Rules of personal finance have existed for centuries now. Budgeting, saving and debt management are some of them. But how many college students understand and implement these in their daily lives?
A hub brimming with students from all over the world, Boston boasts 35 institutions for higher education, according to the Boston Redevelopment Authority.
But living in this fast-paced city comes with its fair share of expenses — food, rent and activities, to name a few — that can become difficult to manage for anyone, especially college students living on a budget.
As a college student myself, I know that I am speaking for almost all of us when I say that living on a college budget is tough. Boston’s rising housing costs and the country’s increasing inflation make maintaining our finances even more stressful — and more important.
When I first came to Boston University, I had no idea how to manage my own finances. Through loads of research, time and help from my dad — who knew a lot of financial terms I couldn’t understand — I figured out how to spend money intelligently and to budget in a way that worked for me. This knowledge provided me with confidence in my ability to independently make financial decisions.
However, not everyone has the resources or time to understand personal finance on their own — which is why universities should make personal finance classes mandatory for all students of all majors and backgrounds.
My studies of economics throughout middle and high school played a big role in helping me understand finance. Knowing how the economy works can help you make informed decisions about money. Because I had the luxury of learning about economics at an early age, I had a solid foundation to learn personal finance.
Financial illiteracy is a huge problem for our generation today. Gen Z demonstrates the lowest understanding of personal finance, with only a 38% financial literacy level, according to a 2023 study from Money Zine.
By making personal finance courses mandatory, institutions can ensure their students encounter fewer financial risks after graduating. Providing classes on topics such as borrowing, budgeting, student debt, credit scores and investing will help build crucial skill sets for adults entering the corporate world.
At both public and private non-profit universities, 55% and 57% of students, respectively, have student loans and educational debt, according to Forbes.
Studying financial topics better prepares students to handle their own financial needs so they’re less likely to depend on others. This would decrease the burden on students paying back their loans, an issue faced by many young adults today.
Greater knowledge of personal finance would prepare students to deal with unexpected economic downturns, such as the Great Recession, a national financial crisis that lasted from 2007 to 2009.
We should not repeat history, we want colleges to realize that teaching financial concepts early on can help students avoid potential money struggles. Through courses on financial planning, students can learn how to earn passive income and protect their money through insurance. Courses like these can provide a student the tools to pay their debt sooner.
Changes to the economy affect everyone, not just business and finance majors. When inflation is high, the money sitting in your savings bank account decreases in value. This loss is even more harmful to a college student living on a budget.
To avoid falling into debt, it’s crucial for students to know how to manage their money and respond properly to inflation. As inflation worsens, university education loses value. Students can spend years saving for college, and even more paying back the loans, for an education that means less. Inflation also increases the cost of other expenses, like housing and food.
One powerful tool to help reduce the monetary harm of inflation is investing. Many students don’t realize the power of investing — either they’re scared of the market, or they don’t know where to start. By mandating courses about the stock market and investing, universities set their students up for financial success. The earlier you learn to invest, the sooner you’ll be able to increase your disposable income to face adverse financial situations.
Investing leads to an overall growth in the economy, which, in turn, increases the economy’s gross domestic product and employment rates. Enforcing financial literacy courses would benefit not just individual students, but the whole economy.
Universities need to see the importance of teaching financial literacy to all students, not just those pursuing business or finance. Requiring such classes will better equip students to face the real world once they graduate — and boost their confidence. By investing in the economy and in financial literacy skills, you will invest in yourself.
