YAO | Financial literacy: it makes money

I’m still unclear about the differences between a Roth IRA and a 401 (k). I can’t imagine how much money I would need for retirement. I can’t figure out what debt could mean for my future. And don’t even get me started on taxes or insurance rates.

I’m far from the only student to feel this way. It might be reassuring if it wasn’t so terrifying. According to a 2019 survey by EVERFI, 53% of students surveyed felt they were less prepared to manage their money compared to other college activities like staying organized or managing classes. I am not a medium, but since a recent Bankrate survey showed that 51% of Americans have less than three months of emergency savings, our society’s lack of knowledge about money management does not bode well for our collective economic health.

Simply put, there is a financial literacy crisis in this country and few ways to fight it. Financial literacy education should start at a younger age, when most students can enjoy conversations about money, but are not yet struggling with obligations such as mortgage payments, student loans. or large medical bills. Universities like Cornell are in a position where they can help deal with the crisis, rather than allowing it.

Some colleges have actually taken steps to build the financial confidence of their students. The Utah State University, for example, has just added a personal finance course that would meet general education requirements. In fact, during the fall 2018 semester, Cornell had a similar course titled HADM 3200: Personal financial management, but it is no longer offered. The class covered topics ranging from taxes and insurance to investing and retirement planning. Bringing back such a course that teaches life skills like budgeting while discussing concepts like inflation or compound interest could go a long way in building beneficial long-term financial habits. Allowing the course to count towards graduation requirements and marketing it as essential for students of all majors would encourage students to take the subject more seriously.

In 2020, the total amount of US student debt reached $ 1.71 trillion, the average borrower in front of 39,361 dollars. Students take out loans to continue their education in hopes of a better future, so it’s counterintuitive that so many college graduates don’t understand how their current financial decisions will impact their lives later on. Of course, the idea of ​​putting down a down payment on a house may seem distant, and retirement even further away. But, our current credit scores and debt will affect how quickly our mortgages are approved, and the amount of money we invest now can determine the age at which we retire.

Financial literacy classes shouldn’t be about stock picking or advanced Excel modeling, but rather about developing ways to deal with any money issues that are sure to arise much sooner than you expect. There are, unfortunately, so many other ways besides student loans to cripple debt. The sooner we are taught to make informed financial decisions, the more equipped we will be to deal with all the unknowns that life throws at us.

Ten, twenty, thirty years later, I will probably forget the exact definition of an eigenvalue or the temporal complexity of sorting by insertion. Unlike that fleeting information that wears out over time and becomes obsolete, money management is something that lasts for the long haul. If that isn’t a sign for colleges to start educating students on best practices for a financially stable future in this changing world, I don’t know what is. Maybe Cornell can reinstate his personal finance class and show that the school cares about its students’ success long after we’ve left Cayuga waters.

Katherine Yao is a student at the College of Arts and Sciences. She can be reached at [email protected] His chronicle, Hello Katie, takes place every other Monday this semester.

Louis R. Hancock

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