CEO’s and Wall Street pundits. Quickly we familiarized ourselves with ticker tape symbols for a multitude of companies, became acquainted with a whole new vocabulary of technological and financial terminology and began evaluating the pros and cons of investing in individual stocks and mutual funds.

Once their individual online accounts were established, each of the kids had the ability to access information and analyze an incredible array of research data available on the web. With my husband’s help, they set up online portfolios and began to chart and evaluate the progress of the stocks that interested them. After many weeks of instruction and guidance, they began to make their own decisions as to what stocks to buy, how much to invest in each pick and when to sell. Sometimes they asked for our advice, sometimes not. Many times we gave it to them even when they didn’t ask.

For the first time in all our years of homeschooling our numbers-shy children were initiating requests to learn math. Finally mathematics had a purpose. They needed to understand percentages, fraction/decimal conversions, averaging and rounding of numbers in order to calculate profit/loss comparisons, analyze information, understand price/earning ratios and do complicated calculations. What a change it was to see my son converting fractions to decimals or my daughter comparing week/month/year/five year graphs of stock values. And the best part was that all their work was self-initiated, being done because they needed to know the information in order to make better educated financial decisions.

On Friday nights we regularly tuned into PBS’s Wall Street Week. The kids began to read some of the many investment newsletters and financial magazines that my husband subscribes to. Our dinner conversations frequently became peppered with discussions about various companies. Business news had become relevant and at times riveting. Marketing trends and economics in general took on a fresh new face. Even Toby, our eight year old and the only child not managing his own portfolio, started to show signs of financial awareness. He seemed to have picked up investment concepts and terminology by osmosis. Occasionally he’d ask how Disney’s stock was doing or what price KIDE (the licensing agent for Pokemon cards and one of the stocks he is interested in) closed at.

Throughout the past two years of active trading our children have had disappointments but they’ve never felt overburdened or regretful that they took on the responsibility of managing their own money. Some of the stocks they invested in tumbled, resulting in financial losses rather than gains. Other times stocks went up but instead of selling and making a profit, they would hold them too long only to see their stocks eventually slide back below their original purchase prices. These are problems my husband and I have experienced as well. Timing is one of the most difficult aspects of trading stocks but, although no one likes it when wrong choices are made and money is lost, none of those disappointments has made the kids wish they had not begun investing. On the contrary, they all wish they had started earlier.

Our family’s investment experience has taught us many things. Together we have learned much about economics, government, taxes and the value of money. We have also learned about human nature, greed and the difficulties of decision making. I think that managing their own money has empowered our teenagers to believe in themselves and know that they are capable, even at a young age, of making real monetary decisions. Evaluating risks, plotting out financial goals and mapping out strategies to realize those goals are some of the important lessons our kids have learned. Plus they know that their parents believe in them enough to entrust them with adult responsibilities at an age when they are almost but not yet quite grown up.

Many parents might find it hard to let their teenage children make financial decisions involving large amounts of money, but one doesn’t need to have several thousand dollars to begin investing. One of our 16 year old friends recently started his own online account with just $500, money he had received as gifts on his birthday. He is taking his investing just as seriously as our children do and is having as much fun at it as well.

It was hard for us initially to entrust our teenagers with so much financial responsibility and it continues to be difficult at times, especially for Ralph who now frets over our kids’ decisions as well as his own investment choices. But he also realizes that part of our job as parents is to teach our children how to handle money, be confident, capable individuals and wise decision makers. Eventually they will need to know how to do these things for themselves so why not start now when they are motivated and interested? Tapping kids’ interest when they are excited about a subject gives them the most valuable kind of learning experience - one that is self-initiated and hands-on, yielding tangible real-world rewards.

Our family’s experience with the stock market reminded us how important it is to let go and trust in children’s innate abilities. By allowing teenage children, with parental guidance and support, to manage their own finances, all family members benefit from the flush of new growth and learning that automatically follows. And, who knows, the whole experience might even have the unexpected byproduct, like it did in our household, of shedding new light on a once dark, dreaded subject like math. Real life investing in the stock market might be just the means necessary to make mathematics come alive for your family like it did for ours.