| Sargent & Lundy Savings Investment Plan |
| MONEY IN THE SECOND GRADE |
| The following excerpts are from an article in the July
1999 "Money" magazine. The opinions of the author, Jean Sherman
Chatzky, may or may not reflect those of the SIP Committee.
Every morning, just as the working world downs its coffee and starts its day, the 26 kids in Jerri Cotter's second-grade class get down to business too. The class veterinarian feeds the chinchilla. The paper pusher distributes worksheets. Every student in this bright classroom at West Middle Island School on New York's Long Island has a job; some have two. They get them every two weeks by filling out applications explaining why they're distinctly qualified. "I'm good with counting money and I know how to add and subtract," wrote one who wanted to be class banker. He got the job. For their efforts, the kids get paid $.50 a week in plastic Cotter Cash, which they can bank or spend in the class store. Most choose the former - it's the only way they can save enough for new pencils ($1) or a one-night no-homework pass ($10). It's also the only way they earn interest at the very competitive rate of 5% a month. This economic microcosm sports penalties too. Forget your homework and face a $.10 fine. Lose your crayons and you have to buy new ones for $3. "It teaches children responsibility for their own behavior," says Cotter. It also teaches them about money, which is not easy. Personal-finance courses are now offered to 60% of high school students, according to the American Savings Education Council's 1999 Youth and Money Survey. But only 21% have signed up. Worse, compare the kids who have taken the courses with those who haven't, and you'll find little difference in how they handle money. That's a problem, considering that nearly 30% of these students have credit cards. And of those who do, more than a quarter carry debt from month to month. (Where do they learn this stuff?) Securities and Exchange Commission chairman Arthur Levitt is addressing the problem by sending securities regulators into classrooms to "get students and young adults excited about saving for tomorrow." With my interest in kids and money running high, I visited Cotter's class to observe a similar effort from the American Bankers Association. But I don't believe one lecture from a visiting pro is going to have the impact that Cotter's daily program will. Why? because there's a big difference between learning by listening and learning by doing. Her seven-year-olds understand interest not because someone told them what it is, but because they earn it. Fortunately, there's a lot about her program you can try at home. Here's what I'll offer my son as he heads to kindergarten next year: * A regular payday. Allowance should come the same day each week to help kids budget. * A chance to earn more. I don't believe in paying for good grades or for anything else that is the child's responsibility, but I do believe in paying for jobs I'd hire an outsider to do - weeding, mowing, shoveling and so forth. * A bank account. Many banks still have low-minimum-balance passbook accounts, which allow your kids to see the interest grow. * Room to stumble. Kids need to learn that money is finite. That's why, when they blow the budget - and they will - you need to be strong enough not to bail them out. Jerri Cotter's less frugal kids asked her to add credit cards and loans to her classroom. She said no. |
This page updated on 6/28/99