Stanford University Program: Personal Finance Education
U.S. colleges — often criticized for teaching subjects with little practical value — may soon impart real-world knowledge. A Charles Schwab-backed Stanford University program brings personal finance education to the college classroom.
The Initiative for Financial Decision-Making aims to develop cutting-edge personal finance education programs. Starting with Stanford students, the program plans to leverage technology to broaden access, influence policy through partnerships and campaigns, and strengthen personal finance education.
Potential for Expansion
There is potential for expansion, too; instructors from state schools and community colleges are already involved in parts of the initiative, hinting at broader adoption.
The media has long bemoaned the woeful state of American financial literacy. Unlike other subjects, the student body has a keen appetite for money studies.
Student Interest in Financial Topics
A recent Intuit Financial Education survey of 2,000 American high school students revealed that 85% are interested in learning about financial topics in school. While encouraging, initiating the next generation into the world of personal finance brings challenges. Hence, we turn to financial advisors for their insights.
Financial Literacy – A Prerequisite To Success
Financial literacy is a key to success in this country. Having the ability to manage their day-to-day finances is vital for Americans, but not all workers and consumers are up to the task.
“I have seen personal finance curricula spend more time on ‘choosing the best credit card’ than the importance of saving earlier in a career,” laments Stephan Shipe, Ph.D. and Financial Advisor at Scholar Advising.
“Teaching financial literacy in schools faces several challenges, including a lack of standardized curriculum and qualified instructors, which can lead to incorrect coverage of critical topics.”
Importance of Early Financial Education
“Often people worry about where education happens… but I think the bigger issue is the when,” says Benjamin Simerly, Founder and Financial Advisor at Lakehouse Family Wealth. “How early financial education starts plays a key role in how the human brain develops the concepts, and working with clients and hearing their stories about what they learned growing up bears this out in reality. To me, the best time to teach finance is when children first learn about numbers.”
Understanding The Power Of Compounding
“The single most significant moment of change in a client’s mindset comes when they learn the power of compound interest,” says Simerly. “Once they grasp it… you see the lightbulb turn on above their heads. It’s one of my favorite moments that I get to share with clients.”
Financial Literacy Enhances The Advisory Profession
While financial advisors differ on the ideal financial education for young Americans, many agree that greater financial literacy does not threaten the financial advisory profession but enhances it.
“Everyone has the right to learn how to succeed, and it’s been a joy watching clients learn the ins and outs of investing,” says Daren Blonski, Managing Principal at Sonoma Wealth Advisors.
Advisors also believe that the increase in personal finance education will lead to a higher demand for financial advisors.
Incorporating financial literacy into college or high school education is important for young Americans. Practical know-how, core concepts like compounding, and skills to earn a high income can empower students to make informed decisions that will benefit them throughout their lives. If done correctly, greater financial literacy will enhance individual well-being and the broader economy.
This article was produced by Media Decision and syndicated by Wealth of Geeks.
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