2001: How would Buffett teach kids about money?

AUDIENCE MEMBER: Hi. My name is Steven Kampf (PH) from Irvine, California. I’m 10 years old and this is my fourth consecutive year here.

WARREN BUFFETT: Terrific.

AUDIENCE MEMBER: How I got —

WARREN BUFFETT: We’re glad to have you here.

AUDIENCE MEMBER: Thanks. This is my fourth consecutive year here, and how I got to owning stock is my dad taught me to start my own business. And I bought Berkshire Hathaway stock with my profits.

In school, they don’t teach you how to make and save money, not in high school or college. So my question is, how would you propose to educate kids in this area?

WARREN BUFFETT: Well, that’s a good question. Sounds to me like — (Applause)

Sounds to me like you could do a good job yourself, too. And, you know, at 10, you’re way ahead of me. Unfortunately, I didn’t buy my first stock until I was 11, so I got a very slow start. And — (Laughter)

It’s, you know, what it takes really is — and you find it in some classrooms and you don’t in others — but it takes teachers who can explain the subject. Charlie would say Ben Franklin was the best teacher of all in that respect.

But, you know, it looks like you either got it from your parents — an education on that — and parents can do more education, really, in that respect, even, than teachers.

But it’s, you know, I get a chance to talk to students from time to time. And, you know, one of the things I tell them is, you know, what a valuable asset they have themselves.

I mean, I would pay any bright student probably $50,000 for 10 percent of his future earnings the rest of his life. So he’s a $500,000 asset just standing there. And what you do with that $500,000 asset, in terms of developing your mind and your talents, is hugely important.

The best investment you can make, at an early age, is in yourself. And it sounds to me like you’re doing very well in that respect. I congratulate you on it.

I don’t have any great sweeping program for doing it throughout the schools though. We have — here in Nebraska — we have an annual get-together of students from all the high schools throughout the state. And it’s a day or two of economic education. I think it’s a very good program.

But I think if you just keep doing what you’re doing, you may be an example to other students.

Charlie?

CHARLIE MUNGER: Well, I’d like to interject a word of caution. You sound like somebody who’s likely to succeed at what you’re trying to do. And that’s not always a good idea.

If all you succeed in doing in your life is to get early rich from passive holding of little bits of paper, and you get better and better at only that for all your life, it’s a failed life.

Life is more — (applause) — than being shrewd at passive wealth accumulation. (Applause)

WARREN BUFFETT: I think he’s going to do well in both.