Kim: Personal Finance 101
By Yoo Jung Kim, Staff Columnist
Published on Tuesday, August 7, 2012
As the members of the Class of 2012 received their diplomas in June, they faced a job market with a 9.4 percent unemployment rate for degree holders and were expected to receive lower starting wages compared to those who graduated a decade ago, according to the Economic Policy Institute. During the Commencement ceremonies — an event filled with excitement and dread — I asked a graduating Phi Beta Kappa member what he wished he could have learned during his time at Dartmouth to prepare him for the real world. One of the things he stated was “finance.” He was not talking about the Wall Street variety but rather the pragmatic means of dealing with one’s money.
This took me by surprise because unlike many of his graduating peers who were stressing about finding a job, he was heading off to medical school. But I came to see the practicality of his answer. Even if we are born into money — which may apply to some students at Dartmouth — we will still have to deal with the reality of taxes, budgeting, 401(k), health insurance, car insurance, money market mutual funds, APR, different types of loans and credit scores. Despite the demonstrated importance of personal fiscal responsibility, Dartmouth does not offer it as a class. This exclusion merits concern, considering that in 2010, 50 percent of Dartmouth students graduated with debt, with the average amount per graduate amounting to $18,712, according to Project on Student Debt.
Why are we omitting such practical knowledge in our curriculum?
The answer may lie in the classical biases against different types of knowledge. The greatest Greek thinkers focused their attention more on the role of the human being than on the explanation of the material world. Aristotle, for instance, considered “sophia” — theoretical wisdom in intellectual or philosophical activity — as the highest faculty of human beings. “Phronesis” — the ability to decide how to determine and achieve a certain end, also known as “practical wisdom” — was relegated to a lesser importance. But even Aristotle emphasized that both “sophia” and “phronesis” were seen as necessary for happiness.
This belief persists in our current educational culture, considering that many other major universities similarly do not offer courses in personal finance, although higher education has now become synonymous with debt.
Fortunately, our high schools have been picking up the slack. According to the Council for Economic Education, the number of states requiring public high schools to offer a personal finance course rose from nine to 15 between 2007 and 2009, and 13 states require the completion of a personal finance course for a high school diploma, up from seven in 2007. This still leaves several dozen states unaccounted for, and college-bound students competing for seats in the most prestigious institutions may continue to opt for Advanced Placement classes in more “abstract” and “lofty” matters, such as the sciences, calculus, history, government and language, all — not coincidentally — staples of liberal arts education.
On its website, Dartmouth touts that its liberal arts curriculum encourages students to “maximize [our] understanding of the world in ways that enable [us] to be a leader in [our] future work,” but this will be difficult to achieve if we find ourselves wallowing in debt and the consequences of unsound financial decisions. Beyond its liberal arts courses, Dartmouth should give serious consideration to organizing personal finance classes run by members of the faculty, or a permanent Miniversity course run by a rotating group of savvy Dartmouth students. This way, even non-economics majors can have a thorough understanding of the choices they have regarding to their money and a basic purview of how the market can affect their financial health.