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Money 101.

January 16, 2011

The only thing I ever knew about credit scores and finances in my late teenage years was what my mother taught me. Pay your bills and be responsible! You have to take care of your finances! These were her two favorite lines. While I understood the gist of it, no one broke it down for me. I had no clue about interest charges, APR’s, budget‘s and student loan rates. I believe it is safe to say not many 18 year olds understand it either. The only financial education I received was when I was in the 8th grade. An accountant from PricewaterhouseCooper taught us how to balance our check books. Did I mention I was in the 8th grade? I’m not even old enough to open a bank account but I knew how to balance a check book. The time would have been better spent teaching me about the best ways to win at double dutch.

The New York Times published an article about a college in Burlington, Vermont named Champlain College that  has implemented mandatory courses in financial literacy. After the whole mortgage collapse in 2008, you have to wonder how much blame should be placed on those individuals who signed up for loans they didn’t understand. In an effort to prevent a repeat, Champlain College is educating their students on things like maintaining good credit, budgeting, salary benefits, and retirement stocks. By making college students aware of how to be financially responsible, they will make better choices when the time comes to buy a house or choosing to invest in a mutual fund. I always wished college taught courses on real life. I understand I need to know about U.S. history but I’ve been taking those classes since grammar school so something practical every now and then is great. Considering tuition runs in the thousands, per semester, a course that will help me throughout my life seems essential. All colleges should have courses like this, especially with an unstable economy. I think it should even start at the high school level since not everyone goes to college. Makes you wonder if there would have been a different outcome if those obtaining mortgage loans were better financially educated. We can’t make large fiscal commitments based on the word of our banker or portfolio investment manager. After all, they are looking to make a buck. I commend you Champlain College and hope other schools will follow suit. Ask yourself this, if college students are considered tomorrow’s leaders, shouldn’t they know how to best manage today’s economy?

At GAI (www.gunwel.com) we want to help make you more financially secure by handling all your tax and bookkeeping needs. So stop by and visit or give us a call at 212-979-6830. See you soon!

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