Infographic by Charlotte Braden

A financial literacy course should not just be offered, but a mandatory requirement to graduate from California Lutheran University. 

As students, we attend college to prepare ourselves for the real world. We spend hours writing research papers, or studying for exams, but very few actually understand the processes behind paying off credit cards, building credit, or how to properly invest money. Overall, college students are not financially literate.  

According to Forbes, a study from Auburn University found that fewer than 3 out of 20 students were able to receive a 6/6 on a basic financial literacy test, and even worse, less than half of the students were able to get four of those questions correct. This research, with over 31,000 participants, shows there is a disconnect when it comes to finances and the younger generations. 

Kirk Lesh, assistant professor of economics, said he has seen the financial gap with college students first hand. Lesh said he has talked with students who are already invested heavily in stocks, but the vast majority of students seem to be scared to even open up a stock account. 

“I have students that are already investing in stocks and playing the market,” Lesh said. “And then I’ve had other students that say, ‘I’m too afraid. It scares me.’ It goes from very little to quite a bit.” 

Nathan Buehler, a sophomore and founder/president of Cal Lutheran’s Investment Banking Association, said he feels confident about his own personal finances, yet observes that many students don’t. 

“I think in terms of real-world finances, I have a pretty strong grasp on it,” Buehler said. “Especially in the realm of personal investing and accounting, especially corporate accounting, I think I have a pretty good grasp on. Most of that is through self study, not as much through courses, but that’s kind of where I’m at right now.” 

A 2019 study in the Swiss Journal of Economics and Statistics found that “only one third of adults worldwide are financially literate, and young adults between the ages of 15-24 are the least knowledgeable.” 

The same study reported that individuals with higher levels of formal education were nearly twice as likely to make sound financial decisions, such as saving regularly and planning for retirement. 

Although Lesh said he agrees finances are super important, his personal view is that it is not the universities responsibility to teach students financial literacy. He does believe, however, it should be a class that is widely offered for students who are interested in becoming more financially literate. 

“Should universities offer financial literacy courses? Yes,” Lesh said. “The university’s first goal is to prepare you academically for the world, the job market you’re entering. But that doesn’t mean financial literacy isn’t important.” 

I still ask the question, even with the acknowledgement that universities need to focus on academics — shouldn’t learning financial literacy be a part of the real world as well? 

Cal Lutheran mandates students take IDEAS courses in order to graduate. They claim that these courses “will give you opportunities to inquire, develop, experience, apply, and serve. They’ll broaden your major and make you a more well-rounded musician, scientist, entrepreneur — or perhaps even introduce you to possibilities you didn’t know existed.”  

So I refer back to my question before — shouldn’t financial literacy be something we ‘inquire, develop, experience, apply, and serve?’ 

Why is a financial literacy course not offered as an IDEAS course option, let alone a mandated requirement to graduate?  In what world have we woken up to that seems to completely repel the idea of teaching college students finances and how they work. How are basic survival tools that finances offer not considered a concept that will broaden students as a whole? 

Cal Lutheran offers a very small sliver of classes that remotely involve personal finances. Most education with this topic would come from clubs, or student run organizations, like the Investment Banking Association. 

According to the Investment Banking Association page in the Cal Lutheran School of Management website, they “aim to place students into investment banking and high finance adjacent roles. We aim to achieve this through technical training, networking prep, and structured recruiting timelines for our members. Students will have the opportunity to speak with Wall Street professionals and gain financial expertise in a community setting.” 

At Cal Lutheran, the idea of financial literacy is just static in the air. 

The university offers a class titled “UNIV: Intro Personal Finance,” but it’s provided over summer break after many students have left campus or have their summer internships or jobs. 

Buehler said he believes that making a financial literacy class mandatory, even to replace an elective, would provide students with skills they actually need. 

“A lot of the electives that you have to take in college are kind of useless,” Buehler said. “So I think that making, like a financial literacy course or an investing course, one of your mandatory elections, no matter your major, would help with that problem.”

Living in today’s society and being financially illiterate can lead to a world of problems. A required course could help students learn how to properly save, invest and even how to make money work for them. Lesh said what he’d like his beginning lessons for a financial literacy course to look like. 

“My first thing would be keep your spending in check. Put yourself on a budget,” Lesh said. “How much are you going to save every month? What are your goals? Keep your credit card debt manageable.” 

Lesh said he often tells his students to invest in 401(k) plans, especially if employers will match their deposits into the account. 

“When I was in the private sector, companies would match 50% up to 8%. So if I set aside 8% of my pre-tax income, my company would just give me an extra 4%. Definitely, start doing that.”  

To truly break down how important those numbers are, here is a hypothetical visualized breakdown of putting money into a 401(k) as a minimum wage worker.  

If you have an income of $17 an hour, and work 40 hours a week, you will make about $680 a week, $2,270 a month, and $32,640 a year.  

According to Fidelity, the average employee contribution for Generation Z is 3.7% and for Millennials it is closer to 4%. For this hypothetical we will stick with 4%.

4% of $32,640 will equal $1,305.60 per year that will be placed into your retirement savings. 50% of $1,305.60 will equal $652.80 per year deposited to you from your employer, and you don’t have to lift a finger. 

Now, to expand on the possibilities this free money can create in your life, let’s assume there is a 7% annual return, which tends to be a very common return in stock market investments, according to Investopedia. 

Assuming for this hypothetical that you stayed at the same job and same salary, you would have invested $26,000 into your account over the span of 20 years, with your employer contributing $13,000. With the stock staying consistent at the 7% return, added to the total contributions from you and your employers, there will be approximately $80,000 in your account, thanks to compound growth. This is the art of learning how to make your money, make you money. 

For many young adults, this is the exact information they need to hear. Financial literacy isn’t just about saving money, but how to make the most without doing a thing. It’s about freedom, stability and confidence. 

If Cal Lutheran really wants to prepare students for the future, they need to educate them on all aspects of the real world. Finance is no exception. 

“If students aren’t learning this at home, where else are they going to learn it,” Lesh said.