Financial literacy must be taught at a young age to promote smart decisions

Financial Literacy

Francis Emelogu/The Cougar

When it comes to financial literacy, teenage students in the United States pale in comparison to students in other developed economies.

PBS NewsHour reported on the newly released results of a financial literacy assessment run in 2012 by the Organization for Economic Cooperation and Development through the Programme for International Student Assessment. The assessment was administered to 29,000 15-year-olds in 18 OECD-affiliated countries or economies. The mean score for students from the U.S. was between that of Latvia and Russia, below the international average and well below the top-scorer — Shanghai, China.

A financially literate population benefits not just individuals but also the country’s economy as a whole, and with so many Americans deep in debt, it is a serious issue if they are not financially aware and do not make smart financial decisions. With that in mind, these results have raised discussion about why the U.S. scored so poorly and what can be done to improve the situation.

While financial awareness and education ideally begins in the home as early as possible, not all parents have the time, ability or resources to teach financial literacy, and this is where the education system must step in.

There is evidence that financial education and preparation at the high school level can greatly impact students’ present and future financial decisions.

The Huffington Post reported on another recently released study on financial literacy — this time with college students. This survey of more than 65,000 first-year college students in the U.S. found that students who had received financial literacy education in high school scored significantly higher than their peers on questions related to financial knowledge. It was also found that they practiced this knowledge and were more financially responsible and cautious with their money.

Accounting senior Eric Flores said he thinks that high schools and colleges can do more to prepare students financially for the real world.

“I think high school should teach about paying bills, how a credit card works, how to manage your money efficiently,” Flores said. “In college, it really depends on what major you want to focus in, but … there are not core courses that will teach you all of this. I think that’s necessary.”

While a personal finance course is not required or a core course, Bauer College of Business offers GENB 3300, an introduction to personal finance course available to all UH students of any major. The University’s Program for Financial Literacy offers many events such as seminars, workshops and the annual Financial Symposium. Additionally, this program offers access to many resources and provides access to Cash Course, an online financial education program free to all college students.

John C. Lopez, a clinical assistant professor of personal financial planning at Bauer, addressed the initiatives the College is taking both on and off campus.

“We have a big mission on financial literacy and helping college students understand management of debt, helping them understand management of cash, budgeting, investing, retirement planning, taxation, buying insurance and all of the kind of things that really impacts their financial lives,” Lopez said. “We partner with non-profit organizations who have a mission of financial literacy as a core component. We also have community outreach programs, where we’re going into the high schools and the middle schools and teaching students basic concepts about how to stay out of debt, how to save.”

The earlier financial preparation is instilled, the better. By middle school and high school, some students may already have jobs, and with them, the opportunities to establish financially-responsible behaviors that will build the foundation for the rest of their lives.

“What we’re hoping to do is by reaching into the community at middle school, high school and early college, we can make them aware of the financial decisions that they make that early can impact later on their financial well-being,” Lopez said. “Because by the time I get them, and they’re juniors and seniors, if they haven’t had that education, it’s not too late, but they would’ve made different decisions.”

Some of these decisions may include taking out large student loans and not looking into other alternatives. With the rising concern of students graduating with debt from college loans and tuition, being aware of personal finance is all the more important for college students.

While college students may take different courses depending on their choice of field, after graduation, they will have to know how to manage their money, no matter what career they choose. For this reason, financial education is vital for every student.

Lopez said that many students are not oblivious to this importance and recognize and take advantage of the opportunities provided to educate themselves about personal finance and make an investment in their future.

“We at Bauer College of Business have really taken the initiative to make financial literacy a priority — not only at our college, but at the University of Houston — so that’s why we make these courses available to all University students, and I can say that all of those are oversubscribed,” Lopez said. “Every semester (the classes are) packed. In fact, we’ve added another course to respond to the demand, so students are hungry for the information, and as long as we can provide it to them and reach out to them and give them those resources, they can make more informed decisions.”

Opinion columnist Eileen Holley is a creative writing senior and may be reached at [email protected].

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