“Bridging the Gap: The Crucial Role of Financial Literacy for Students”

Good morning! Today we’re part of a roundup organized by Shannon of The Heavy Purse focusing on financial literacy. The theme is discussing your big realization that money is essential for living a good life.

For me, understanding finances from a young age is crucial to avoid costly mistakes that could affect you for most of your adult life. When I was a student, I was fortunate to have my finances in order, mostly thanks to my parents, since we rarely discussed money in school.

I learned early on that to achieve the freedom and lifestyle I wanted, I needed to work hard and save diligently. However, not all students thought this way; some had never been taught about money management and were completely lost when it came to finances.

To raise awareness about financial literacy, I interviewed Gene Natali, co-author of the book “The Missing Semester,” which aims to help students become financially literate. Enjoy!

Can you please introduce yourself and your project?

My name is Gene Natali, Jr. I’m a Senior Vice President at C.S. McKee, L.P., a Pittsburgh-based institutional investment firm. I have a bachelor’s degree in economics from Allegheny College and an MBA focusing on finance from Carnegie Mellon University’s Tepper School of Business. I’m also a Level III candidate for Chartered Financial Analyst accreditation.

I co-authored “The Missing Semester,” an award-winning financial guide for young adults. The book is used by high schools, colleges, and organizations nationwide, and its goal is to transfer ownership of its financial ideas to readers.

Why did you feel the need to write The Missing Semester?

We noticed that many educated individuals with good jobs were facing significant financial challenges simply because they hadn’t been taught how to avoid mistakes and make smart financial decisions. We call this subject “Money 101,” and it’s one of the most under-taught topics in America. Our hope was that by reaching readers when they were young, they might be better prepared for the financial decisions everyone eventually faces.

This subject affects everyone. Every high school or college will have future teachers, doctors, mechanics, engineers, and even dropouts—all of whom will need to make financial decisions. By being prepared, people can avoid mistakes and ultimately achieve financial freedom.

In your book you cover the basics of personal finance, debt, interest, and student loans. Do you think these should be taught at school?

Absolutely! But more importantly, students themselves think so too. From our experiences in the classroom and feedback from readers, students are genuinely interested in this subject. I frequently speak at high schools and colleges, and the enthusiasm and excitement are inspiring.

What is the state of student financial literacy these days?

National statistics suggest that student financial literacy is quite poor but slowly improving in some areas. I spoke with a Senator from Utah who acknowledged that although the state is making progress, there is still much work to be done. This response probably sums it up better than I could.

The good news is that aside from schools, many people and organizations are dedicated to improving student financial literacy. Groups like Jump$tart, Junior Achievement, and EverFi are doing great work. The financial services industry is also becoming more involved in educating clients. Many personal finance bloggers, writers, and journalists are tirelessly working to help improve people’s financial lives. With so many resources available, motivated students can find something that resonates with their personal lifestyle.

How can a young adult make sure they get a great financial start?

The best advice is to start now. Recognize that being young is an opportunity. While you can always catch up later, getting a head start and not playing catch-up is the best approach. Saving even just $1 or $3 a day in an S&P index fund from a young age can make a big difference by the time you turn 65.

It’s also crucial to educate yourself and have a plan. At the University of Pittsburgh, students create personal financial plans outlining 1-year, 3-year, and 5-year financial goals, and the results are impressive. I’ve spoken with students after they completed this assignment, and their responses have been very positive.

Should students focus more on managing small expenses in college or on choosing the cheapest college offering a quality degree?

Education is crucial for empowerment, whether through college or other forms. However, it’s important to consider potential careers and the paths to achieving them. For example, you wouldn’t want to graduate with six-figure debt for a career with modest earnings. Having a plan helps you understand your future expenses and potential income, allowing you to consider different paths and their costs.

When people are torn between paying off student loans and saving for a house or retirement, what do you suggest?

Firstly, if your company offers a 401(k) match, contribute the maximum amount the company will match as soon as you can. It’s like a pay raise.

For those without a 401(k), if you have student loans at 6.5%, paying them off faster essentially generates a return by avoiding the 6.5% interest. Some recent graduates balance starting a Roth IRA with focusing most of their money on paying off loans. There’s no one-size-fits-all answer, but this approach lays a foundation for future savings.

What advice do you have for a young graduate who made financial mistakes in college and now wants to get their finances together?

Realizing the need to fix your finances is the first step. Be realistic about your goals, spending, and saving needs. Create a budget and stick to it. I heard from a recent graduate who paid off $22,000 in loans and credit card debt after reading ‘The Missing Semester.’ Instead of buying a reward purse, she started her Roth IRA. Spending money should be done in moderation. Let your savings dictate your spending, not the other way around.

If you have any questions for Gene, please share them in the comments below!