When we think about higher education, we often envision a pathway to career success, where students acquire technical knowledge and critical thinking skills to excel in their chosen fields.
Without a doubt, these skills are critical for success. However, as the economic landscape continues to change at an unprecedented pace, there is an urgent need for a shift in emphasis.
It's time for universities and colleges to put financial literacy front and center as a top future-ready skill.
It's becoming increasingly clear that being able to understand and manage personal finances is crucial in our current world. In fact, it's so important that it can make the difference between being financially secure or struggling with debt.1
So let's take a closer look at why financial literacy needs to be a top priority for higher education.
Current Financial Literacy Is Lacking
Financial literacy, the ability to understand and manage personal finances effectively, is an essential skill that has been overlooked for far too long. It includes fundamental financial knowledge such as budgeting, saving, investing, and managing debt.
However, studies have shown that many college graduates lack the financial literacy necessary to make informed decisions about their finances.
According to a survey conducted by the National Financial Educators Council, a staggering 76% of college students wished they had received more assistance with their personal finances while in college, with 55% reporting that they had never taken a personal finance course.2
This deficiency in financial education can have significant consequences, including student loan debt, credit card debt, and difficulty in managing financial responsibilities after graduation.1
Benefits of Financial Literacy
The importance of financial literacy cannot be overstated.
It is essential for students to have the tools necessary to make informed financial decisions that will impact their lives both in the short and long term. There are reasons for this both on a personal level and also on a societal level.
When individuals are equipped with the tools and knowledge necessary to make sound financial decisions, they are better positioned to achieve financial security and stability.
Financially literate individuals are more likely to create budgets, save money, invest wisely, and manage their debts effectively.3
Lower Drop Out Rates
Prioritizing financial literacy in higher education is crucial for reducing college dropout rates and ensuring that students have the financial acumen needed to succeed in today's economy.
Studies have shown a clear relationship between financial knowledge and academic success, with financially literate students being more likely to stay in school and graduate.4
In fact, almost 38% of students drop out of college due to financial reasons.
Societal Economic Health
Financial wellness is not only important on an individual level, but it is also vital for the economic health of society as a whole.
Financial illiteracy can result in negative consequences that can reverberate throughout the economy. It can lead to increased debt, lower credit scores, and less spending power.
In contrast, a financially literate population is better equipped to make sound financial decisions that can stimulate economic growth and benefit society as a whole.5
Where Higher Education Comes In
Higher education institutions have a unique opportunity to equip their students with the financial literacy skills they need to succeed in the 21st century.
Many students enter college without a solid foundation in personal finance, and as a result, struggle to navigate the various financial decisions that come with college life.4
By incorporating financial literacy into their curriculum, colleges, and universities can prepare their students with the skills and knowledge needed to succeed in the ever-changing financial landscape.
These skills can include budgeting, managing student loans, understanding credit scores, investing, and saving for the future. These skills will be invaluable to students not only during their college years but also throughout their professional lives.
Incorporating financial literacy into the curriculum can help break the cycle of financial instability that often plagues underrepresented and low-income groups. By providing students from all backgrounds with the financial knowledge and tools necessary to make informed decisions, higher education institutions can also help reduce the wealth gap.4
A Good Financial Program Can Help
To effectively implement financial literacy education and make a real impact on students, universities, and colleges need to seek the right support.
As a trusted leader in financial education and improving financial wellness, iGrad provides award-winning financial literacy solutions specifically designed for higher education institutions.
By working together with iGrad, universities, and colleges can help ensure that financial literacy becomes a top future-ready skill and set their students on the path to financial success.
1 - https://www.finra.org/media-center/newsreleases/2020/new-research-financial-literacy-significant-indicator-positive
2 - https://views.smgww.org/assets/pdf/2008%20JumpStart%20Financial%20Literacy%20Survey.pdf
3 - https://www.investopedia.com/articles/investing/100615/why-financial-literacy-and-education-so-important.asp
4 - https://digitalcommons.wku.edu/diss/140
5 - https://www.researchgate.net/publication/354630334_Financial_Literacy_A_Catalyst_to_Financial_Inclusion