RENEE MONTAGNE, host:
We recently told you about one of the hottest classes at Wellesley College in Massachusetts. It's Econ 223, and when enrollment opens, the course fills up within minutes.
Ms. FATIMA BURNEY (Senior, Wellesley College): This is what you need to know before you go out into the real world.
Professor ANN WITTE (Creator of Fundamentals of Personal Finance, Wellesley College): Now we're talking about your benefits and your withholdings.
Ms. BURNEY: There was a huge amount that I didn't know, and you can get into a lot of trouble for it.
MONTAGNE: That's senior Fatima Burney. We also heard the voice of Anne Witte. She co-teaches the class, which is a primer on credit cards, health insurance and 401(k)s. If it's tough for students to learn this, Professor Anne Witte says it's the hardest class she's ever taught.
Prof. WITTE: The financial world is ever-changing. Wall Street is continually innovative. We have to, every year, come in and completely revise almost everything that we're doing to reflect the latest developments in the financial world.
MONTAGNE: What prompted you to create this course?
Prof. WITTE: I'm an economist and, as you know, when one goes to cocktail parties, the first question is, is what's going to happen to interest rates.
Prof. WITTE: And then the second question is: Can you help me with my finances? And it became increasingly clear to me that it didn't matter what the education level was. Much of the United States population was not able to effectively deal with the increasingly complex and ever-changing financial world.
MONTAGNE: I remember when I was at university that pretty much all I was concerned about knowing was how to use a checkbook and, you know, when to get a credit card. That was about how basic it was. What about students today?
Prof. WITTE: Yes. I think that they face financial issues at a much earlier stage than, say, when you were in college. Most of them have student loans. Many of them use credit cards and have had difficulty with credit cards. They're getting their job offer letters, and the job offers talk about 401(k)s and health plans and life insurance and disability insurance, and they need to know what these things are, and they need to know how to choose from an employer compensation package.
MONTAGNE: Are there any of these concepts that the students are startled by?
Prof. WITTE: I think one of the things that they are startled by is what proportion of their paychecks are going to go to taxes. So first of all, when they get their, say, $55,000-a-year job offer and they find out that they're going - in New York City - and they find out that they're going to pay 40 percent of that in taxes, this comes as a huge shock.
MONTAGNE: Well, I think that one never gets over that one, actually.
(Soundbite of laughter)
MONTAGNE: Or so far.
Prof. WITTE: I think you're probably right.
(Soundbite of laughter)
Prof. WITTE: When you see those are net versus the gross.
MONTAGNE: Yeah. But if there was one concept that you would think is the most difficult to get across to your students, what would that be?
Prof. WITTE: The most difficult concept to get across to students is the concept of not taking numbers at face value. So when they get their offer letters for their first job after they graduate, to look at the $55,000 salary, but to also look at differences in cost of living.
For example, if they have a job offer in New York City and a job offer in Chicago, the cost of living between those two cities are huge. And the same thing when it comes to purchasing, to have them think carefully about the implications of their purchasing decisions for their future income security and their future ability to buy large ticket items like a home.
MONTAGNE: Thank you very much for joining us.
Prof. WITTE: Thank you, Renee. It was a pleasure.
MONTAGNE: Anne Witte is a professor of economics at Wellesley College. She and Saundra Gulley, an associate in economics, co-teach Econ 223.
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