Fixing the Personal Finance Blind Spot

College and high school students say there is a glaring gap in their education — nothing exists to teach them the basics of personal finances. Worse, students don't know where to go for this information. There is no textbook for taking out a first credit card, getting a first automobile, starting to save for retirement.

"I have taken classes where I know everything about hurricanes, but I'm a finance major. I think a class dedicated to financial literacy would go a long way," says Matt Sauers, a College of Business Administration senior.

Sauers was part of the first annual Financial Literacy Panel Discussion, held April 12 at Sennott Square, which drew students from the University of Pittsburgh, Duquesne University, Butler County Community College, Fox Chapel Area High School, and Greater Johnstown High School. Clinical Assistant Professor Jay Sukits organized the event, which coincided with National Financial Literacy month, with Gene Natali Jr., a senior vice president at CS McKee Investment Managers in Pittsburgh. To prepare for the forum, all the students read a book on the topic, The Missing Semester (2012), which Natali co-authored.

Sukits, a Wall Street investment banker before he was a professor, said the student panel illustrated the evolution of young people's thought process, as saving for college and picking a major shifts to securing that first job and paying off student loan debt. Sukits says experience-based learning is the best way to reach students, which is why he manages the Socially Responsible Investment Club, a project in which students oversee a real portfolio valued at tens of thousands of dollars.

"Students are good at learning theories and concepts and how to plug things in, and then they graduate and don't know how to manage their own money, pay off student loans, or start their own portfolio," Sukits said.

To a person, the students urged taking action to change that. They support making personal finance classes mandatory. To reach their generation, they recommended that educators ground the work in real-life examples, such as having students review their own finances. They suggested showing the "big numbers" that demonstrate the amount a student's retirement savings can grow to if started early. They also encouraged educators to use the scare tactics of showing how painful credit card debt and bankruptcy can be.

"There is substantial peer pressure against good financial behavior. I had an old roommate who said I'll have a real job soon and the money I make now will pale in comparison, so I better spend it now and enjoy myself," said Marc Funderlich, a student at Butler County Community College.

But other students experienced the opposite. "I've been fortunate," said Stephanie Brackbill, of Butler County Community College. "My friends who graduated, they all talk about what we owe. People are saving for weddings, babies."

Duquesne student David Nist says he sees a vicious cycle on campus. "After the first semester, people say, 'You want to go get pizza,' and people say, 'I can't I don't have any money.' But then after summer jobs, they are flush with cash again and the vicious cycle repeats."

Students spoke of the financial stumbles of their parents. One family took out credit cards to pay for other credit cards. One parent ruined her credit score so badly that obtaining a home mortgage was difficult. Another family, with both spouses working as physicians, recently paid off student loan debt at the age of 50. One of the myths that students say is popular among their peers is that it improves one's credit card score if he or she carries some credit card debt from month to month. The truth is that paying credit cards off right away will save money, without hurting the credit score.

Fox Chapel student Chris Mazza says many of his peers have never worked. He works at a supermarket, which, he says, "isn't the greatest job in the world," but has still taught him "lots of stuff and I'm fortunate to have it."

That job can be a spring board to something bigger, Natali says. "One student said I want to be an equity portfolio manager but I work at Shop 'n Save. Pay attention to what products are flying off the shelf. Then in an interview, say 'XYZ was flying off the shelf and I researched the company and…'" he says.

Universally, the students said that financial literacy should be a curricular priority. "We take a lot of required courses at Pitt. I think one in financial planning and personal budgeting would be a lot more applicable," said CBA senior John Brownschidle. 

-- The forum was featured in the Pittsburgh Post-Gazette