The financial games kids play may pay off
By Julie Sturgeon • Bankrate.com

Worried that the extent of your kids' financial knowledge ends at how to spend more money faster? They've got a lot of company.

More than two-thirds of high school seniors recently surveyed by the Jump$tart Coalition for Personal Financial Literacy failed a money literacy test. What's a parent to do? Consider ramping up your youngsters' financial education by using something they've probably already mastered: the video game.

Such nontraditional efforts could pay off. Additional data gathered by the Washington, D.C.-based nonprofit coalition reveals that students involved in interactive stock market games show slightly higher levels of financial literacy. Lewis Mandell of State University of New York at Buffalo conducted the survey for Jump$tart and has included game playing as a research element since 2000. The percentage of improvement for game players has stayed level during this period.

"Any game that gives them knowledge they might not have otherwise is good," he says. "But would I pull my kid out of soccer practice to make him play a stock market game? No. It's more like I'd encourage it as a fun way to study these concepts."

Mandell also suggests that adults who truly want to teach stock market dynamics look for ways to incorporate consequences for doing poorly. For instance, in his college MBA class, students who end up with portfolios above the class average earn bonus points. Students below the median lose points from their grades.

"Too often 'winning' means taking the most risk. Without consequences, other than merely losing a game, you haven't taught a lesson," he says.

"Video games are mind-numbing, good for manual dexterity practice, but they don't broaden your horizons," says Carol Jarvis, executive director of the Maryland Council on Economic Education at Towson University. "Kids are interested in the world around them if we can find a way to connect them to it so that they feel like what happens out there is relevant." Participating in stock simulations accomplishes that.

Money-based games also feed the game-playing competition quotient. Most versions offer top scorers honors, some dangle prizes. To get the financial fun started, here are some online programs educators tout:

The Stock Market Game Worldwide
Developed by the Educational Foundation of the Securities Industry Association in 1977, The Stock Market Game Worldwide remains one of the most recognized programs among educators.

Participants receive a hypothetical $100,000 to invest during a 15-week simulation. Stock prices mirror real life, but any time a stock falls below $5 the game liquidates that selection and deposits the money in the portfolio. The idea is to discourage day trading mentalities.

The games begin February and October, with a special summer session available. Registration information, broken down by state, is available at the Web site. The curious are allowed a two-week window to explore the game before committing to registration. Parents living in the D.C. area may want to take advantage of free workshops the Maryland Council on Economic Education sponsors to show adults how they can boost the lessons.

Fees vary from state to state but generally are $10 per team, typically four to five students in a classroom. Individuals also may participate, as well as student-parent pairings.

StreetSage.com
The problem with a short simulation, says Michael Stahl, founder of StreetSage.com and author of Early to Rise, is that it encourages a short-term, speculative mindset. That's why his entry simulates 35 years in the stock market over an entire semester.

"You can really illustrate the miracle of compounding this way," says Stahl. "Low-income students especially hang on to that concept because they want to find ways to change their future."

And as a junior at the University of Pennsylvania's Wharton School of Business, Stahl represents the first generation of kids who grew up with Internet stock simulation games. Thanks to his experience, StreetSage.com offers the eye candy that appeals to the video generation.

"We've found that little things like this encourage more use than the other programs that teach the same information without the fun," he says. "Some students tell us they log on multiple times a day, which is great."

Education reigns, too. A journal feature steers participants to log their reasoning behind every purchase or sale. Pie charts visually enforce the information a full-service broker would include on quarterly statements.

StreetSage.com entered beta-testing in September 2002, so while eager players may sign up for the Spring 2003 session, the exact start date has not been set. According to the enrollment form, players will be notified before the next game, at a cost of $19.95 per session, begins.

The Virtual Stock Exchange
Since Jeff Berman, president of VSX, created this game in 1997, 400,000 people ranging from third-grade classrooms to business school students and full-time security analysts have signed on. The attraction: Virtual Stock Exchange allows users to create their own private competitions and invite friends to join them.

It also allows almost every type of order, including limit, stop, market open, market close, good-'til-cancel and day orders. Plus, it's free.

"Our most active users literally make hundreds of trades each week," Berman reports. "We normally have anywhere from 4,000 to 7,000 competitions simultaneously, and recently a fifth-grader e-mailed me to say she enjoyed the game so thoroughly, she started another contest for her family."

Hollywood Stock Exchange
The Hollywood Stock Exchange launched as a way for regular Joes to invest in independent film projects. But when that didn't prove practical, its Wall Street founders ran with the simulated-game concept as a way to gather market research for movie moguls. Americans jumped aboard with fervor.

At last count, 500,000 players sign in regularly to hypothetically invest $2 million in movies and stars rather than company stocks and bonds. According to vice president Michael O'Rorke, Hollywood Stock Exchange's demographics skew slightly more male than female, with the college ages fueling the growth. But that shouldn't discourage parents of children as young as middle school since the concept centers on whether the public will or won't like a movie.

The site also gets into the more complicated trades like short selling and options on weekend openings. In January, HSX turns Oscar contenders into IPO offerings that tempt with premium cash-out values should you guess correctly.

"The market is the metaphor but the movies are the message," says O'Rorke. "What players trade is a lot more interesting than a WorldCom or Intel. And we stack up to Nintendo very nicely because our game is more cerebral."

Players may jump into this ongoing 24/7 game at their leisure, with no time limits. "It's like a drug. I was a trader before I started working here and I loved the game," O'Rorke confesses.

HSX is free. The sponsors make their money by selling the results of this game to insiders as a way to predict box office receipts.

Pit
Parents wishing to steer clear of online games need look no further than the local toy store. The classic "corner the market" card game Pit is celebrates its 100th birthday with special versions.

Participants hone negotiation skills by attempting to persuade other players to trade commodity cards before time runs out. But Pit's attraction, says Phil Orbanes, president of Winning Moves Games in Danvers, Mass., is that it teaches the frantic excitement of trading in the commodity pit without requiring children to know anything about technical process.

"When you play Pit, you feel the emotion, the intensity and timeliness of the decisions you're making," he says. "That's what most people find satisfying about the experience."

The basic deck runs $10.95, with a $15.95 price tag for the deluxe edition.

But, educators warn not to depend on these games alone to broaden young financial horizons. Sure, they may make mom and dad feel better about the time young Joe and Jill spend in front of the screen, but they are just a small part of a complete financial education.

Parents, says Jarvis, need to commit time to helping youngsters understand the underlying money-management concepts if they want any game to produce real-life payouts.

Julie Sturgeon is a freelance writer based in Indiana.

-- Updated: April 22, 2003