Full disclosure: I don’t know what a 401k is. My understanding of the stock market is rudimentary at best. My budgeting skills are laughable, and at the end of each semester, I can’t help but wonder how my bank account got so low. Personal finance is not my forte, but I need it to be: I am an English major after all.
Especially considering that it is home to the world’s top business school, Penn has an obligation to supply all of its undergraduates with basic financial literacy. To this end, Penn should begin offering a substantial number of financial literacy classes and institute a financial literacy requirement.
Americans, in general, are woefully financially illiterate, according to a paper published in the Journal of Economic Literature and a report from the Federal Reserve. Four in 10 Americans would not be able to pay for a $400 emergency. When given a basic financial literacy test consisting of three questions (which tested knowledge of inflation, compound interest, and stock risk), only about a third of respondents could answer all three questions correctly. Recent high school graduates fared about as well as their older counterparts: On a comprehensive financial literacy test, most earned a failing grade. College students who took the same test earned similarly dismal scores.
Unsurprisingly, those who tend to do well on these assessments also tend to be wealthier and come from wealthier backgrounds. Those who show some degree of financial literacy did not learn it in high school or at university but instead picked it up from parents who had that knowledge and communicated it to them. In the long term, this exacerbates inequality. While wealthier students are exposed to the knowledge that is necessary to preserve their economic standing, poorer students never get similar exposure. Especially considering Penn’s sizable population of first-generation, low-income students, the University has a duty to give those students the basic knowledge that they’ll need to be financially secure later in life.
The dearth of personal finance courses at Penn is made even more glaring considering Penn’s many personal finance initiatives. Penn’s Human Resources department celebrates February as Financial Literacy Month, and has a website that outlines high school outreach programs and professional development classes. Such initiatives show that Penn recognizes the importance of financial literacy, which makes the fact that it does little to advertise these initiatives or offer more personal finance opportunities to undergrads puzzling.
This past spring, Penn offered URBS 140, a personal finance course taught by an NFL player and Wharton alumnus that serves as a good model for what personal finance could look like at Penn going forward. The course had no prerequisites and was open to all Penn undergraduates. More than 180 students requested the course, which caused the instructor to raise the original 20-person cap to 30. Many students who took the course said, “they would recommend the class to their friends, no matter what school they are in.” The course was small and discussion based, and covered topics ranging from taxes to stocks, with a particular emphasis on the relationship between financial illiteracy and inequality. At the end of the semester, the class was assigned a project to teach what they had learned throughout the semester to local high school students. Although future personal finance classes don’t all need to be taught by NFL alumni, by offering more courses based on this model, Penn and high school students alike could reap an incredible amount of benefit.
Penn has a writing seminar requirement because all of its students, regardless of their profession, will need to write in some capacity in their professional careers. Writing is an indispensable skill, and one that everyone needs to have. The case for basic personal finance is even more dire. Knowing how to file taxes correctly, choose the right loan, budget expenses, and make smart investments can mean the difference between financial security and stability and living from paycheck to paycheck. The importance of Penn having its students take a Physical World course pales in comparison to preparing its students to successfully navigate the make-or-break financial decisions that await them after college.
JAMES MORRISON is a College sophomore from Pipersville, Pa. studying English. His email address is email@example.com.
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