A really close up photo of dollar bills and pennies on a brown desk
Campus, News

Financial literacy is low among college students, professors say

Daisy Ramirez, a fourth year criminal justice major, never learned how to save money, and as graduation nears, she fears it will affect her financial and personal future.

“I didn’t even know about the term ‘financial literacy’ until recently,” she said. “I have been trying really hard to catch up on my knowledge, but it’s overwhelming and I wish I would have known sooner.”

Financial literacy is the application of basic financial concepts such as purchasing a home, investing or saving for retirement. According to finance professor Laura Gonzalez, there is a lack of knowledge on financial literacy at Long Beach State.

Gonzalez said California high school financial literacy ranks at the bottom 20% in the nation and because students don’t learn financial literacy during this time, they tend to stay financially illiterate in their higher education.

Michael Gibbs, a finance professor who teaches about investments, said those who do not understand the basic tenets of financial literacy will be affected negatively for their next 40 years.

“Financial literacy is a spectrum,” Gibbs said. “But in general, it’s about understanding how to optimize your time with your money.”

Through his experience as a professor, Gibbs found LBSU students are much more frugal with their money than students at other universities. However, he worries being frugal does not equate to being financially literate. He added that many students he has spoken with have not heard about terms like mutual funds, hedge funds or 401Ks.

“Students here, compared to other states, are playing with a huge disadvantage because they don’t know the meaning of simple words like that,” he said.

According to Gibbs, students learn financial literacy through the media and from their parents. He interprets this to mean that if students invest in their future, they will likely take little to no risk because past generations have suffered through several recessions.

“If this generation does make low-risk investments because of their lack of financial literacy, then their retirement will be half as much as it should be,” Gibbs said.

Yulong Ma, the finance department chair, said the best time for students to invest is while they are young.

“The sooner you do it, the more money you’ll get in the long-term,” he said.

Campus administration has an online financial course, Financial Literacy 101, that is open to all students. In addition, Associated Students Inc. financial literacy workshops are also open to all students.

“In the end, it is something we need to learn about, whether for credit or not,” Gonzalez said. “It is about survival.”

Edward Munoz, a fourth year computer science major, said financial literacy among his peers is low. According to him, his peers do not know how to buy a house, do their taxes, save money or plan for retirement.

“It’s not just my peers,” he said, “I am in major debt, not just student debt, but credit card debt, all because I didn’t know anything about finances when I got a card.”

Jackeline Campos, a fifth year history major, fears for her future because she does not have basic financial education.

“I don’t consider myself financially literate,” she said. “But I do know that it’s better to invest your money than have it be sitting in a savings account doing nothing. I just have no idea how to do that.”

 

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