A math major we know recently took a new personal finance class offered by her college. She rated it Excellent and passed along slides outlining the course.It covers about what you would expect, with added emphasis on on topics – education loans, subsidized health insurance – of special concern to new grads. Students are introduced to basic accounting (income statement, balance sheet, net worth), banking, retirement plans, credit cards (use as charge cards only), taxes, insurance and goal setting.
Because most new grads will start out poor and in debt, the course encourages inconspicuous consumption, as advocated by Mr. Money Moustache and – new to me – the Frugalwoods.
Investing receives substantial coverage. Students are encouraged to keep it cheap and simple: Avoid brokers. Buy mutual funds, not stocks. Buy no-load funds, preferably index funds, from the fund company. Choose funds with an expense ratio of no more than .35%.
As investors, most new grads will have little to work with. The course encourages them to look on the bright side:
"If you were to take only one thing away from this class it would be to understand the time value of money.
"Compound interest is a very powerful concept. It is the single greatest advantage that young people have over old people."
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