Mellody Hobson, Class of 1991, speaks out on the latest episode of the “She Roars” podcast to demystify principles of investing and discuss her own efforts to combat the dangerously high rates of financial illiteracy in America today. “I find that children become the gateway drug to parents, and I mean that in the best way. If you can teach a child about money, you de facto teach their parent.”
That kind of thinking led Hobson and her business partner John Rogers to set up the Ariel Community Academy — an elementary-school program with a savings and investment curriculum on Chicago’s South Side. The school includes hands-on learning, says Hobson: “We give every first-grade class $20,000 real dollars to invest, and the money follows them through their grade school career.”
The class invests that initial pot of money for eight years. When they graduate, students give $20,000 back to the incoming first grade to make the program self-perpetuating. Half of the remaining profit is donated to the community and the rest is split among the class members. Every child who invests their share in a 529 college savings program enjoys a matched contribution by Ariel Investments.
“It's our way of teaching them not to walk away from the free money that they may be offered inside of a company one day with the deferred compensation or defined contribution plan,” explains Hobson.
Most of the school’s 600 students are African American. Race, says Hobson, is an outsized factor in rates of financial literacy but women, too, face barriers. Indeed, as an African American woman and boardroom executive, Hobson is deeply concerned by the persistently low representation rates for women at the level of Fortune 500 managers and CEOs. Corporate America is typically intolerant of good intentions with poor results, observes Hobson.
“But when it comes to diversity, there is for some reason this willingness to be O.K. with effort. … This is the one area in corporate America where trying counts, versus every other area in corporate America, if you don't get results, you don't keep your job.”
Hobson thinks it’s time to deploy financial incentives to reward diversity gains or penalize their absence. “Because diversity is not about feeling good or looking good or doing the right thing. It's actually in the best interest of the future of a 21st-century company.”
The “She Roars” podcast was launched in October 2018 to celebrate women at Princeton, following the University’s successful alumni conference of the same name. Future interviews will include Jennifer Rexford, Class of 1991 and chair of Princeton’s computer science department.