UGA professors tackle problems with financial education for students

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Each year, thousands of university students and young adults nationwide struggle with crippling credit card and student loan debt, including those at the University of Georgia.

Many lack significant savings or a long-term investment strategy for gaining passive income. The reason why many develop these patterns has to do with issues surrounding how young adults are being taught, as well as access to experiential resources, due in part to a lack of education surrounding financial literacy in schools.

What is financial literacy?

While definitions of financial literacy vary, it can generally be described as a person’s understanding and utilization of financial skills such as management, budgeting and investing.

However, UGA assistant professor Kenneth White believes that measuring financial literacy can be a challenge. He said often, financial literacy is confused with financial knowledge, which is an incomplete measure of financial literacy.

While financial knowledge refers to an individual’s education on how financial resources operate, such as how a certificate of deposit works, literacy is the ability to effectively implement those skills and knowledge to make positive financial decisions and promote wealth.

White also said the way people think about and interact with money is often shaped through financial socialization, which is what people do and do not learn about money from their family and peers, particularly throughout their childhood and adolescence.

“When you talk about access to financial literacy or financial education, much of that comes from home, from the parents, because it’s not being required in schools,” White said.

Challenges to financial education

One of the largest issues facing financial education at any age is access. Many people do not attend schools with financial literacy programs, and many come from communities that lack financial outreach initiatives. While plenty of free resources exist online, what people desperately lack is experiential learning, White said.

White pointed out that some groups living in low-income areas are particularly disadvantaged when it comes to financial education.

“There’s just not a whole lot of organizations or programs out there that are offering those opportunities,” White said.

Michael Gene Thomas has helped lead one of the few initiatives trying to change that.

Thomas is the co-founder of UGA Money Dawgs, an experiential program designed to work with middle school-age youth, affording them the opportunity to actually utilize money and to consider the use of money in ways that go beyond just telling them what to do with it.

For Thomas, the problem facing boosting financial literacy rates and increasing young adults’ fiscal knowledge lies with how people think about financial education in general.

“The way that I think about financial literacy is both the knowledge and the capacity component of it,” Thomas said. “Not only do you have the knowledge, but do you have the capacity to actually use that knowledge?”

A holistic approach

Through Money Dawgs, Thomas has tried to address financial literacy from a broader perspective.

“When it comes to this conversation, financial literacy for me is very holistic, it goes beyond knowledge,” Thomas said. “There’s also these other behavioral and psychological aspects that are just as important, that if we don’t integrate all these concepts together, we can actually be setting people up for failure.”

Thomas believes everyone is financially literate to some degree, and part of teaching students and young adults comes from addressing and correcting conceptions of money.

“I spend a lot of time just listening and understanding where they already are in terms of preconceived notions about money,” Thomas said. “You have to know that the person that you’re trying to educate already has something there. You’re not filling into an empty vessel.”

Thomas continued to argue that the connection between financial literacy and financial well being is not as strong as we think, and that capacity and confidence are factors that should be considered alongside literacy.