Kid Wealth News

Avoid The Stock Market Game

Stock Market Game
Stock Market Game

We need to talk about the Stock Market Game.

Well, I need to write about it. There is something very wrong with the Stock Market Game.

However, before that, let’s get everyone up to speed.

What is the Stock Market Game?

The Stock Market Game is an educational tool designed to teach students about the stock market. Participants engage in a simulated trading environment where they buy and sell stocks, mutual funds, and exchange-traded funds (ETFs) using virtual money. Virtual money allows them to gain valuable experience without risking real money.

History of the Stock Market Game?

The Stock Market Game started in the late 1970s to promote financial literacy among kids. Over the years, it has evolved into a widely adopted educational program, reaching schools and colleges all over the world.

How Does the Stock Market Game Work?

Students use one hundred thousand dollars in virtual money on the Stock Market Game website to invest in stocks. It’s very realistic, which can help them learn how to use a brokerage platform using real money later in life.

Students learn stock tickers and how to place market and limit orders. They can work by themselves or in groups of up to five. The goal is to make the most money. The game lasts between 10 and 15 weeks. (It seems that the teacher may configure this, or different regions have different lengths.)

The Problem with Stock Market Game

A stock market simulation sounds like a fun way to learn a practical skill, right?

Unfortunately, it has one ginormous problem: The Stock Market Game encourages kids to invest recklessly.

Over a short period, a well-diversified ETF such as the S&P 500 Index or a Wilshire 5000 Index will never win the stock market game. Over a decade or more, the same well-diversified ETF will outperform nearly 90% of professionally managed funds.

In the Stock Market Game, there will always be a kid who got lucky on the first day trading some of the recent hot stocks. The kid could then sell and stay at the top of the leaderboard. Other kids who didn’t get lucky will probably lose money. They’ll make more risky bets at that point because that’s their only hope of winning.

Kids could lose 80% of their virtual money, and it wouldn’t matter. If they lose the game by $10, it’s the same if they lose it by $90,000. They weren’t planning to buy real cars or houses or save for retirement with it. In real life, turning $100,000 into $110,000 with minimal risk is rewarded with the ability to spend $10,000. In real life, losing $90,000 may mean working much longer than planned.

The Stock Market Game could do much better by teaching kids the investing basics of asset allocation and buy-and-hold (for years). It’s like giving kids a couple of games of Super Mario Cart as a test for their driver’s license. No one has ever played Super Mario Cart to complete the race safely.

Is The Stock Market Game a Scam?

I’ll let you be the judge, but Allan S. Roth, MBA, CPA, CFP® makes a good case in my opinion:

“Why would SIFMA want to teach maximizing risk? SIFMA stands for the Securities Industry and Financial Markets Association. Well, over half of its 520 members are broker-dealers. The SMG provides great benefit to those broker-dealers. If students do well in the game, they could take away the lesson that investing is easy and become a day trader. If they do poorly, they might learn the opposite lesson and believe that picking stocks is so difficult that they need to hire a broker to buy individual securities.

I view the SMG as yet another version of the financial services industry’s game of ‘heads we win; tails we win more.'”

Andy Hallam, a former teacher, has this to say:

Stock market games reinforce bad behaviours while crushing the good ones.

Nothing else in education is so inherently backward.

What’s better than the Stock Market Game?

I recommend reading Investing for Kids or visiting our Investing landing page (which is still under development). Another great resource is the MoneyTime Kids course.

Kids will learn a lot more if you let them make their own mistakes on a small scale.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

Halloween Money Lessons – Cash or Candy

Halloween Cash or Candy

Halloween is just a week and a half away. This is the time of year for witches, ghosts, candy, and kid money lessons. Wait, kid money lessons?

Yep.

We all know how Halloween night is supposed to go. Kids get dressed up in costumes, and they go door-to-door ringing bells, saying “Trick or Treat,” and get some free, delicious Halloween candy.

What if, instead of just giving candy, the response was “cash or candy?”

That’s what Chuck Jaffe has done since 2016. It’s worth reading the article. I’ll wait.

If you cheated and didn’t go read the article, then:

  1. Shame on you
  2. I’ll give you a little summary

Jaffe has played games with kids where they either forgo candy or trade candy they already have. In return, they can have a guaranteed cash prize and/or a chance at a bigger cash prize.

The idea is simple… get kids thinking about value.

Almost all the kids took the money when the offer was simply cash. That makes sense; they can get candy from every other house. Over the years, the kids visiting Jaffe’s home seem to know he’s “the money house.” The kids almost always take that option, even when it’s just a gamble. And why wouldn’t they? It’s fun.

What if kids were given big candy bars? Everyone knows that the houses that give out the big bars are rare. They’re more valuable.

Experiment: Would Kids Choose Cash or Big Candy

I found this YouTube video about how one house offered kids a $2.50 giant bar or a dollar bill. Clearly, the giant bar of candy has more value. However, kids can still get candy from everyone else, and cash is rare. It turns out that about 25% took the dollar bill. There are a few other interesting things that the person learned. I don’t want to give it all away, so watch it below:

Final Thoughts

I’d love to try out some of this stuff at Halloween myself. However, we only get two or three groups of trick-or-treaters every year. I’m not sure I’d learn too much or increase the financial literacy of too many kids.

One of the more interesting side effects of Cash or Candy is that kids walk away with less candy. That’s less sugar, cavities, and obesity.

Finally, if Cash or Candy isn’t your thing and you find yourself with too much candy, you can always try “Cash FOR Candy.” This program run by HeathyWage will give you cash for sending your candy to overseas troops. They have limited cash to give, so you need to act fast.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

Kid Wealth Voted Best Financial Literacy Content for Children

There’s a tremendous community of personal finance content creators. I started blogging my own financial journey in 2006. I quickly realized other bloggers had the same idea: Take control of your money, and it will take care of you.

Nowadays, blogs might not be as popular to learn about personal finance as they once were. There’s a lot more content now. There are short-form and long-form video platforms like TikTok and YouTube. There are social media platforms like Facebook and whatever Elon decides he wants to do with Twitter/X this week. Podcasts are extremely popular.

All of these different forms of media fall under the umbrella of content. There’s only one awards show in the world of personal finance content. It’s not like television or movies with awards like the Emmys, People’s Choice, and Screen Actor’s Guild.

The only awards in town are the Plutus Awards, and today they have decided that KidWealth is the Best Financial Literacy Content for Children!

The Plutus Foundation does a lot more important work than running the Plutus Awards. You can read more about the Plutus Foundation mission here

You may have noticed that I haven’t created new articles in the past few months. I had been working on a push to close out the year, but now I’m even more motivated.

Stay Tuned.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

Real-Life Money Spending: Always Look at Prices!

A couple of months ago, I wrote a real life money story about my son using his debit card to buy some arcade games and candy for his friends. I guess this isn’t normal for a ten-year-old.

Today, I’ve got another money story. As you can tell from the title, it’s not quite as positive.

My kids love Guardians of the Galaxy. They love that it has the action of a Marvel movie, but also that it’s very funny. They also love the music, which is a big win for me. We were at Walmart picking up a few things, and my 10-year-old (the oldest) spotted a Guardians of the Galaxy magazine as we were going through the checkout. He grabbed it and said that I could subtract it out of his FamZoo account. It sounded good to me. I encourage reading over video games and YouTube any chance I get.

Guardians of the Galaxy Magazine

We got home, and it was late, so we went to bed. The next day we were both in for a surprise. I looked at the receipt and saw that it was $13.99. So I asked my son if he knew how much the magazine was. He said that he didn’t. I bet it wasn’t advertised very well outside of the little price in the lower-left corner. I don’t think many kids would know to look there for the price anyway.

The tragedy is that $14 at Walmart goes a lot way. You can get a decent toy and have money left over for a good amount of candy. While he loved the magazine, I think he realized that it wasn’t the best use of his money.

It was a great lesson, and it wouldn’t have happened if I didn’t let my son control his money with the FamZoo account. By empowering my son to make money mistakes, he is learning. In a related story, I have an update on the $7 shark pen my youngest son bought in that article. He came home at the end of the school year with it, and it was broken. The shark’s jaws wouldn’t open or close anymore. I asked him if he thought he got $7 of value out of it, and he said that he did. Maybe it wasn’t a money mistake after all. Maybe he is still learning some of the costs of things.

The money-learning journey continues…

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

Ten Ways to Make Your Kid a Millionaire!

Make Your Kid A Millionaire

Most of the articles at Kid Wealth are designed to make your kid a millionaire. However, here are ten specific ideas. One of the significant advantages of writing for kids is that they’ve got time and moldability. It’s harder for adults who have responsibilities, less time, and are more set in their ways.

1. Learn and Use Compound Interest

Regular readers know that teaching compound interest was going to come first. In particular, a kid Roth IRA can compound for five or six decades and be withdrawn tax-free.

If you don’t want to wait several decades, there are some ways to speed up the process.

2. Choose a High Paying Career

I love teachers. Unfortunately, their pay very much compared to architects and engineers. Some studies show that engineers have lifetime earnings of $4 million, while teachers are half that.

When you make more, you can save more and invest more.

3. Avoid Debt

Debt is compound interest working against you. You can’t save and invest while paying off a mountain of debt.

Not all debt is bad. Some debt, such as starter homes or state school college, can pay off down the line. Be very cautious about six-figure student loan debt – make sure it’s a top-earning career like a doctor or lawyer.

Avoid McMansions.

4. Limit Your Biggest Expenses

Why avoid McMansions?

Housing and transportation typically combine for half of people’s expenses. Big houses lead to more furniture, have higher property taxes, and require more energy to heat and cool. There are more maintenance costs.

McMansions also typically cost more money. That means taking out a bigger mortgage and more debt. A smarter money move would be to buy a tiny house and invest the savings. That may be a little extreme, but there are many types of house hacking, from getting roommates to live-in house flipping.

Buying an older used car without all the bells and whistles is also intelligent.

Most kids don’t need to worry about big expenses until they are legally adults, but it’s wise to build this foundation at a young age. I know many young adults who get their first job and spend too much on a first house. Similarly, many kids spend too much on a car when they get that first paycheck.

5. Maximize Assets and Limit Liabilities

Kids should learn the difference between assets and liabilities. For me, this was like flipping a switch in my brain. I stopped buying a lot of “stuff” unless it was shares of stock.

If you had $400 when Apple released the first iPod, you could have bought an iPod that would most likely be in a landfill – or you could have bought Apple stock that would be worth nearly $180,000 today.

Of course, no one knew that Apple would be the fantastic success story it is today, but it’s a strong example. Kids may not know what an iPod is, but this is an excellent chance to give them a quick history lesson.

6. Start a Business

Get kids motivated to start a business. Once they start thinking about how businesses work, they’re more likely to explore side hustles.

7. Increase Social Capital

I have helped a few friends find jobs, and I’ve had a few friends help me find employment. Some jobs are paid well, and we’ve all been happy with the arrangement. In fact, I’ve almost always been hired through word of mouth.

So teaching kids how to network can certainly pay off.

8. Learn More by Getting a Book

Here’s a list of kids money books. I’ve written several reviews to help you decide which book is best for you.

Of course, you could also get the book, Make Your Kid a Millionaire. I haven’t read it, so I can’t recommend it.

9. Learn More by Watching a Video

Looking for more ideas on how to make your kid a millionaire? Check out this video:

10. Be Lucky

Let’s end on a fun one. There will always be stories about someone who made it big through some quirk. Maybe they won a lottery. Perhaps they created a YouTube that went viral. Okay, that takes much more than luck, but luck is involved.

There’s a famous quote: “Luck is the residue of design.” All the above items are part of a design. When you have a good plan, good luck is likely to follow you.

The most likely way to make your kid a millionaire is a combination of the above. Maybe your kid isn’t getting a full scholarship to Harvard Medical School. Perhaps your kid is better suited for live-in house flipping. Since you are reading this site, I know you can set your kid up with investing and compound interest at an early age.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

Teach Kids Money and Math with Monopoly

Is Monopoly useful to teach kids about money? Yes! However, I found that money is a secondary skill.

Last week, for Family Board Game Day we played Monopoly. My wife had found the Nintendo version in a yard sale for $1. (The game was in perfect condition, except that it didn’t have the instructions. They were easy enough to find online.) Instead of Boardwalk and Park Place, we worked with Mario and Luigi. It’s a classic rebranding that Hasbro has done thousands of times with Monopoly. Since my kids love Nintendo, the Monopoly version was doubly appealing to them.

At ages 8 and 9, they are the perfect age for Monopoly (Official suggestion 8+). We had played Monopoly Junior with them when they were 5 and 6, but I never liked it. Doing all the money transactions electronically didn’t feel like Monopoly. I’m much happier playing the real thing now.

monopoly teach kids money
monopoly teach kids money

Monopoly is More about Math than Money

Everyone thinks of Monopoly as a money game. It is, but I was blown away by all the math that we were doing. I’ve been using a credit card for so long that I don’t do a lot of cash transactions. We were doing all sorts of math to make change. For example, often when I had to pay a rent of $14, I’d give a $20 and my kids would have to give me $6 back. One time, I paid $102 for a $52 rent. The kid knew that I did it so that I would get a $50 bill back.

As we played longer, the math became more complex. Instead of dealing with rents under $30, the houses and hotels had us doing math with hundreds of dollars. That’s great place value practice especially now that the kids are out of school for the summer.

What About Monopoly’s Money Lessons?

It was just the kids’ first game of Monopoly. They played it very cautiously and saved their money until they landed on the premium properties. As a result, my wife and I were able to gobble up whatever properties we landed on. We had the unfair advantage of years of experience. I also had an extraordinary amount of luck the whole game.

Once most of the properties were owned, we started trading. This is where younger kids can learn the art of negotiation. My youngest son traded two of the greens for my Luigi (Park Place) to complement his Mario (Boardwalk). After the game, I explained that having three properties for other people to land on is better than two. Getting back to math for a second, this conversation dipping our toes into probability.

We didn’t get into real estate discussions like the landlord, renter relationship. We did cover how to mortgage the properties in the context of the game. However, we didn’t get into the common use of how a mortgage works because you can’t get a 30-year fixed to buy Marvin Gardens.

From a money perspective, there was still a lot going on. We were all making change all game long. We were buying assets and even selling them to other players. One of the things that’s great about money games is that it is a fun way for young children to get a basic financial education.

Final Thoughts on the Monopoly Game

For this age group, it’s hard to beat Monopoly. The worst part of the game is that it takes a very long time to play. I’ve been a little more focused on my kids’ math skills than their money management skills, but Monopoly gives us both at once. Even if you can’t find it at a yard sale for a dollar, it is still one of the best purchases you can make. You can buy Monopoly on Amazon here. I suggest teaming it with the Game of Life that covers more real-world situations such as having a career and earning a salary.

For more ideas, visit our list of best money games.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

Win a Free Teen Entrepreneur Course ($197 Value)

The Simple Startup

To celebrate six months of Kid Wealth, I’m giving away a course to teach your tween/teen how to start a business. This isn’t just any course. It’s by Rob Phelan of The Simple Startup. I’ve mentioned Rob a few times on this website. He’s the author of M is For Money and he’s the creator of the high school curriculum for The Choose Fi Foundation.

He’s a high school personal finance teacher and a Certified Financial Education Instructor by NCFE. Anyone can create a course, but very few people can say they’ve helped kids launch dozens and dozens of income-producing businesses.

If your kid has ever said, “I want that!” but didn’t have the money to buy it, this course is for them. The Simple Startup comes in two flavors. There’s a self-guided course. Then there’s the Summer Group Challenge. The Summer Group Challenge is a 6-week interactive course. It has live webinars twice a week – a great way to keep kids motivated and accountable. It also ensures that if they get stuck, they’ll have a hand. The Summer Group Challenge is normally $197, but one Kid Wealth reader will win one for free.

By the way, your odds of winning are very good since Kid Wealth is new. Also, everyone who enters will receive a consolation prize!

Enter with the widget below or click here

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth

Welcome to Kid Wealth

Welcome to Kid Wealth

Welcome to Kid Wealth, where kids (and their parents) learn to take control of their money.

Kid Wealth is for both parents and kids. Initially, I’ll be focusing more on parents. That’s my most recent experience. I’ve got 35 years of rust gathered on my kid experience. Don’t worry if you are a kid reading this. I’m going to need your perspective to make this work. It’s going to take a real team effort.

For now, I’ve got a message for each of you. Feel free to spy on each other’s messages, we don’t need to have any secrets here.

Kid Wealth for Parents

We all want our kids to have a better life than we had, right? One of the best ways to ensure that is to have enough money.

I know what you are thinking, “Money doesn’t buy happiness. I don’t want my kid thinking that it does.” I don’t disagree. That’s why this website is called “Kid Wealth.” Wealth, by many people’s definitions, can extend beyond money itself.

Besides, even though money may not buy happiness, it can help you avoid the stress that is associated with unhappiness.

Kid Wealth for Kids

You’ve got the more difficult job here. It’s your money and your hard work that went into making it. Parents have it easy, they only have to talk about money. Talk is cheap, right? So while this may seem like a lot of learning and a lot of doing, I want you to note one very important thing.

Mastering money at a young age is much, much than when you are older. You’ve got much more time for compound interest* to help your investments grow into millions of dollars. You’ll be amazed at how much money you can make without doing any work at all.

Doesn’t that sound like something worth learning and working for?

Getting Started at Kid Wealth

The very best article to get started is: How to Teach Your Kids About Money. You may also want to read more about Kid Wealth. We offer no products or services, and show no ads – only information to help you and your kids make the most of their money.

Next, you may want to join our mailing list or follow Kid Wealth on social media. There are forms and links in the right sidebar for that.

Finally, you might be interested in a couple more articles: how to give your child an allowance and the best book to teach kids about money.

* If you don’t know what compound interest is, don’t worry about it. We’ll get to it soon.

Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence.  He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.

Read more on the About page.

If you enjoyed this article please Support Kid Wealth