At the most recent investment meeting, Baker, Neverson, and board member Keith Barksdale, a partner at Third Ridge Capital, a New York City-based hedge fund and private equity investment firm, gave handouts to the kids explaining the current state of the economy. “Home prices have fallen significantly across the country. Banks have less liquidity. Job losses have increased,â€ reads the material. Some of the students’ eyes glaze over the handouts as Baker explains what this all means. “When people feel optimistic about the future, they are going to spend a lot more,â€ said Baker. The three further explained that companies are seeing lower sales and profits, which negatively affects their growth. By the end of the meeting, the group decided to stick with Apple and GameStop, and also to begin investing in Johnson & Johnson, a company previously discussed as a possible investment.
Although the Shock Exchange uses investing as its primary focus, there are many other ways to teach kids about finances. Andrea Mills, founder of Simply Outrageous Youth, a Philadelphia-based nonprofit, says there are three ways to educate young people about financial literacy. The first is to use real-life experiences, which include taking your child to the ATM to withdraw money or to the car dealership when you purchase a car. The second is playing games that involve money, such as Monopoly, Payday, and The Game of Life. And the third is to help kids start their own business. “Empower kids and teach them how to make their own money,â€ says Mills. A few days following the latest investment meeting, Baker and his son are up early. By 6:15 a.m., they’re on their way to a big weekend tournament. It’s a fundraiser at The City College of New York featuring 36 basketball teams from all over the East Coast. By 10 a.m., the Shock Exchange and the Maryland Ruff Riders are awaiting tip off. At roughly 6′ 3â€, the Maryland team’s tallest player towers over the New York Shock Exchange. When the halftime horn blows, things don’t look good.
During the break the players get some guidance from Baker, who speaks about playing better as a team and passing the ball to the first open man. After his spiel, the team huddles together and puts their hands in the center of the circle: “One. Two. Three. Shock Exchange!â€ They didn’t win the game that day; the final score was 30 to 14. But perhaps the bigger lesson is never giving up. Not in the boardroom. This team is catching on. Even though they were unevenly matched, they didn’t quit. “We’re going to try and learn from this,â€ says Ralph III after the game. “We know we need to come back and do something.â€
The path to financial literacy starts early. Here are some activities to point your kids in the right direction:
1.Â Â Â Understanding the concept of money is the first step. Start by explaining that you go to work for eight hours every day in order to pay for your