What do you wish your younger self knew about finance?
Before Tim Ranzetta, a San Francisco-based entrepreneur, co-founded Next Gen Personal Finance (NGPF), a nonprofit with a mission to bring personal-financial education to all students, he volunteered to teach a class in personal finance to ninth graders. Their hunger for financial lessons impressed him.
“As an entrepreneur you are always looking for a gap between the way things should be and the way they are,” he said. Ranzetta, a former management consultant, and Jessica Endlich, a former New York public high school principal, set up their nonprofit in 2014 with a mission to make financial literacy courses in high schools mandatory by 2030.
There are 46 proposed bills pending in 20 states to incorporate financial education into high schools, although not all of those bills would make it mandatory. Last year, three states made sure high-school students would take a one-semester course in personal finance — Nebraska, Rhode Island and Ohio — and in 2022 Florida and Iowa followed suit.
What’s the No. 1 financial lesson you wished you learned at a young age?
“Start investing in index funds at as young an age as possible,” Ranzetta told MarketWatch in an interview this week to mark National Financial Literacy Month. “People can get intimidated about buying an individual stock rather than a basket of stocks. But you can’t beat the power of compounding.” Most of compounded interest is reinvested and earns more money. In fact, some people say compounding is such a revelation that it’s close to miraculous.
As Riley Adams, creator of the Young and the Invested website, puts it, your money snowballs over time with compounding. “The benefits of compounding apply to virtually all families. Start contributing $10 per day to your child’s college savings account when they are 1 (assuming a 6% annual return), by the time they’re 18 they would have about $120,000 saved.”
Giving young people access to that type of insight is just one of many reasons why Ranzetta and Next Gen Personal Finance lobbies state legislatures, state departments of education and even local districts to encourage mandatory personal-finance education in high schools. The organization provides free training for teachers, and helps develop curricula for high schools, and also offers over 40 free modules for teachers to develop their own skills.
What was the most surprising thing about your young students?
“They were students seeking to be the first in their family to go to college,” Ranzetta said. “There was a ripple effect. I started getting calls from their parents about budgeting and investing. I even accompanied one student’s father to help him open a brokerage account.”
He found that teachers as well as students often …….