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Jessica McKinnon, who wants to be a doctor when she grows up, is smart. So is Aymiel Ankrah, who hopes to become a veterinarian.

Yet, a year after opening their own bank savings account and depositing regularly, the two nine-year-olds are still confused about money.

And these two fourth graders understand financial concepts better than most of their peers at St. Lawrence Academy in North Buffalo.

Asked what "interest" means, Jessica, whose strongest subject is math, frowns and shrugs. Even when told that she gets 2.74 percent interest on her $5 bank deposit, or an extra 17 cents per year, she didn't get it.

Asked what happens to his money after he deposits it, Aymiel says it sits in a vault at the bank. "The vault has all these little boxes on it with combination locks," he explained.

How much do children know about finance? Chances are, not enough. And that could cost them.

Many financial advisers believe that the sooner children understand saving, spending and investing, the better their lives will be.

"It's a sad fact that most marriages break up over disputes about money," says Michael J. Searls, a former Wall Street financial adviser and author of the recently published "Kids & Money." He is already paying his two-year-old an allowance and helping his 11-year-old daughter invest in stock.

That's because he realized three years ago that his children -- there are four of them now -- needed help before they made the same mistakes as their father.

"I figured out I had to get a good education and what career to go into to make money. But I didn't know what to do with money once I made it," Searls said. So he spent his earnings -- on boats, on cars, on homes.

He stopped doing that when his daughter asked him for money and couldn't tell him what had happened to the cash he'd given her earlier.

"I learned through neglect; I did not want my kids to do the same," he said.

Searls' quest to help educate young people about money is one that makes sense to educators and money managers.

"This idea of compounding for the future should be engraved at an early age," said Ted P. Schmidt, a Buffalo State College professor of economics and finance. "I don't think it hurts to start them whenever they're able to read."

Schmidt is director of the Center for Economic Education at the college. The center is one of 15 sites statewide that coordinate the "Stock Market Game," co-sponsored by The Buffalo News. The game, open to students in grades four through 12, has attracted teams from nearly 600 Western New York schools, including seven elementary schools.

The competition is a simulation of buying and trading on Wall Street. It is designed to help students understand securities markets, decision-making
and capital.

"It introduces them to the stock market, but not to personal finance; I always thought that is something handled in the home," said Lorraine Redlinski, who coached a Casey Middle School team to second place in the game last year.

She said she sees a mix of knowledge about money matters among the 13- and 14-year-olds she works with in her eighth grade American history classes. Some students, she said, are "in the dark" about finance. That's clear when they suggest that the national debt could be fixed by simply printing more money, she said.

At St. Lawrence Academy, 150 students started accounts at the First Federal Savings & Loan Association school banking program. Those making their weekly deposit last Tuesday showed they are saving with withdrawal in mind.

Aymiel, who owns many pets, said: "I have to take it to feed my animals or to use it to buy another animal." He said he puts money in the bank to avoid spending it all at once.

The focus on spending, rather than saving, is evident among older students as well.

At Lafayette High School's Academy of Finance, most of the 280 students in grades nine to 12 "don't have a concept" of personal finance, said director Fred P. Press.

The program invites financial professionals, including credit bureau officers, to talk to students. Press said he thinks children should be taught about finance in sixth grade, when they begin to realize that money can lead to freedom.

To his high school students, he said, "money exists for no other purpose but to put clothes on their back and to put music in their CD player."

Spending is what youngsters do as corporations pummel them with ads, said James U. McNeal, a marketing professor at Texas A&M University who researches spending by America's youth.

He said people of ages 4 to 12 spent $20.3 billion last year -- one-tenth of that on junk food and one-tenth on toys and games.

Their purchases were made from money they accumulated from allowances, gifts and work.

They influenced the purchase of another $172 billion in goods last year, McNeal said, and indirectly caused the purchase of another $300 billion.

In his surveys of American households, he's finding that children are learning to shop more responsibly because more are going to malls and stores accompanied by their parents.

Searls said he recommends giving weekly allowances to children and they should be taught to divide the money they receive into different categories of use: some to spend or give to charity, some to save, some to invest.

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