Recent studies have shown that young adults have limited knowledge where personal finance is concerned, even in countries that are considered to have an economically-desirable climate. To counter this problem, some experts have suggested making a personal finance course mandatory for students, but is there evidence supporting the usefulness of such a course?
The opinions about the usefulness of an obligated personal finance course are currently divided into two camps. The pro camp is supported by Annamaria Lusardi, chair of economics and accountancy and the George Washington University School of Business. She firmly believes that people require good knowledge on personal finance to survive in this economic climate. However, the con camp, supported by Lauren E. Willis, professor of law and Rains senior research fellow at the Loyola Law School in Los Angeles, claims that such courses should not be obligated since there is insufficient evidence to support the claim that these courses are effective to help young people survive in the current economic climate.
Despite of the lack of evidence claimed by Lauren E. Willis, Annamaria Lusardi stands firm behind her standpoint that obligated personal finance courses could make a difference. She stated: “It is time to extend that type of thinking to financial knowledge by making personal finance a required course at U.S. colleges and universities. For people—especially young people—to survive and thrive in today’s financial environment, knowledge of personal finance is a necessity.”
Annamaria Lusardi also pointed to a problem many young people are familiar with nowadays. They are faced with important financial decisions, including taking on a student-loan. Unfortunately, their knowledge about the extent of such a loan and how it will impact their early professional life is often unknown to them. There have been several studies investigating on how much young people know and understand about their student loans, but results indicate that they know too little to make an informed and smart decision.
The evidence that there is a lack of personal finance knowledge amongst young Americans is certainly there, but Lauren E. Willis states that obligated personal finance courses will miss the issues that are currently playing. She claimed that a recent study indicated that students receiving personal finance training were more aware of the student loan offers on the market, but were not able to pick out the lower-cost loans or select the best savings and insurance products. Lauren E. Willis is not alone in her opinion about personal finance courses, especially when you look at how much financial experts disagree about the right investments, retirement-saving strategies and more. If it is difficult for these experts to keep up, how should the educational system keep up?
While both camps agree that students and young Americans struggle with a lack of personal finance knowledge, they do disagree on how to provide young Americans with the right knowledge about the personal finance market. Therefore, finance and education experts will need to look for a targeted solution together.