Like a cruel April Fools joke, April 1 marked the beginning of Financial Literacy Month in the U.S. With a population that holds more than 900 billion dollars of credit card debt and 1.56 trillion in student loan debt, financial education is the U.S.’s liferaft to save a population drowning in debt. The problem seems to lie in how knowledgeable people are about personal finances, and it is not confined to the U.S. alone.

The 2014 Standard & Poor’s Global Financial Literacy Survey found that only 33 percent of adults worldwide were financially literate. Four questions in the survey posed simplified real world situations, simulating the problems people face day-to-day when it comes to money. Only one in three adults could answer three out of the four questions.

This problem does not plague all age groups either. Studies show that the problem is increasingly applicable to millenials, current undergraduates and graduating high schoolers. Analysis done in Forbes Magazine shows that U.S. American college students are predicted to lose thousands of dollars simply due to a gap in financial literacy.

NYU Abu Dhabi students are starting to notice this gap in knowledge too. Although many NYUAD students are in a unique position of financial security, this is only temporary. Recent chatter on the NYUAD Facebook Group has centered around recommendations for increasing personal financial literacy. Discussions on NYUAD Forum – a private Facebook for NYUAD students – picked up as alumna Kristina Stankovich, Class of 2018, asked for personal finance book recommendations.

Additionally, the Career Development Center hosted a the Senior Transition Series: Financial Literacy event as part of their renewed commitment to help students prepare for life after Saadiyat. Holborn Assets senior associate Steven Downey spoke at the talk, highlighting some of the key issues around personal finance, what to look out for and some handy financial tips.

"While sessions such as these are by no means a complete and ultimate guide to do finances as an adult, I found it super helpful to know what to look out for and have those basic pointers to keep in mind moving forward!" said Sally Oh, Class of 2019.

How did we get here?

While there is no clear cut evidence as to how the current lack of financial knowledge came about, there is some well-argued analysis. Initial research suggests that the transition from tangible money and paper checking systems to plastic credit cards and online banking has contributed to the problem. With fine print in place it’s difficult to grasp the various interest rates, commit to a budget and even pay taxes.

Another contributing factor educators believe is contributing to the problem, is the decline in financial literacy courses at both the high school and undergraduate levels. Surveys in the U.S. indicate that not all states include financial literacy as part of their educational state standards.

Not only does a classroom setting provide formal education about personal finance and economics, but it creates a space to discuss the issue in general. Financial socialization is identified as a key discrepancy between those with high financial literacy scores and those on the lower end. Financial socialization is the combination of formal and informal learning, whether its talking to peers, parents or educators. Having a place to discuss the issue seems to be half the battle.

Why is it so important to be financially literate? Failing to grasp basic financial concepts can put you at a disadvantage. If you are unable to understand the way interest works you are left at the mercy of banks, salesmen or anyone who is generally looking to make money off of those who might be out of the loop.

Studies have found that people who do not learn about interest compounding tend to accumulate more debt, get higher interest rates on loans and end up saving less money. Learning about these topics, whether in a classroom setting, a social space, or other outlets, gives people a necessary advantage, making them better at, “job planning and saving for retirement.”

Millennials are facing an even bigger crisis than their predecessors did. In the U.S., housing costs have skyrocketed in the past few decades. More and more university students are falling behind on their loan payments. Financial literacy is critical for current and recently graduated college students. As young people become increasingly independent, they are also forced to confront the many hidden costs of living. Being versed in personal finance could mean the difference between being able to pay for a medical emergency or burying yourself in credit card debt.

Students are also able to recognize the nuance of the issue and different levels to understanding financial literacy.

“Regarding financial literacy amongst young people, that depends on how you define financial literacy. If you think of financial literacy as being capable enough to manage your day-to-day expenses in the short term, not going broke and still meeting all your wants and needs, then to an extent most people have that sort of literacy and that comes from the basic survival skills that we all have,” Himag Vaidya, Class of 2019 commented.

Vaidya did, however, recognize that some young people do not completely understand the intricacies of navigating more complex financial decisions in the long-term.

“But if you think of financial literacy in the long term and how investing today can bring you returns in the future and planning for those returns, or optimizing your spending today to maximize your returns tomorrow, I think that’s a place where young people don't really focus. A large reason for that I believe is that we’re too short sighted and we’re not educated enough.”

Although the reality of the issue of financial literacy is alarming and poses a significant problem today, the situation might not be as hopeless at it seems. As your time at NYUAD draws to a close, it might be time to look to those out there that are actively trying to rectify the issue and make important resources accessible.

College Finance is a series created by The Gazelle’s Features desk to investigate the problem of low financial literacy amongst college students. Find out more in the coming weeks with College Finance 102: The Resources Out There & College Finance 103: Looking Towards the Future.