Why All College Students Should Take a Personal Finance Course Before Graduating

Guest post by Josh Wilson, a Millennial personal finance blogger with a passion for financial literacy.

Personal Finance for US Households

The state of personal finances in the United States is dismal. Credit card debt is as high as it has ever been with the average household owing more than $16,000. Less than 10% of adults have $1,000 or more in their savings accounts and more than half of adults feel they are inadequately prepared for retirement. Imagine how different things might be if people learned even the basics of money management and personal finance before they start making financial decisions that impact the rest of their life. Critical financial decisions are often made before a person even graduates from college. As evidenced by the current state of personal finances, financial illiteracy has come at a great cost to individuals and the society.

The Cost of Financial Illiteracy

By the time most people turn 40, they have already made the majority of their most important financial decisions; yet, only a third have a strong understanding of the concepts of saving, borrowing, and managing cash flow. This lack of financial knowledge can cost them thousands of dollars in extra borrowing costs, a seriously deficient retirement account, and the inability to pay for their children’s college education. Financial illiteracy has a snowball effect as children will grow up adopting bad financial habits and usually follow down the same path of personal financial hardship.

In most American households, personal finances are rarely discussed. According to the Council for Economic Education, most parents are uncomfortable talking about their finances with their children and that extends to teaching their children the ways of money management. For most kids, the first time they open a checking account is when they enter college, forcing them to learn good money management habits by trial and error. By the time they finish school, they may understand how to manage a checking account, but they know very little about debt, interest, budgeting, and savings strategies.

In the meantime, they have likely taken out $30,000 or more in student loans without regard for how they plan to repay them. If they truly understood the cost of money and the toll it can take on their finances, they likely would borrow less in student loans. As it stands, more than 40% of student borrowers have had to delay important life events, such as buying a car or a home, getting married and starting a family or even retirement. Roughly the same percentage are in the process of ruining their credit by falling behind on loan payments or going into default. Knowing enough to borrow less or having a sound foundation of budgeting and money management may have kept them out of trouble.

It Costs Young Adults the Most

The biggest missed opportunity for young adults is learning about the cost of money and the cost of waiting to save and invest. Knowing how much money costs, especially borrowing at high interest rates over long periods of time, is critical to understanding the negative impact it has on your ability to achieve financial success. Consumer debt, particularly credit card debt, is bad debt, which is an indication of poor money management or misplaced priorities. One survey found that 36% of Millennials have maxed out their credit card limit at some point. Over 23% of Millennials do not know the impact of a late credit card payment.

The most valuable asset is time, which allows money to work harder through the impact of compound interest. However, it is an asset that loses its value as we get older. When young people are able to understand the opportunity cost of waiting to save for the future, they might be more likely to save early and often. When they wait to save for retirement, it can cost them tens of thousands of dollars and force them to delay their retirement date

There’s a Personal Finance Course Near You

These are just some of the reasons why all college students should take a personal finance course or two before they graduate. An increasing number of colleges are starting to offer personal finance and money management courses as separate curriculums. Some states are now requiring personal finance as a mandatory curriculum for high school students. However, if your college doesn’t offer such a course, you can still take it upon yourself to sign up for any number of courses offered online by other colleges or private providers.

The University of California, Irvine offers a Fundamentals of Personal Financial Planning course that is open to the general public. CrashCourse.org works with many colleges to provide online personal finance instruction as a supplement to existing coursework. You can check with your school administrator to see if it’s being offered; or you can sign on as an individual student. There are also dozens of other personal finance courses available through accredited online educators.

If you’re in college or have recently graduated, before you dismiss the idea of taking a personal finance course, you should consider that there is an entire financial services industry waiting for you in the real world, and it is counting on your financial ignorance to make hefty profits. Don’t give them the chance.

Why You Should Consider Working for a Company that Offers a Student Loan Repayment Program

Student Loan DebtThe number of students who borrow money to finance their higher education is growing each and every year.

Roughly 70% of college students graduate with student loan debt from obtaining their bachelor’s degree. For those who graduate with a significant amount of debt, it can be difficult to find a job in their chosen profession that pays enough to both live comfortably and make progress toward their student loan debt reduction.

Employers, especially those in white collar fields such as accounting, are starting to recognize that most of their college hires are saddled with high student loan debt and would benefit immensely from employer-sponsored repayment assistance programs.

This type of program is now a hot benefit and can draw in skilled employees looking for a faster way to pay down their loans. These days, it is possible to find employer-sponsored programs providing repayment assistance to employees of up to $250 or more per month.

If you are lucky enough to work for a company that offers this sort of benefit, the repayment assistance can take a chunk out of your student loan debt. The assistance programs found at various companies can vary immensely, however, with different companies offering a wide range of monthly assistance options as well as some putting caps on the length of the repayment programs. An increasing number of CPA firms are now including this employee perk, offering some sort of repayment assistance.

Ion Tuition Survey

In a recent survey conducted by IonTuition, roughly 80% of respondents said they would prefer to work for a company that offers student loan repayment assistance. This shows a new tendency to prioritize this benefit over others.

The survey polled 1,000 student loan borrowers to find out their top priorities in a potential employer. The respondents made it clear that today’s employees are searching for help with their mounting student loan debt. This is particularly true for younger workers and those starting a second career after going back to college. The fact that 80% of those surveyed would like employer-sponsored repayment help equates to roughly 30 million Americans looking for this perk

CPA Firms Begin to Offer Repayment Benefits

PricewaterhouseCoopers (PwC) has a repayment assistance program for employees offering up to $1,200 per year toward student loan debt payments. Although only a small number of CPA firms currently also offer this benefit, employers are quickly realizing that the younger demographic of employees see a benefit such as student loan repayment as more enticing than some other traditional benefits. In fact, offering this type of program has become a strong marketing tool for PwC and other firms throughout the country.

There are many reasons why you should consider finding a firm that offers you employer-sponsored student loan repayment assistance.

The first is obvious: You will pay down your debt in a fraction of the time! However, there are more less obvious reasons to seek out this type of employer. Consider that firms who offer this sort of benefit are consciously making an investment in their employees. They have listened to the desires of college graduates and are proactively responding.  This speaks to the employer’s investment in their employees and is undoubtedly the type of firm we all strive to work for and emulate. Student loan repayment assistance programs give an insight into firm culture and the role the company takes in supporting the financial health of its employees.

Student Loan Repayment – the New Healthcare?

One day, student loan repayment assistance might become as common as health care or retirement benefits. Some studies indicate that for those in their 20s and 30s, repayment of student loans is a more desirable financial goal than saving for retirement. This makes sense when one considers how far off retirement is for that demographic and how pressing an additional monthly payment for student loan debt can be.

Paying off high-interest loans is a worthy goal that should usually come before aggressively saving for retirement.

Searching for employment opportunities where loan repayment assistance is available will increase the rate at which higher interest debt is paid back and pave the way for saving toward retirement.

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This guest post was by Jacob who runs his own personal finance blog over at Dollar Diligence. Through meticulously watching his money and extreme frugality, he was able to pay down over $25k in student loan debt in just 15 months. You can learn more about his story and follow him here.

2017 CPA Exam Changes

The CPA exam is headed for some significant changes in 2017. The AICPA (American Institute of Certified Public Accountants) issued a statement saying that starting on April 1, 2017, CPA exam test takers will be taking a new version of the exam focused more heavily on simulations than multiple choice questions. This may sound scary, but don’t go complaining to any of your accounting professors or “older” CPAs unless you want to hear that same story2017 CPA Exam for the hundredth time about them having to take all four sections of the a hardcopy exam in a couple of days with just a pencil. Actually, to be fair to our “elder CPAs”, they were required to get at least a 50% on all four sections of the exam during the same session or else none of them counted. Can you imagine getting: 80% FAR, 85% AUD, 78% BEC, 49% REG and having to take all four of them over again?!? Brutal! So although they might exaggerate how tough the test was “back in the day”, I would rather be taking the 2017 version with four separate exam windows than go through what they did.

So why did the AICPA decide to change the exam and what are the new changes? In 2014, they started a research project to help identify what types of skills and knowledge are most critical to new CPAs in order to protect the public interest. They found out that CPAs must be better at:
-Possessing the skills necessary to perform more advanced tasks.
-Contributing to complex accounting projects earlier in their career.
-Higher order cognitive skills and exercising professional skepticism.   

In order to achieve these objectives for new CPAs, the AICPA decided to place a stronger emphasis on testing higher order skills. The 2017 exam will now place less emphasis on multiple choice questions in favor of application and analysis as part of the simulations. The exam will increase from 14 to 16 hours in duration broken out by four sections at four hours each. It will also be a little bit more expensive to take. Here are the 2017 structural changes by section:

AUD:
Now: 50% multiple choice, 50% application
2017: 30-40% multiple choice, 30-40% application, 15-25% analysis, 5-15% evaluation

FAR:
Now: 50% multiple choice, 50% application
2017: 10-20% multiple choice, 50-60% application, 25-35% analysis

REG:
Now: 50% multiple choice, 50% application
2017: 25-35% multiple choice, 35-45% application, 25-35% analysis

BEC:
Now: 50% multiple choice, 50% application
2017: 15-25% multiple choice, 50-60% application, 20-30% analysis

As shown above, the most significant changes will be to the FAR and BEC sections as they will cut down heavily on the multiple choice questions.

If you are able to squeak in before the 2017 changes take place, I would highly recommend doing so for the cost savings and the shorter exam (14 hours versus 16 hours). However, if you will be subject to the new exam, don’t sweat it – the top CPA review programs are staying abreast of the new changes and will have you well prepared to pass. If you have any questions about the CPA exam, I would love to hear from you below!  

Accounting Resume Tips and Mistakes

The bad news about accounting resumes is that if you make spelling or typographical errors, you most likely have zero chance of getting an interview, let alone a job offer. Why the bad news first? Well, there isn’t really a whole lot of upside or additional advantages to having a clean, well-documented resume – in this job market it is expected. Think of it as a “minimum” to getting to that next step, whether it be an interview or an actual offer letter. With that said, it is beyond critical to ensure you don’t get taken out of consideration as a candidate for an avoidable resume mistake.

Accounting Resume Format

Below, I will go through some of the accounting resume questions and tips I frequently discuss with students and entry level professionals.

Is it okay to have a resume longer than one page?
No. I don’t mean to be so blunt but I cannot think of any scenario where an accounting student would need a resume longer than one page. This seems to be the consensus among all of the campus and entry level accounting recruiters at the top accounting firms I have spoken to. Recruiters have to sift through thousands of resumes when they go onto campus, the last thing they want to do is spend more time than necessary reading through extra pages. The recruiter wants to be able to reference a few data points as quickly as possible: GPA, accounting GPA, internship experience, work experience, CPA exam eligibility, and leadership activities. There isn’t any reason you shouldn’t be able condense those items on to one page. If you are having trouble doing that, start reformatting and removing until you can squeeze it fits. Do you have a unique situation where you think a two page resume is warranted? Contact me and I would be glad to give you my opinion.

Document your best stuff above the fold
“The fold” typically refers to what you see on a newspaper above the crease. In the online marketing world, “above the fold” is what you see on a webpage before needing to scroll down. Above the fold is where the first impression of the information you are absorbing takes place. In resume speak, this would generally refer to the top 1/3 of the document. This will be the section that leaves the first, and most important impression on the recruiter or hiring manager. This section should include your GPA and work/internship experience as these items are usually most important to the decision maker.

Keep the text simple
You want to stand out from everyone else, I get it. If you use some crazy medieval looking font, you will certainly stand out but not in a good way. I always suggest using a basic but modern font such as: Helvetica, Arial, Century Gothic, or Georgia.

Make your contact info stand out
In today’s digital society, you don’t actually need to include your address on your resume anymore. That means you can replace it with other more modern modes of communication such as: Your cell phone number, your personal email address, a link to your LinkedIn profile (which should be set up as a resume itself), and your Twitter handle. This goes without saying but be sure to clean up your social media content before pointing the hiring manager in that direction. There are too many horror stories of people sending a hiring manager to their Twitter page which is littered with pictures of them partying.

 

Do you have any more tips for accounting resumes? Please share them below or reach out to me – I would love to hear from you.

Accounting GPA

I get a lot of questions about grade point average from accounting students as well as those interested in the profession. Most want to know either what type of GPA it takes to land a solid job offer or what actions they can take as a student if they don’t currently have a good GPA.Accounting GPA

Let’s start with the cold hard truth: You will need a GPA over 3.0 to be competitive with other interviewees seeking the same good job opportunities. Is having at least a 3.0 GPA a requirement for getting a job with a prestigious accounting firm such as PwC? Typically, firms don’t have GPA requirements etched in stone and there are plenty of stories out there of students with bad GPAs pulling off great job offers but it can be incredibly difficult to get even an interview with less than a 3.0 GPA. The recruiters at job fairs speak with many hundreds of job seekers so unless you find some way to leave an incredible impression, they will be relying on the large stacks of faceless resumes to set up their interviews. If they see a GPA less than 3.0 or there is no GPA listed on a resume, it usually gets a one way ticket to the dumpster. So why put yourself at a disadvantage?

Does that mean anything above a 3.0 GPA will lead to interviews and the best job opportunities? Not exactly. The 3.0 GPA can be looked at as more of a “requirement” for a recruiter to invest time in a candidate. A 3.7 GPA certainly garners more attention than a 3.1 GPA. If you want to be sure that your GPA won’t hinder your job prospects at a top level firm, shoot for a 3.5 GPA – anything above is gravy.

What are your options if you have below a 3.0 GPA? Fortunately for this article, I can provide some tips on this from firsthand experience. During my freshman year of college, I decided to spend more time at a local poker room than on campus which lead to me checking out for the summer with a GPA in the ballpark of 1.5. I did quite a bit of careful planning and maintenance to get that GPA up to a 3.6 by graduation 4 years later.

The first thing you should do is pull up your transcript and look for any “non- accounting” completed courses that are below a B minus. You can retake these courses which will remove the prior grade from your GPA calculation and replace it with your new grade. If you would like to save some money, you can consider retaking these courses at either a local community college or online as long as your college will accept the course as a transfer. Keep in mind that if you take the course outside of your own college and transfer it in, your new grade will typically not factor into your GPA. The old grade will be removed and replaced with simply “credit.” For example, if you partied too much during your freshman year and got a D in Psychology class then retake and ace that psychology class at a different institution, the A will not factor into your GPA but your D will be eliminated from the calculation.

Aside from replacing your bad grades, try to choose your non-accounting courses carefully. I would always select courses with good professors who would hand out A’s if you put the work in. RateMyProfessor.com is a great tool to do some research into your options before signing up for your courses.

While GPA is critically important for your job prospects, a little cleanup, careful planning, and hard work will take care of everything. Do you have questions or comments about the accounting industry? I would love to hear from you through our contact page.