Talks money with teens

~  Ray Parker
~  The Arizona Republic


Teens at Willis Junior High seem more familiar with spending money than making it, especially during this holiday season.

Many of them own iPods. But few of them knew they could own a piece of the company that makes it:

Rod McKinnis, a former economics professor and Chandler business owner, visited the Chandler school Tuesday to give some 500 students the bottom line that often separates rich and the poor: financial information.

A lot of the listeners got turned on to investing, like Lisa Nickerson, 14, said she liked what McKinnis had to say about compounded interest.

To illustrate the concept, students were shown the dangers of buying a car like a loaded BMW 750iL costing about $75,000. First-time buyers could pay 25 percent interest on the car loan over four years, eventually doubling the cost of the car to $150,000.

“This is the bad way to compound interest,” said Sharitta Allen, Gilbert branch manager of M&I Bank, who also spoke to the students.

McKinnis, founder of a Chandler-based financial consulting group, gave the alternative: If students invested $25 a month over 20 years at 12 percent interest, the pot would build to $147,059.

“It kind of makes you think differently about that Christmas money,” he told the eighth-graders.

Referring to the book Rich Dad, Poor Dad by Robert Kiyosaki, the financial planner said the poor tend to invest in items that go down in value (cars, brand-name clothes), while the rich invest in items that increase in value (stocks, bonds, mutual funds).

Over the past 60 years, he said, the stock market has averaged a 15 percent return.

“I want you to be equally excited about buying stock in the Wii, in Nintendo, as buying one,” McKinnis said. “When it comes to a major purchase, think if this is going to be an asset or liability.”

Social studies teacher John Prothro brought the speakers to school hoping students would get a new perspective on what to do with their holiday money.

“All the young people are fascinated by how money grows,” Prothro said.

McKinnis suggested the following strategies for a teen to become the next Donald Trump.

• Create investment goals with a target for 15 percent annual return.

• Review the results every six months.

• Protect your credit score, which determines interest rates on loans, among others.

• Develop a relationship with a local bank.