by Kimberly Roy, Manager HSFPP
Why teaching students how to find reliable resources is the most important part of financial education
Riding home on the light rail after work in downtown Denver is normally a very quiet experience. Most people are reading a book or newspaper, catching a cat nap, or talking in hushed tones with one another. So when a young college student talking very loudly on his cell phone sat down across the aisle from me, it was hard not to hear his conversation.
He was telling a friend about some financial decisions that he faced regarding an inheritance he had just received. He said he wanted to think about his options before acting. He wanted to invest this windfall so that it would grow, rather than spending it and just having it disappear. I quietly cheered his wisdom. Then he told his friend “Of course! I'd be happy to share some financial advice with you.” As someone involved in financial education on a daily basis, I was very curious to hear what he had to say.
The first red flag came up when the young man told his friend that, in order to improve his credit score, he first needed to open an account at a credit union. He said that is why the word "credit" is in the name, because all accounts at credit unions immediately improve your credit score. I cringed, but did not say anything.
Then his friend put a girl on the line so she could get some advice as well. She wanted to start investing. The young man told her that she needed to start with stocks, because that is where the money is. He said Wall Street tries to scare you and make you think you can lose all of your money investing in stocks, but that it isn't true. He talked to her about how she needed to avoid stocks like Walmart because even though you will never lose money investing in companies like that (cringe) you need to invest in overseas companies because you were assured to make a ton of money (cringe). He warned her that she needed to have a laptop to monitor the shareholders of the stock. He said that you watch “the one with over 50% of the shares.” He said you “wait until that person sells their shares, and once they have sold, then you sell your shares.” (Now the people around me are noticing my cringing).
When he moved on to how to check your credit score and couldn't remember “the one that started with a ‘T,’" he looked around for help and I finally had a reason to speak up. I told him that the name he was looking for was "TransUnion." Once he got off the phone, he thanked me and I told him what I do for a living. He asked me if the advice he gave was good, and I had to be honest with him about his misconceptions. He was embarrassed that he was not giving accurate advice to his friends, and wanted more information. He said that because he's a business major, his friends all come to him for financial advice. The train was pulling into the final station, so I gave him my business card. I told him I would be happy to provide him with some reliable resources for financial information.
This highlights a very interesting point about financial education. Instead of relying on a financial adviser, a financial services representative, or even a trusted website, when a financial decision needed to be made, this young man's friends turned to the person they considered an "expert" in their circle of friends. As the one deemed most knowledgeable by his peer group, this young man has been spreading what he knows, what he doesn’t know, and what he thinks he knows far and wide in his social group.
This experience solidified for me the need to not only teach our students accurate personal financial information, but also to teach students how to independently find reliable sources to address the questions and concerns that arise as they move through different life stages. Albert Einstein said, "Never memorize what you can look up in a book." In modern times that extends to what you can find on the Internet. Our students may not remember every fact they are taught; they may not be able to explain the difference between a bank and a credit union on demand. However, what they should be able to do is to identify reliable, trustworthy, unbiased resources that provide the information they need to make solid financial decisions. Today’s young people should have enough basic knowledge of personal finance so that they can ask the right questions and be able to discern when the answer is completely off the mark.