“The things I think about the most are things I never know though. Like, why don't schools teach more mathematics, less trigonometry and more about taxes? They at the chalkboard, teaching us ass backwards. How about preparing us for life, instead of lab rat us?”
The man who spoke these words isn’t your typical personal finance expert or industry watchdog, as you might have guessed from his colorful use of language. However, rapper Big Sean, a 24-year-old Detroit native, both reflects and directly influences youth culture today. And in his song “24 Karats of Gold,” he speaks to an issue that is growing in importance among young people: being adequately prepared for financial independence.
We’ve all seen the issues our parents – often considered to be infallible in our eyes – have been forced to confront in recent years, and if they can make mistakes and get into such financial trouble, where does that leave the rest of us who aren’t as well versed in the do’s and don’ts of money management? The complexity of personal finance was thrust in our faces by the Great Recession, and while a desire to learn has certainly spawned from that, is anyone there to teach?
The answer is most certainly yes.
How Financial Institutions are Meeting the Need
Not only do 25 states have some form of mandatory financial education in public schools, according to the JumpStart Coalition, but to our surprise financial literacy curriculums are also firmly entrenched at many colleges and universities. For example, the University of Utah not only offers two introductory classes in personal finance, but it has also opened a popular new personal finance help center, where students can go to ask questions about their own finances or attend lectures on the topic. Texas Tech University offers an entire minor in personal finance as well as a couple of classes that students can take individually.
“For many, many years at Texas Tech there’s been a survey course in personal finance, … a course that covers a very broad array of topics, starting from cash management, budgeting –that type of thing, going through taxes, credit, housing, insurance, investments, retirement planning, [and] estate planning,” said Dr. Vickie Hampton, a certified financial planner who is both a professor of personal finance and chair of the Personal Financial Planning Department at Texas Tech University. “These courses are fairly common on university campuses actually, in that a lot of universities do offer them. However, very few universities require them, so it’s always a challenge because they don’t fit nicely into any core curriculum.”
Money Management Education: Popular Among Students
In other words, helpful resources – whether they come in the form of personal finance classes, help centers, or informational websites – are often at students’ disposal, but it’s typically up to the students to seek them out. However, if Big Sean and the case of the Personal Finance @ Duke program are any indication, generating interest isn’t very problematic.
Duke launched its program last April following an e-mail sent by a former student, who said that while she appreciated all that she’d learned at Duke, the fact that personal finance was not among her teachings had made living in New York City on a limited budget difficult. The task of setting up the curriculum, which includes an informational website, a lecture series, and soon, peer counseling, fell to Irene Jasper, a CPA who is the Director of Student Lending at the university.
“When I started this I thought, ‘You know, this is going to be a difficult program to really get any kind of interest in because it’s money and who’s interested in that?’” Jasper said. “Once I started making some phone calls and sending e-mails out to get people to help, everybody, everybody wanted to come on board and contribute time, money, ideas, and it was like I had turned on this firehouse of input and information.”
Personal Finance Education Has Tangible Benefits
And while many of these programs around the country weren’t created as a direct reaction to the Great Recession’s financial literacy wake-up call, hopefully we can help correct the all-too-apparent knowledge gap by placing an increased emphasis on them. After all, a 1997 study by Dr. B. Douglas Bernheim of Stanford University, did establish a clear connection between personal finance education and financial performance in adulthood, when it found that students who went through state-mandated personal finance education in public high schools ended up saving significantly more of their money than peers who did not.
“Interestingly, I don’t think that the financial education that people receive in high school or earlier affects their behavior subsequently to any great extent due to the specifics of what they learn,” he said. “Do these people score higher on tests of general financial knowledge or economic knowledge? Not particularly. But they do make better choices, and so the theory is that … exposing people to these ideas, acclimating them to basic financial concepts early on creates a comfort level.”
That “demystification,” as Dr. Bernheim puts it, is the most important reason why personal finance education is something every student should receive.
“Financial stuff seems really mathematical and really complicated to a lot of people, and so they’re very put off by it. And the way a lot people handle being scared by stuff like that is to avoid it. They go into denial, they try not to think about it.” he said. “That’s, of course, exactly the wrong way to handle these kinds of things. You have to dive into them and think about them and realize the implications of what you’re doing.”
Ultimately, we have to hope that the Great Recession has emphasized the need to familiarize ourselves with these topics sufficiently enough that we won’t have to face being fooled twice by economic situations we aren’t equipped to handle. After all, the shame would surely be on us if that were to happen.