Herald Editorial: Financial knowledge important for students

It’s a fact: financial illiteracy is common among ‘The Millennial Generation’, the moniker given to those born between the early 1980s and the early 1990s.

According to a 2004 study by Harris Interactive for Northwestern Mutual, only 5 percent of those in their early and mid-20s felt that they were “very knowledgeable” in business dealings and investing.

True to form, 20 percent of that cohort had amassed more than $5,000 in credit card debt since leaving college, according to the study. Young adults between 20 and 24 years old represent the fastest growing segment of bankruptcy filings.

Indeed, the need for improving instruction on personal finances has been recognized by some of the highest powers that be. President Barack Obama has created the President’s Advisory Council on Financial Capability.

The Education Department is trying to add financial understanding to curriculum objectives for grades kindergarten through 8th grade, and a bill currently before congress would require all colleges that provide federal loans to provide a course in financial literacy to recipients, according to John Hope Bryant, writer for Businessweek.

No doubt, this is due at least in part to the relative lack of emphasis that colleges place on “financial literacy,” — the comprehension of financial dealings that affect ones personal finances.

In a general education curriculum that requires students of all stripes to take at least one class in something like “exploring dance,” a class in personal financing is still in its nascent form. Judy Swisher, Ph.D., CDA, chair of the Department of Finance and Commercial Law, has been working to create Western Michigan University’s first freshmen level course in personal finance.

The class will be called personal finance (FIN 1010) and its learning outcomes will include understanding personal financial statements, taxes, savings and retirement planning, debt management, the effect of psychology on individual investors, and the benefits of personal financial planning.

It is unfortunate that even if this course is approved by the Committee on General Education, it will not be offered until fall 2011.

It is important that the Committee on General Education recognizes the need for a class in personal finances.

Donald Gribbin, Ph.D., professor and chair of accounting at WMU, said it is important that classes in personal finance satisfy general education requirements.

Currently, the accounting department offers a course, Accounting 2100, in which any student may enroll, albeit for credits that won’t be incorporated in the student’s general education requirements.

The thing to recognize is that an understanding of personal finances and economic behavior is important.

“People tend to think narrowly about the relevance of an understanding of the economy.  They think it’s just about the stock market and so on.  They don’t realize that economics encompasses life,” said William Kern, Ph.D. and chair of the economics department.

“Economics deals with the allocation of time and resources and so it is really just about decision making, which is something that is present throughout life. As Bill Clinton said, ‘It’s the economy, stupid.’”

Students should recognize the importance of classes in business, accounting and economics. Students should take classes that will build their financial literacy.  Although the class in personal financing will not be offered until fall 2011, courses in accounting and economics will build financial literacy.

Short URL: http://www.westernherald.com/?p=17070

Posted by heraldstaff on Apr 25 2010. Filed under Editorial, Opinion. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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