URI Department of Human Development and Family Science offers courses in personal finance

When considering finance courses at the university level, one usually envisions complex classes on banking, corporate finance, investments, the stock market and hedge funds.

Balancing a checkbook, filing personal income taxes, examining costs and benefits of student loans or calculating retirement needs are often overlooked at the collegiate level, but many college students — and even graduates — lack these simple yet critical skills.

The Department of Human Development and Family Science, part of the College of Health Sciences at the University of Rhode Island, is helping students get a handle on their financial futures, offering courses in personal finance to teach them the basics of managing their money. HDF-205, “Money Skills for Life,” and HDF-418, “Personal Finance,” are introductory course mostly for young adults so they can learn the basics they’ll need for their whole financial life, according to Assistant Professor Nilton Porto and Professor Jing Jian Xiao, who teach these and other personal finance costs.

“People don’t always have a chance to take a class like this in high school so they come to college without the basic information,” Porto said. “We cover the whole spectrum — earnings, borrowing, insurance, saving for retirement — all the main topics you need to know we go through in this course. Every week there is a new assignment — balance a checkbook, do your taxes, decide whether to buy a car using a lease or a loan. It’s a hands-on course.”

While “Money Skills for Life” focuses on one’s own family finances, “Personal Finance” involves more case studies and financial planning, helping train students to become financial advisors or counselors. “There are a lot of job opportunities in financial counseling, coaching and planning,” Xiao said. “At the very least, this gives you an additional edge in the job market.”

The classes are required for Human Development and Family Science students, and are also open to matriculating students in other colleges. Porto and Xiao are also working on an Accredited Financial Counselor (AFC) certification program using some of these courses, offering additional benefits for URI students.

“Finances have become more complex and people sometimes don’t have an understanding of basic things,” Xiao said. “We believe there is a lack of basic financial knowledge; hopefully, these classes can provide some of this and help people make better choices.”

Managing one’s own finances does not have to be complex, Porto said. “It’s not rocket science,” he said. “You just need to have some basic knowledge, some good behavior. Sometimes you just need to give people some rules of thumb.”

Some basic rules of thumb Porto and Xiao recommend people keep in mind include:

• Put 10 percent of your salary into savings every month.
• Have an emergency savings of at least three months of your income.
• Housing and all other obligations should be no more than 50 percent of your disposable income.
• Use the Rule of 72 to determine how long it will take an investment to double. To use the rule, divide 72 by the expected growth rate of your investment to get the number of years it will take to double. For example, if the growth rate is 8 percent, it will take 9 years (72/8) to double the investment.
• Establish and maintain good credit. “Having enough savings is number 1, but good credit helps in an emergency,” Porto said.
• Limit student loan borrowing to your first year’s expected annual salary.

That last tip is particularly important for college students to consider, given the ongoing student loan crisis in the country. About 44 million people in the United States are carrying more than $1.5 trillion in student debt, according to the Pew Research Center. The average student leaves college with about $30,000 in loans to repay, and roughly 10 percent are late or delinquent on their loans.

That’s not to say borrowing can’t be beneficial, Porto said. People just need to go into debt armed with the kind of information his and Xiao’s classes provide.

“It makes students aware of how much money they are borrowing. They also have to consider their major and compare what they are borrowing to what they can expect to make when they graduate,” Porto said. “It’s OK to get loans if you need one. Just make sure you are taking the right amount and there is a plan in place to pay it back.”

It has become more common across the country to teach college students basic personal finance, even at institutions known for their elite business schools such as Harvard and Stanford universities, Xiao said.

“But this has been happening for more than 30 years at land grant universities like URI,” he said. “I think people are just not aware of this. These classes are more hands-on, less theoretical. We’re teaching them things they can apply to their own financial future.”

For more information on the personal finance classes, visit the Human Development and Family Science website here.