The need for personal finance courses

Colin Hannifin

Columnist

Education can be described as a series of stages, each one meant to prepare you for the next. The latter years of elementary school prepares us for middle school, which in turn prepares us for high school, which carries us into college, which, finally, readies us to enter the real world. Or, at least, that’s the theory.

But how well does that last transition truly work? As we continue further and further into our college education, we become more and more entrenched into our particular field of study — so much so that by the time we graduate, all we’re taking is biology, mechanical engineering, drawing or marketing courses. However, while these are integral to our degrees and finding a job after graduation, they often overlook the one fundamental tenet necessary to operate in today’s world — money management. Every student should be required to take a course in personal finance.

The knee-jerk reaction is to point out the VCU Humanities and Sciences course 202, “Choices in a Consumer Society.” This course seems to cover some basic aspects of personal finance, but misses some major points. It can be completed in just a few days with dedication and a healthy dose of common sense, but how much does one really take out of it, other than an easy A? Do the students know the best strategies to plan for retirement?

Yes, when we graduate, many of us will only be 20-somethings, but the earlier you start saving for retirement, the easier it gets. Do they know how to calculate the actual interest on an “interest-free” loan? Or the benefits of a fixed-rate loan against a variable-rate? Or what APR really means? Or how to properly diversify your portfolio to minimize investment risk? All these issues will have to be addressed as we age and come to have houses, families and careers. Many of us have little idea how to do any of these things, and bumble around for a solution when the time comes to make a decision.

The financial world within college is stressful — trying to find the money to pay tuition, plus rent and utilities, and still have money for food can be difficult. But it only gets harder when it’s replaced by mortgages, credit ratings, car loans, investments, retirement plans, salary and benefits—the list goes on and on. As much responsibility we take on in college, none of these issues deal with the “cool professor” that will let you turn your paper in a week late. There is still a due date, but miss it and the effects can be far more grave than a zero. All of this is overwhelming, even if you know exactly what you are doing; when you don’t, it is much harder and much more overwhelming. Even if a personal finance course isn’t required, every student should strongly consider registering for one regardless. It isn’t easy, but it’s worth it.

The material that needs to be covered isn’t light or intuitive. The business school courses that cover such material — such as “Financial Management” and “Personal Finance Planning,” located in the Finance, Insurance and Real Estate (FIRE) department — require at least junior standing and a basic understanding of math. But they do cover that which is necessary to operate in the world outside of these collegiate doors. Subjects—like car loans, mortgages, and retirement plans — that we will confront in our lives, and should know how to make the correct decisions.

A course like this should be heavily recommended to all students, if not required. The material’s not easy and not particularly enjoyable, but not nearly as unpleasant as trying to work this out on our own. As well as college prepares us for life after graduation for our major, it should do a better job for those skills that we will all need at some point: personal finance.