The Student News Site of Tarrant County College

The Collegian

The Student News Site of Tarrant County College

The Collegian

The Student News Site of Tarrant County College

The Collegian

Opinion-Personal Finance 101 required

credit trapAmericans have become increasingly reliant on credit cards to pay for minor and some major purchases with some individuals amassing thousands of dollars of debt.

As a result, their fundamental ignorance in financial matters is leading to disaster.

During the present recession, many businesses and individuals have fallen further into debt. Credit card issuers such as Citibank and Chase have cut back on their workforce to compensate for their quarterly losses. Many cardholders have fallen behind on payments because they have no savings to pull from.

Financial expert Dave Ramsey said on his Web site that 29 percent of teens are in debt, owing at least $300, and people under 25 are becoming the fastest-growing group to file for bankruptcy.

What Americans need is a better understanding of finances and the way money and credit work in the real world. If public schools require students to take courses in sociology and psychology, why not require students to learn personal finance?

Students should be taught the most important financial issues such as budgeting, the importance of savings and the realities of credit cards. If teens learn this information as they are starting their first jobs, they could avoid many financial missteps after they graduate.

In 2006, financial literacy courses became mandatory in 14 states and covered the concepts of maintaining a healthy credit score and opening bank accounts.

Advertising frequently targets teens and 20-somethings. Being uneducated in financial matters and having a fistful of cash can make for a dangerous mix.

Bad financial habits begin early. If people are taught to control impulsive buying habits and not let advertising sway their better judgment, Americans will be better prepared for times of low employment and cut hours. 

Citigroup and Visa have attempted to attract students by incorporating games into personal finance courses.

“Teachers tell us that financial literacy is important, but it’s deadly dull,” said Visa director of financial education Jason Alderman in USA Today.

Financial literacy often is not taught in schools because some believe it is the parents’ job to teach financial literacy or because time and money are a deciding factor.

If parents have a poor understanding of finances and credit, they cannot teach their children who fall victim to the same mistakes.

But people can avoid falling into the credit trap.

People need to prioritize. They should pay bills and buy necessary items such as food, gas and rent before buying expensive clothes or cars.

Keeping a journal of expenses will help individuals keep track of where and how much money they spend.

Paying cash when possible is the best way to stay out of debt. And they should avoid multiple credit cards. With more than one, the urge to spend can increase. Credit cards should be a last resort when all other options fail.

One rule to remember is if the purchase cannot be paid by the next due date, then a consumer cannot afford it.

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