Over the weekend, I wrote about how school as an institution is flawed because it doesn’t provide children with a proper financial education. 

I did some more research on the topic and, to my surprise, I found an MSNBC article about a Chicago public elementary school that has taken a remarkably non-conformist approach to education.

Established in 1996 by Ariel Capital Management, a Chicago-based money management firm, the Ariel school gives each incoming first-grade class $20,000 for the children to use to pick stocks and manage.  Ariel Capital’s experts manage the $20,000 portfolio for each class until sixth grade.  They brief and advise the children along the way.  Then, in sixth grade, they turn over the decision-making to the children. 

When they graduate from eighth grade, each class returns the initial investment amount to the school for another first-grade class; the students then donate half their gains; and then they can take the rest and either pocket it or invest it in a 529 college savings plan.  (If they invest it in a 529 plan, Ariel Capital gives them an additional $1,000.)  80 % of graduates last year invested in a 529 plan. 

Who would have ever thought that a first-grade student would have the opportunity to make money in this manner?? 

John Rogers, the chairman and CEO of Ariel Capital, reasons that, with pensions being phased out all over the country, saving and investment must become an essential part of schools curriculums.  I couldn’t agree more.  Rogers lends the school some of his own reputation and credentials.  He graduated from Princeton, and he started Ariel Capital when he was 24 with his own savings and investments.  Now, the company has more than $13 billion managed across three mutual funds, and it has separate accounts for 89 institutional clients.

It’s still difficult to evaluate whether the Ariel school’s strategy has been successful.  Its first graduates, who are now juniors in high school, haven’t ventured out into the working world yet.  Nevertheless, the school’s high math test scores are a good indication of the students’ prospects. 

In addition to its unique investing process, the school is heavily focused on creating an atmosphere centered around money and finance.  Hallways are named after Wall Street and other marketplaces.  Twice daily, students announce the latest business news over the PA system.  The school teaches first graders basic economic principles, and it teaches eighth graders how to write their own business plans.  The students can also tap into some real world experience, such as attending analyst presentations and meetings at McDonald’s Corp., where Rogers is a member of the board of directors.

“We don’t wait until our students are 16 to teach them how to read.  Why wait until they’re 16 to teach them how to manage a bank account?” asks, Connie Moran, the school’s director of financial education.

That is a principle that will, no doubt, push the school’s 440 students to the head of the class–in the real world.

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