Emmett Dulaney: Financial education must become a priority

Wed, 2012-06-27 11:25 -- univcomm
June 27, 2012

If I were given unlimited power for a single day, the first thing I would change is the Core 40 requirements for Indiana high school students and add a course on financial literacy. The United States is in the midst of a financial epidemic, and so much of this problem can be traced to a lack of understanding about the basics of finance among so many individuals. By prioritizing financial responsibility, and instituting a change to the amount of education provided, the United States could prevent the current financial problems from worsening and the state of Indiana could lead that charge.

Giving credit where it is due, two Indianapolis residents — Joe Cope and JR Westerhold — first proposed the thoughts here. As they pointed out in a presentation they made, increasing the amount of financial understanding will benefit both the individual (who is able to make sound financial decisions and have a better understanding of the situation they are in) and society in general (who will not literally be paying the price for irresponsible or uninformed borrowers). The lessons learned would affect the students’ decisions every day and cover a broad range of financial issues, starting with the basics and moving through the course in the same way a person moves chronologically through life. A typical semester could address issues such as the following:

  • Making choices — How do you evaluate cell phone plans and determine expenditures over time (which is the better bargain)? What is the difference between need and want?
  • Beyond High School — Do you need to go to college or are there other options? How much should you spend on your education, and what is the expected return on that investment? How do you prepare for the large number of credit card offers that are always directed at — and marketed to — students?
  • Living — What are the tradeoffs between an apartment (with or without a roommate) and a house? What are the ACTUAL costs to owning a home? What types of mortgages are available and what do they mean (fixed, ARM, etc)? Why shouldn’t you borrow the maximum amount you qualify for?
  • Budgeting — What percentage of a budget should be reasonably allocated to housing, food, and other expenses? What does making only the minimum payment on a credit card do for you in the long run? How much should you keep in an “emergency fund?” What does bankruptcy entail (the ramifications of declaring)?
  • Investing — What kind of investments are available? How do they work and what are the risks associated with them?
  • Family choices — What financial trade-offs are involved with deciding to get married, divorced, and/or have children? Will you need to take care of your parents as they age?
  • Retirement — How much will you need to save for retirement? What are the different retirement vehicles (Roth IRAs, 401k, 403b, etc)? What if you don’t save enough to retire?

Space prohibits going into more detail, but by being introduced to these topics, students would have a better foundation for making sound financial decisions throughout their life. Those financial decisions would go a long way toward setting students — and society — up for financial success.

Anderson University is a private Christian university of 2,600 undergraduate and graduate students in central Indiana. Anderson University continues to be recognized as one of America's top colleges by U.S. News and World Report, The Princeton Review, and Forbes. Established in 1917 by the Church of God, Anderson University offers more than 65 undergraduate majors and graduate programs in business, education, music, nursing, and theology. The Falls School of Business is one of Anderson University’s largest academic departments offering eight undergraduate majors as well as MBA and DBA programs. The school is accredited by the Accreditation Council for Business Schools and Programs (ACBSP) and is a member of the Christian Business Faculty Association (CBFA).

Columns from Anderson University’s Falls School of Business are published Tuesdays in The Herald Bulletin. Tuesday’s columnist is Emmett Dulaney, who teaches marketing and entrepreneurship.