economics finance and math I even took
classes in high school related economics
it’s almost thirteen years of formal
education in economics and finance since
I graduated with my PhD I spent the last
five years in international finance
altogether it’s close to 20 years of
experience in the economics and
financial field but if it wasn’t for one
undergraduate upper level finance
elective course I would have absolutely
no formal education when it comes to
personal finances retirement savings or
how to manage money that’s unfortunate
right and if me who’s passionate about
this field who tries to get this
education can only master one
undergraduate course I can’t imagine
what other fields of study in science
history or education are getting with
their financial literacy the answer is
they’re not getting any now we often
view college as a stepping stone to
full-time employment where we learn
theory and technical knowledge that will
help us get a job and keep a job
well I strongly challenge that should be
the main goal of college college should
prepare you for the next phase in life
regardless what that phase is one of
those phases might be having a full-time
job but there’s more to that regardless
of what we do after college we need to
understand personal finances and perhaps
my sort of well-rounded view on what
college should be stems here from north
central at liberal arts college but even
liberal arts colleges struggle with
teaching personal finance and regardless
what we do after college whether we do
take that full-time job whether we do go
to graduate school or whether we do stay
at home and raise kids we need to
understand personal finances that
full-time work we’ll have a 401k that
graduate student will one day graduate
and have even more student loans to pay
off and budget for that stay-at-home
parent we’ll have kids to manage on one
income these are tough decisions to make
but we’re not prepared to make them now
I could stand up here and bore you with
statistics about how we don’t save and
how we’re not ready for retirement how
we can’t budget how we have crappy
credit scores but I don’t need to do
that
we know we don’t we know we’re not ready
to make these decisions so what can we
do about it well the first thing we can
do about it is talk about it right we
can talk about it but it’s tough to talk
about these topics in fact we’re any
personal finances as one of the most
difficult topics to discuss it’s right
up there with death politics religion
and taxes we say these are difficult to
talk about but if any of you have spent
any time on social media or watch the
news in the past year we don’t have any
trouble talking about politics or taxes
or religion in fact when I look at my
facebook feed every day I wish people
would shut up about those topics but
there’s one up here that we don’t talk
about that’s personal finances we say
it’s difficult but we don’t talk about
it why well to me it starts at home
3/4 of us say that we get most of our
financial knowledge from our parents
that’s great
parents can give a lot of wisdom but
when we actually ask parents if they
talk to their children about finances
only one-third of parents who they
frequently have this conversation at
home so if our primary source of
financial education our parents actually
doesn’t provide that education often
enough that’s a pretty weak primary
Avenue but should we blame our parents
well maybe not right if you ask your
parents if they talked about financial
literacy and savings and investing when
they were growing up they very likely
say no if you went to your grandparents
and asked them the same question they’d
also likely say no this is a
generational issue that we just haven’t
stopped and like most types of education
if it’s not happening at home it’s not
being reinforced with personal finances
if it’s not happening at home it’s not
happening at all so the first place we
can start is at home but if you think
about one of the most important
financial topics saving for retirement
saving for retirement is one of those
thirty to forty year goals where it’s
imperative that we start early right
start early
save early save for a long time it’s
imperative through my many talks with
employees that are close to retirement
age
they often regret the fact that they
didn’t start saving early enough when I
asked why they didn’t do that they said
because they didn’t understand the
importance of saving for retirement when
they were young they didn’t understand
how compound interest could magnified
savings over a long period of time but
once again is it their fault
well maybe not saving for retirement in
retirement in general is a relatively
new phenomenon for us it’s only been
around a few generations let’s look at
life expectancy let’s say we go back a
hundred years that oh that might only be
three or four generations depending on
how old you are right if we’re back in
the 1910s in the 1920s life expecting it
was hardly over fifty years of age
we weren’t even expected to live to be
over sixty on average so there was no
concept of working for 30 or 40 years
stopping work at the age of 60 or 65 and
spending the next 20 or 30 years living
off of your savings not only did we not
live that long but disposable incomes
weren’t even high enough or even even
even as high as they were today so we
don’t talk about personal finances
largely because our ancestors didn’t
talk about personal finances and compare
that to other fields of study like
science or history or the education
field or general business right that’s
been ingrained in our education for
decades if not centuries the
conversation happens at home personal
finances it doesn’t so what can we do
about it well to me there’s three main
avenues that we can look at one is get
the conversation going with family and
friends two is formal education through
school and three is through your
employer so we think about family and
friends for a minute if we think that
parents are generally weak Avenue
because they actually don’t have the
conversation with us or perhaps they’re
too shy or too embarrassed to chat with
us then we need to extend that look at
extended family or friends and
especially friends but even with friends
we don’t talk about money right we don’t
talk about our salaries and whether it’s
because we’re embarrassed or regellius
talk about our salary we as people we’d
like to value our contributions to
society with the size of our
paycheck right we couldn’t be more wrong
we need to stop measuring our self-worth
in dollars and actually start the
conversation we don’t have to talk about
dollar amounts and salaries though we
can talk about the decision-making
process right if you know somebody just
bought a house asking questions about it
they’re proud about it they’re more than
happy to chat believe me ask them if
they have an adjustable rate mortgage or
a fixed mortgage 30 years or 15 years
how much did they put down do they still
pay PMI is even is it an FHA loan same
thing if they just bought a car
are they leasing it did they buy it
outright are they financing it what
interest rate did they get you’d be
surprised at how often people will chat
about these topics understanding their
decision making process is just as
important if not more important than how
much they spend on it so get the
conversation started but really if you
want to think about where this education
should happen it’s in schools and
research shows that the primary driver
of getting financial education taught in
schools are state standards in fact 45
states actually require personal finance
to be a part of their state standards
that’s great we’d love for it to be 50
but 45 is just fine sighs a little
further 37 states actually require those
standards to be implemented by districts
the other states the state standards are
more of suggestions or guidelines second
other step only 22 states actually offer
a class on personal finance in high
school this isn’t a semester-long class
though what counts here is that if
there’s an existing class like economics
or entrepreneurship or business
accounting civics social studies where
they throw in a personal financial
financial module or two going further 17
states 17 states actually require
students to take a financial education
class before they graduate high school
these are the 17 states but once again
this isn’t a semester-long class if
there’s a module of personal finance and
existing business class already that
counts it’s not enough it’s not near
enough only five states actually require
a semester-long personal finance class
to be taken before you graduate high
school five states we need to do better
here this is just high school college
doesn’t fare any better and we have a
lot of college kids here chances are you
haven’t taken a financial education
class chances are it’s not even a
general education requirement I’ve
chatted with many business school
professors at liberal arts colleges at
large public universities at
world-renowned universities here in the
United States I asked them why they
don’t offer a personal financial
education class they all tell me the
same thing we already teach those topics
it’s a cop-out what they mean is that
they teach those topics and other
finance classes I’ve taken those finance
classes I’ve even taught those finance
classes we don’t teach personal finance
in those classes we teach theory we
teach technical knowledge that the
students will will use in their eventual
job we don’t teach personal applications
and we don’t spend time and what the
students are actually going to have to
deal with when they get out of school we
need to do better here so you have a
child who grows up at home and they
don’t we don’t talk about personal
finances with them they go to school
they go to high school they don’t take
any class on personal finance they go to
college they still don’t take any class
on personal finance they graduate and
they get a job and they realize oh crap
I don’t know what to do I have a 401k
what is that there’s 20 funds what do I
choose I need a budget for student loans
how do I do that
so the Millennial voice is a very strong
voice and this is where it comes in
handy we’re starting to demand that our
employers require this or teach us this
education that’s great and employers are
starting to do this I do this at PwC at
PwC
we’re one of the world’s largest
accounting firms most well-respected
we have a lot of students that come to
us that have economics finance and CPA
backgrounds but when it comes to
managing money they’re just as bad as
the rest of their peers so I actually
started a semester finance class that I
teach our peers we talk about firm
benefit to talk about 401ks IRAs let’s
talk about financial literacy it’s been
such a hit that were rolling out
nationally and hopefully in the
onboarding as well so every person that
starts at PwC receive this education
it’s unfortunate that we can offer this
education through an employer but we
can’t do it through school doesn’t make
any sense we need to work to demystify
financial topics and remove the taboo
about talking about money we do that by
talking about money the financial
industry spend a lot of time and trying
to confuse you and trying to tell you
that it’s too difficult to manage your
own finances it’s not with an adequate
education you can so I hand it to the
students demand that your school offer
personal financial education class
demand that’s a general education class
live your politicians for better state
standards get involved with financial
literacy organizations because your
future is worth it so please get
involved but most importantly ask
questions and talk I’m more than happy
to continue the conversation thank you you