On October 19, 2012

Apps Provide Cool Ways for Young to Learn About Finances

By Kannan Mahalingam

October 19th marks the 25th anniversary of BlackMonday, the largest one-day percentage decline in the Dow Jones, according to many financial experts.

“The real lesson from Black Monday is that one can’t—and shouldn’t—try to beat the market by predicting where it will go at any given time,” according to an article about the causes of the event in an article in US News and World Report.  In the story, the chief market strategist at investment house Edward Jones pointed out that your investments should be based on principles, not predictions.  Great advice for sure, but perhaps more salient advice for anyone, particularly young adults, aspiring to invest is to make sure you know what those principles are before putting your money in the market.

To many young adults, the market is perceived as the local hangout, like a mall, where you go to have fun and shop, and not the store of inflation indexes, savings, borrowing, diversification, impact of taxes on investment returns, price swings of an asset driven by supply and demand.  “Stop,” you might say, “what is all that?”  Well indeed, many young adults don’t know what those terms mean, and for that reason new apps are being developed to help them better understand the intricacies of the financial markets.

Tedious Chore

In an article in The New YorkTimes, Greg Mankiw, a professor of economics at Harvard, discussed the lack of financial prep students receive before entering college: “As a Harvard professor who teaches introductory economics, I have the delightful assignment of greeting about 700 first-year students every fall…which raises these questions: What should they be learning? And what kind of foundation is needed to understand and be prepared for the modern economy?

“Few high school students graduate with the tools needed to make smart choices. Indeed, many enter college without knowing, for instance, what stocks and bonds are, what risks and returns these assets offer, and how best to manage those risks.”

Simulating and Stimulating

In order to better prepare young adults for Professor Mankiw’s courses, and for future investments in the market, apps that provide a hands on and competitive approach are now available to help instruct and engage future investors.  And, much like the real world, some of these apps use external forces to impact the markets in exciting ways.

This week, Wonga Bazaar will launch in the U.S. – marking the anniversary of Black Monday and providing a venue for young adults to vicariously experience the wild ups and downs of a financial market through a village economy.  The game app lets a trader buy or sell a versatile range of commodities in an authentic marketplace where market impacting events are delivered through a traditional and consistent drum-beat, just like the real financial markets, only in a more colorful and playful manner.

Apps, like Wonga Bazaar, creatively showcase the fluctuations of demand and supply. Despite the complexity foisted by the world of modern finance, these apps distinguish themselves by showing the simplicity involved in trading within a contained ecosystem, and how outside forces like seasonal weather changes and the decisions of the government influence the market’s direction. Traders playing finance game apps have to constantly make a choice between timing the market and holding a diversified portfolio of commodities while navigating the challenges these apps provide – just like what happens in the real financial markets.  And, many of these apps allow users to compete against other players, providing an incentive to learn and interact more to win.

Most Likely to Succeed!

We may never have a firm idea about what caused Black Monday 25 years ago, but in today’s tech world, we do have a way to teach young students how the markets actually work, via fashionable and socially acceptable “cool” apps.  Finances might not be “Biggest Man on Campus”, but game apps that teach finance are the one’s “most likely to succeed”!   For example, Wonga Bazaar already boasts near 17,000 Facebook fans and over 30,000 clicks on its YouTube video trailer.  In addition, the app was voted the “Most Popular App” during last month’s U.S. Department of Treasury contest, “My Money App Up”, searching for the “next generation mobile apps to help Americans shape their financial futures.”

Popular game apps have the potential to prepare and engage young adults for their upcoming turns in the market.  Perhaps, one of these more savvy and learned future investors will develop a financial app for the 50th anniversary of Black Monday that, when downloaded, prevents the wild fluctuations of a Black Monday and keeps the market on a constantly trending uptick.  Now, that sounds like a fun market where I’d like to hangout!



Kannan Mahalingam is the founder and president of myZantium, a game app developer. Kannan holds a Bachelor degree in Electrical Engineering from National Institute of Technology, India, and he and his family live in Colorado.