An inconvenient truth

There is a problem in this country. This problem is serious, time sensitive and can have a very negative impact in the coming century. That problem is a lack of savings. Last year, our country’s savings rate was negative 0.5 percent. This is compared to a 6.7 percent savings rate for Japan, and a 11.2 percent savings rate for France. Our age group is hit especially hard with crippling debt and bankruptcy.\nWhy does this phenomenon happen? Why do I constantly see intelligent, educated people make terrible financial decisions? \nThe reason this happens is that these people, though intelligent, do not know any better. Many go their entire lives without a single bit of financial education. This is the result of a negligent policy by the educational system. It is the result of a system that teaches people how to find a tangent in trigonometry, but not how to take care of their own lives.\nSeveral high-profile authors have gone after this problem, including Donald Trump and Robert Kiyosaki, author of “Rich Dad, Poor Dad.” While they have been successful in helping millions of people, they have still not fixed the fundamental savings problem. The problem still exists and we are just beginning to see the repercussions.\nFirsthand, I saw the direct effects of poor financial decisions. Growing up I had a unique perspective. I lived among both the rich and the poor. At home, I lived among the immigrant community and lower-class Americans. At the same time, I went on scholarship to a private school with students from the upper class.\nAt home, my parents worked very hard but still lived from paycheck to paycheck. Even at 8 years old, I knew that something was wrong. After going to the library and doing some research, I proposed a budget to my parents. Of course, my parents laughed it off. For many years I felt very money conscious, even when my parents started to earn more money. What I saw was that as we earned more money, the effect was the same: zero savings, zero progress. I started to realize that the problem was with the lack of financial education and not with the amount of money. \nThe struggle my family dealt with is a common one across the entire country. In fact, I soon learned many “rich” Americans had even bigger financial problems.\nMany people have started to take notice. Politicians, hoping to capitalize on fear and ignorance, have framed it as a rich vs. poor problem. \nHistorically, the lack of financial education has been the downfall of the greatest civilizations. Rome fell because the gap between the rich and poor was too wide. France had its revolution. Our country is not immune to natural forces. Even now our country is faced with a recession because greedy and unscrupulous people have taken advantage of financially uneducated individuals. Our natural security is at risk because of the amount of foreign money in our economy. \nThere is only one possible solution: We must commit to mandatory classes in personal finance for every student. Like every large idea, it must start on a small scale. This goal can best be achieved by starting with universities. \nIU is in a position to be the leader in personal accountability and financial education. The university’s own class on personal finance, Business F260, can be enlarged to accommodate every student. Personal finance should not be framed as a business subject, but rather an issue that is pertinent to every student. \nI have personally spent the last two months gathering support from alumni and professors. This issue is now supported by hundreds of individuals associated with our university. Like with any new idea, there are many obstacles that need to be overcome. Such is the case with any large project. This, however, should not deter our efforts.\nUltimately, the University and specifically its president must be accountable to the student body. I need your help. If you support this issue send an e-mail to President Michael McRobbie at iupres@indiana.edu with the subject “I want University-wide financial education.” Let’s tackle this important issue together once and for all.