You may be College Educated, but are you Financially Literate?

Photo credit: Vatsal Lahoti

Do you know how to pay your taxes? How about investing in stocks? Know how credit scores and interest rates work? Or even how to open a savings account? If you answered no to any of those questions, you aren’t alone. In a 2022 Inside Higher Ed and College Pulse survey, only four in 10 college students called their financial knowledge “excellent” or “good.”

As a college student, you are likely dealing with various financial decisions, such as paying for tuition, managing student loans, and trying to save some money for your future. However, despite the importance of financial literacy in your life, many college students struggle with this topic.

Senior engineering major Emma Malone attributes her lack of financial education to a lack of mandatory resources.

“I feel like I know the basics of financial management, but when it comes to practical applications, I don’t have much experience … like I know how to budget, but when it comes to investing and taxes, I’m lost,” Malone said.

Financial literacy is the ability to understand and manage your personal finances effectively. It includes various skills, such as budgeting, saving, investing, and understanding credit and debt.

“Everyone knows that personal finance is important, yet my experience has shown that there are a variety of reasons that have attributed to our young adults having a lack of ‘money awareness,’” said Christopher Magnan, Director of the University of Miami’s Money Management Program, a toolbox of resources to help students enhance their personal finance skills.

Some of these reasons include a lack of early financial education in high school, a “fear of money,” that is fueled by the media or negative experiences, a uncomfortability with talking about money, resulting in students trying to “figure it out” on their own, a mentality that it is okay to put it off until after they have graduated, and many just lack an awareness about the resources that are available to become financially literate.

Having a strong foundation of financial literacy is important because it gives you the knowledge needed to manage your finances wisely. In an effort to improve financial literacy among young adults, 15 states, including Florida, are mandating that high school students take a personal finance course to graduate.

“Financial literacy is an important life skill for a student to have,” said Florida Governor Ron DeSantis after signing the Dorothy L. Hukill Financial Literacy Act in March of 2022. “Ensuring our students have the skills to manage their finances and perhaps one day own a business will pay dividends for our state. I am proud to sign this bill to support the future of Florida’s students and ultimately their families and communities.”

A lot of these state initiatives are fairly new and many current college students who weren’t able to reap those benefits still feel ill prepared. In response to this insecurity, UM and other universities across the country offer resources to help students understand and manage their personal finances. The majority of these resources are voluntary.

“[UM’s Money Management Program] educates students on everything from budgeting, living on their own and early credit development, to mapping out their financial Life Plan, investing, and navigating most aspects of real-world finance, like borrowing, living on your own and buying a first home,” Magnan said.

One of the best things students can do for their financial futures is to take advantage of free resources offered at UM, like the Money Management Program. The program has several remaining “Money Talks” this semester, which are free sessions covering different topics that will increase your chances of achieving and sustaining financial success. Students can find the remaining topics and schedules on their website.

Senior Amanda Szaro says that if it wasn’t for her finance and business technology major, she wouldn’t be half as confident in her financial literacy skills.

“The business school has prerequisites that I believe gave me a better background on certain things like taxes and the time value of money. Honestly, I think the only reason I am financially literate is because of my finance major. I did see that the school recently sent out an email about the Money Management Program which I do think students should take advantage of… I even think I could learn a lot from those resources and plan to look into it. ” said Szaro.