Beloit College Magazine

Beloit College Magazine

Fall/Winter 2013 (November 1, 2013)

Money as a Means to an End

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November 1, 2013

By Kate Atkinson’15

When asked why he created the Life and Financial Planning Workshop, a class that prepares students to make post-college financial decisions, Professor of Economics Warren Palmer has a simple answer: “Students asked me to do it.”

Over more than 20 years of teaching economics, accounting, and business finance at Beloit, the Coleman Foundation Chair in Entrepreneurship discovered that many students, even many economics majors, felt they lacked the financial knowledge to make the big decisions they will face immediately after college.

Warren Palmer

Photo by Zane Williams

But the course is not narrowly focused on decisions about money. Its central theme is that money is a means to an end, not the end itself. “Students need to know how to use the financial system to meet their goals and live their values,” Palmer says.

“Students are graduating into an increasingly complex financial world,” he says. “And the decisions they make in the first 10 years are critical.”

As a result, Palmer intentionally gears class activities toward both financial theory and practical applications.

At the start of each class meeting, students practice the math of personal finance. “I want to demystify saving, borrowing, and investing,” Palmer says. “When applying for a loan, I want students to be able to calculate the true interest rate the lender charges and the monthly payment needed to repay the loan.” He adds, “My goal is for every student to leave with a deep understanding of key financial calculations they can use in the pursuit of their personal goals.”

Students apply this knowledge by doing things like looking up their credit reports and learning how to improve their credit scores. They study borrowing and investing money, and learn how to make compound interest work for them instead of against them. They study the tradeoffs between buying a used car instead of a new one, among other practical skills. They work with marginal tax rates and calculate the payoffs of tax-advantaged retirement investing.

“Hopefully, every student who finishes the class will say ‘Yes!’ when an employer offers to match employee retirement contributions,” Palmer says.

In addition to in-class activities and assignments, the class is enhanced by guest speakers, ranging from Senior Associate Director of Admissions and Financial Aid Jon Urish’96 explaining student loans, to New York Times columnist Carl Richards, author of The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money, as well as a handful of Beloit alumni.

Palmer spent his spring 2012 sabbatical conducting extensive research on what Beloit College students know and want to learn about personal finance. He found that more than 90 percent of those surveyed would take or would be interested in taking a class that teaches personal finance. And it’s no wonder. With the pension model of the past century disappearing, students are graduating into a different financial environment than previous generations.

For the class’ first run last spring, 44 juniors and seniors representing 21 different majors enrolled. Because of its unusually large size, the class was taught in Richardson Auditorium.

Economics major Zoe Lengjak’14 says that the course is like no other she has taken at Beloit.

“Warren brings an unparalleled passion to Life and Financial Planning that stimulates students who want to learn how to understand financial responsibilities and options,” says Lengjak. “We spent quite a bit of time on mutual funds, which I learned to appreciate because I’d never learned the logistics of this form of investment. I’m actually investing in several mutual funds now, which is extremely exciting.”

Though this type of course is fairly uncommon at small liberal arts colleges like Beloit, Palmer has grounded it in the kind of critical thinking and academic inquiry that defines a liberal education.

“The course advances the college’s mission of empowering students to lead fulfilling lives by helping them achieve their personal goals, whatever those might be,” says Palmer. “It helps students consciously use the critical thinking skills developed in a liberal education to make good financial decisions and avoid bad ones in their pursuit of those goals.”

Ultimately it all comes down to awareness. Palmer is an advocate for students living below their means post-college, and he has a good reason. “I want people to do the numbers and know the payoff,” he says. “If students can live frugally after college and develop an awareness of how they manage their day-to-day monetary affairs, they can build up their net worth and ultimately use money as a means to achieve their desired ends.”

Financial (and Living) Tips from Warren Palmer:

1.    Live below your means. 

2.    Living doesn’t cost much, but showing off does.

3.    Pursue satisfaction, not status.

4.    Make compound interest work for you, not against you.

5.    Automatically invest part of every paycheck.

6.    Time is your best ally or your worst enemy. Make it your friend.

7.    Save early, save often, in low-cost diversified investments.

8.    Focus on what matters: family, friends, community.

9.    Diversify your skills: start a micro-business for pleasure and profit.

10. Learn from the past, plan for the future, live in the moment.

Book List

• Get a Financial Life: Personal Finance in Your Twenties and Thirties by Beth Kobliner

• The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money by Carl Richards

• Smart Choices: A Practical Guide to Making Better Life Decisions by John S. Hammond, Ralph L. Keeney, and Howard Raiffa.





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