Is Financial Literacy Still Relevant?
When WFI was launched in 2001, what were the initial goals for the financial education program?
Mahdavi: The goal for the WFI program was to provide financial education to young women because women’s financial knowledge falls behind that of men, and men’s financial knowledge isn’t that high to begin with. Although financial literacy is low, on average, in the United States and internationally, it is particularly lower amongst women. In order for women to live life according to their own decisions, they must first learn how to be financially independent which can’t be done easily without thinking about financial planning for your future. This means women need to learn the principles of saving, investing, and compounding interest so they may plan for their futures. After understanding the basics, you have the opportunity to learn more and ask more specific questions - what types of investing are there? What are the best saving/retirement plans? What are the best ways to save or invest?
It’s important for students to start asking these questions in college. By the time most college students graduate they’re in their early 20’s, with the exception of non-traditional age students, so if they have the tools for financial planning at a young age, their lives will be much easier to plan going forward.
Does that mean you believe the initial goals set are still relevant today?
Mahdavi: Yes absolutely! If anything, more so because the type of financial products available now are more diverse and complex than they were, say twenty years ago. Financial literacy isn’t just a course you take once and you’re done with - it’s a subject that requires continuous learning. After learning the basics, you must invest in your financial education going forward - you must keep up with new financial products, new ways of
saving, new ways of investing, etc. so that you don’t fall behind.
Keeping up isn’t hard once you’ve started, but you need to know the language first. Think about when people talk about interest rates, inflation, yields to bonds, dividends, portfolio diversification - if you don’t know what these terms mean, how can you decide how to save and invest?
What are your goals for the financial education program at Smith going forward? More specifically, in the next five years what do you see for CIEC?
Mahdavi: I think one of the most important goals since the beginning of WFI was increasing financial education on campus and getting as many students involved as possible.
The intention of this program was to educate students so that they may get ahead in life. Before the WFI program was founded, alumnae would come back to campus and express concerns over the lack of practical, real skills - the top concern being financial literacy. On the flip side, I’ve also heard from alumnae who were able to take advantage of WFI’s financial education resources. For instance, an alumna who studied English, but utilized WFI’s programming while on campus was able to enroll in her company’s saving and retirement programs with ease and give advice to her colleagues about saving and investing plans for the future. In a thank-you email to me, she expressed gratitude over how proud she was about WFI’s impact on her Smith education - she was the only one in her company who had received any sort of financial literacy as part of their undergraduate experience. So, the main goal going forward should be getting more students to take advantage of resources offered for financial literacy by the CIEC before they graduate so they can maximize their academic and financial education.