I was recently interviewed by an undergraduate student from Boston University who writes for the Daily Free Press (the independent student newspaper at Boston University). She asked me about my work on financial literacy and debt and, at the end of the interview, she inquired whether I had any suggestions to give to college students to improve their financial literacy. This is an important question and I would like to use this blog to make my recommendation available to anybody who reads this blog or is interested in financial literacy. As I told the interviewer, college students have a great opportunity to improve their financial knowledge, and they should exploit it. My recommendation to students is to take economics courses while in college. Students do not have to major or minor in economics; one or two courses in economics can suffice to build some understanding of basic economic principles and how the financial system works. Several studies, including my own work, show that people who undertook economics courses while at school have much higher financial knowledge later in life. Most importantly, that financial knowledge does matter! For example, those who took economics courses while in school were more likely to invest in stocks later in life. And investing in stocks has become even more important now that individuals are increasingly put in charge of investing and saving for their own retirement (for those who want to read more about this topic, please see the paper posted on my web page: “Financial literacy and stock market participation").
This type of advice may look self-serving: Here is an economics professor advising students to take courses in economics! In this blog, I would like to describe not only my research but also my personal experience. I am happy today that as a young woman, I took courses in economics and finance. I have used that expertise not only to start saving very early in life but also to invest in portfolios that have given me steady returns. I have enjoyed the confidence in making financial decisions and the ability to ask for financial advice when it was necessary. I have stayed away from debt and from financial “opportunities” that were too good to be true. A few years ago, I bought a house I truly love. It is sitting on more than 3 acres of woods and every day I enjoy the view from my windows. The crisis in the real estate and the mortgage market has not and will not affect me. And if you ask me, it is good to be free of financial worries at this stage of my life.
Personally, I have always felt very proud in discussing financial matters with my father, who knew much more than I did. Recently, my parents have asked me to advice them on their financial decisions and this has made me even more proud of being a financially knowledgeable woman. I have also helped and advised several dear friends, who know little or nothing about economics. And that, to use one expression used often by my Dartmouth students, is really cool!
Here is a link to the article the student from Boston University wrote after the interview: