Why Take a Personal Finance Course?

By

Brett Pechersky

|

March 4, 2020

Not everyone has the benefit of a friend who knows money, nor does every college or university list finance classes on their “required classes” lists. Many of us grew up in households where conversations about money were either confrontational or seen as outside the bounds of “polite conversation”. As the saying goes, money does not buy happiness; but worrying about it can certainly cause quite a bit of misery.

As the single driving force behind what moves the economy, and on a greater scale, the world, money is one of the most important things humans have ever created. Trading it, borrowing it, losing it or building it are central to our existence whether we like it or not. And the more you know about how the systems of money work and interact with one another, the more well-equipped you will be to plan for your and your family’s future. 

So how should you start? And where? Our article on the Top Online Finance Classes will be useful for beginners and novices alike, but depending on your specific learning style, an in-person class might be much better suited. Before you dive into lists, it is important to first figure out what you hope to get out of the time you’d be putting in. Some of the courses we compiled can take upwards of 14 hours a week for several months. Others you can complete in just under 3. 


Types of Courses

The first thing you should consider is what you’re trying to learn. Do you need to lay a strong foundation, or do you just need a refresher? Do you need to learn more about insurance or get a more complex investment strategy? Identifying what you want, and more so what you need to learn, is an obvious, but very important step one. 


Basics of Personal Finance:

These types of classes are great for beginners. Not only will you get a much needed framework for how the financial system operates as a whole, a big-picture glimpse into the economy will provide much needed context for what can be accomplished. Typically, these classes will start with an overview of debt and credit, building from there. Some of the even more basic amongst the crowd will teach you budgeting best practice, and get you properly set up with either software or helpful hints to start along that journey. 

As we said in our Personal Finance To-Do List, the hardest part of saving is just starting. These are designed to facilitate that, and to encourage you to build strong habits. Many of the classes we have included on our [list] are perfect for beginners, and will fit the bill for even the most “green” investor. Using lists and mnemonics to ease the information in, many of these will be short and very high-energy. 

After diving into budgeting, some will expand their reach out into the basics of growing the money you’ve just saved. Touching on 401k’s, IRA’s or even modest portfolios of mutual funds, these types of classes will not only define exactly what these products are, but how you can utilize them most effectively. 

Because they are designed for beginners, many instructors or creators aim them at a much younger set. This isn’t necessarily a problem, but often the best way to teach a group of high school kids is not the best way to teach an adult who has been working for many years. But as long as you can get past that, and the potential to be underestimated, these classes can still prove to be a very valuable starting point.


Wealth Building

This is another subset of class that starts right about where the previous group leaves off. Many of these will include a recap of the basics, that act as a refresher for those who have not been recently active in their financial education. Because these will focus more on wealth management, they will help guide students towards the ways in which they can start to diversify their savings. 

Some of the longer classes on our list will include this as the last few sections of the course as a whole, and the freedom of many of them will allow learners to simply skip to the parts they most need help with. Generally beginning with the many types of insurance options one can invest in, any good class in wealth building will be able to instruct students on identifying their needs, and making suitable decisions. Because the insurance landscape has grown so rapidly over the last several decades, a refresher here might be necessary for even those who believe they have pretty strong financial foundations. 

Additionally, wealth building classes will discuss the variety of annuities currently on offer, and the benefits that lie therein. Because wealth building is about ensuring financial security more than it is about getting seriously wealthy, they will likely discuss very low-to-no risk ventures in which to invest. These types of courses can also help mid-level students decide which financial vehicles are best suited for the types of savings that they need. From education-based 529’s to ESA’s, HSA’s, Roth’s and more, any good class at this skill level will ensure that students walk away with a properly diverse portfolio of savings under their belt.


Investment Strategy

This is where people start to get serious about the money they are saving. If you’ve already gone through the effort of building good savings and budgeting habits; built a secure future for yourself and for your family; but feel the need to really maximize your potential, investing classes are the way to go. Many of these will touch on jargon, and the good ones will break down how portfolio strategy is implemented from the top down. From how mutual funds are structured to how hedge funds are managed, these are for people serious about investing and rapidly growing their wealth. 

Beyond annuities, mutual funds and 401k allocations, these courses will serve as an introduction to the complexities of ETF’s, commodities and stock portfolios. The best classes in this group will really get into technical analysis, and new investment technology. Helping to conceptualize risk as it relates both market conditions and volatility, these high-level lessons will take aim at really maximizing your yearly return without compromising overall financial security. By learning how things like hedge, exchange traded and mutual funds are structured, investment strategy courses lift the curtain on these daunting financial instruments to help you make more informed, lucrative decisions. 

Not only will you learn the “big picture” stuff about the inner workings of financial markets, a good instructor will allow you to recognize how to maximize the value of your portfolios. Given the amount of misinformation about the stock market and investing, having someone deliver common sense, seasoned advice can be invaluable when learning how to create your own mix of investments. As this is also the “riskiest” of the three classes (there is almost nothing you can lose from learning to save or buying life insurance), finding a good instructor is more important than ever.


What level should you look for?


Know What You’re Looking For

If knowing your options is step one, knowing yourself is following very close behind as a step two. 

Now that you know, basically, what’s out there, it’s time to make a decision. We can’t really do that for you, so this is where you have to objectively look at yourself to figure out what you need most. Certainly, making a high rate of return on a stock portfolio is enticing. Day trading might not be as huge as it was in the early 2000’s, but the allure of getting rich through a few clicks a day is still very strong. However, if you haven’t yet learned how to properly budget, how a mutual fund is structured or why life insurance is important, maybe leave the “get rich quick” dreams out of it. 

As we mentioned over and over again in our Personal Finance To-Do List, goal setting is one of the most important things when designing any long or short term financial plan. And the same is true for the time you invest in your own learning. The best advice is to step back and be honest with yourself about where your strengths and weaknesses lie. If you don’t really know what a 401k is, maybe skipping ahead to ETFs is a big mistake. At the same time, if you work in accounting, you probably don’t need to waste time re-learning how compound interest works. 

Understanding what you need is very important, but reminding yourself why you began looking to educate yourself in finance is almost equally so. Just as with the above, the flashing lights of too-good-to-be-true and get-rich-quick investment schemes can be very distracting. If you began your search because you’re trying to build up a $1,000 savings safety net, you shouldn’t end your day with a hand full of self-help books and an E*Trade account. 

The world wise part of each of us knows that there is no such thing as easy money, but the allure presented by “finance gurus” and market beaters still works. Because the idea is purely captivating. So it’s important to keep a level head, and a list of things you know that you need to accomplish while doing your research. Don’t fall down a hole that leads you away from your goals and towards the goals of the person selling them to you. 

As long as you are able to focus on the goals you set for yourself, and know the limits of your knowledge, finding a personal finance course, wealth building class or an investment seminar that’s right for you shouldn’t be a problem. 


Learning and You

Now that you’ve educated yourself on the types of courses available, set up some goals to help guide your journey and gotten a grasp on the limits of your knowledge, it’s time to think about how you learn. Some people like to be shown. Others told once and left to figure it out. Some people learn best in groups, others by themselves in a quiet room. Think about how the last bit of information you can remember got stuck in your head. Did you retain a lot of the above, or are you finding yourself skimming through for keywords? Do you use YouTube tutorials to teach yourself how to fix things in your house, or do you like pictures and text? There are so many variables out there, you just have to figure out which ones work best for you. 

This might sound a bit psychoanalytic and daunting, but it’s a lot more intuitive than it sounds. Think about your favorite classes in high school or college, how did that teacher present their class? Maybe there was a lot of homework, maybe there was none. Same goes for tests and quizzes. Chances are, if you liked a class, you learned something.

Next is whether you want (or have the time) to take a class in person or online. In-person learning might be your preferred method, but a prohibitive schedule might not allow it. There is also the cost to consider. Many on our list of online courses are free, but others might cost upwards of $1,500 (granted, you would be buying a few credits at MIT). As always, research is your friend. You know how much time and money you have available, so spend both wisely. 

If done right, educating yourself on the financial world will always be worth it. The more you understand how business, the economy and money work, the better equipped to deal with it you’ll be. Trying to make financial decisions without understanding how money works is like going to a mechanic. If you find a good one, everything should work out and you’ll be on the road again shortly. If you don’t, however, you could be stuck with a huge bill and a still-broken car. If money does, in fact, run the world, then finance is probably the most important subject on Earth.


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