Kids and Investing: Too Far or Not Far Enough?

Back in the 1950's and '60s, when today's baby boomers were growing up, life was simple for kids. Before the birth of the Internet, the ipod, and MTV, most children's lives were filled with roller skate keys, black and white TVs, and waiting for the Good Humor truck to roll along.

In this new millennium, things have changed. Children spend more time mowing down enemies in video games than mowing lawns; consultants make sure the kids get into competitive pre-schools; and the cell phone has replaced the No. 2 pencil as a "can't-live-without" accessory. Parents are trying to combat potential financial illiteracy by immersing their children in as much investing and personal finance experience as is humanly possible.

But is this really a good thing?

Financially-challenged adults

Today's adults are good role models for better financial education for children. According to a 2005 Freddie Mac poll, "six out of 10 homeowners wish they understood the terms and details of their mortgages better." If they had, we might not even have had a subprime crisis. Other studies indicate that 43 percent of American households spend more than they earn each year, and 52 percent of employees live paycheck to paycheck. Americans are so undereducated regarding financial stability that nearly 42 percent don't have enough in liquid financial assets to cover their living expenses for three months. Is it any wonder that not one adult has been able to announce on TV that he's "smarter than a fifth grader?"

Investing camps for children

One way that parents are reversing the trend is by sending their kids to financial summer camps. At Camp Millionaire in Santa Barbara, CA, children spend all day learning about personal finance and investing, and will leave feeling that "they can be a millionaire one day." According to Marketwatch, children spend time chanting such intriguing campfire ditties as "Financial freedom is your choice" and "Assets feed you, liabilities eat you." While this can definitely put someone on the road to wealth, is it really more fun than making S'mores and playing Capture the Flag?

A better balance may be found in environments like Camp Challenge, where half the day is spent on traditional camping activities like swimming and horseback riding, while afternoons are filled with the basics of personal finance. There are also money camps geared specifically to girls, like "Summer Stock" in Wellesley, MA.

Finding a balance

Financial education is a good thing. Just make sure that it doesn't stress your kids out. They still need time for reading, writing, arithmetic, geography, and history before they spend all their free time balancing their portfolios. At Thinkquest.org, children are asked: "When is your birthday? What do you want? Ever considered some stocks? That new computer game or sneakers you want is guaranteed to be interesting for a while, but will you be interested in it in ten years? Or would you be more interested in lots of moula in ten years?" There's no doubt that it's good to have "moula," but not at the expense of plain old common sense and values.