The financial crisis has had many across the country questioning what, exactly, went wrong. While there is no one person to blame, we know for a fact that shady loan and banking practices and irresponsible government behavior played a big role in today’s sagging markets. Still, individual decisions, like taking on loans whose commitments, often buried in small print contracts, we did not fully understand, were a big part of the problem. And as with nearly any social problem, solutions are best addressed through education, whether it’s on the personal level or at school.
A recent New York Times article featured Champlain College, an institution in Vermont that requires all of its junior students to take “financial sophistication” courses, in which students learn more than just the basics of balancing a checkbook. Student teachers teach other students about student loans, credit reports, and how to maximize your credit score while minimizing debt. They empower students to avoid typical college-level financial pitfalls like taking out several credit cards, while also educating them about future decisions like buying a home, preparing tax forms, paying back loans, investing, and taking advantage of employee benefits.
The article’s author noted that it is the only American institution of higher education that has such an in-depth program about personal finances. Considering that good personal finance decisions start early, it’s a shame that more schools don’t have these sorts of options, which can potentially save many recent graduates just starting their careers from following the footsteps of debt-laden parents, relatives, and friends.
For current college students or recent graduates who do not have the good fortune of a program similar to Champlain’s, there are several tools, articles, and books out there to get you caught up. While in an ideal world we twenty-somethings would be born knowing all the ins and outs of personal finance, the fact of the matter is that most of us are woefully ignorant. One of my favorite personal finance blogs dedicated to a young audience is MoneyUnder30.com, a blog written by a man under thirty who left school strapped with debt but managed to find a way out. For those who are in a similar position, this blog is especially inspiring.
If reading blogs isn’t your thing, considering setting up your finances with online tools like Mint.com. In my personal opinion, Mint is one especially compelling answer to Gen Y’s personal finance woes. We were born virtually feeding on the Internet intravenously. Online platforms like Mint that connect and simplify are especially useful for those of us who are adept at using online tools like Facebook intuitively. For those of you who aren’t familiar with Mint, it’s an online tool that syncs with your bank account and aggregates all your financial information into one simple user interface. It helps you keep track of savings goals, and allows you to know exactly when all your bills are due on one site.
Investing is another arena in which students and recent grads can feel as though they’ve been left in the dark. In fact, many people don’t begin investing until their 30s. The best advice for those in their twenties who would like to wade into the investing world is to learn the basics of financial markets. The blogosphere is littered with investing strategies that are more suited for those who already know the terminology. Thus, the best way to start off on a simple and sound investing strategy is to read as many basic-level books as you can on the topic. A CNN Money article published last year advices that recent college graduates read The Little Book of Common Sense Investing by John Bogle, How a Second Grader Beats Wall Street by Allan Roth, and That Thing Rich People do by Kaye Thomas. These books will give a sound investing background such that you can branch out later and try more complicated investing strategies.
In the final analysis, if you didn’t learn anything about finance from your parents or from school, then you’ll have to put in some time to figure things out on your own. Many recent graduates are so excited about getting a job and having independence that they don’t buckle down and begin thinking about their financial futures. Don’t make the same mistake that so many others have made. Start teaching yourself now.
Raine Parker, regularly writes on the topics of accounting degree. She welcomes your comments at her email Id: email@example.com.