Darren Tsai
Financial literacy is more than just a buzzword—it’s a critical life skill. Whether you’re a student or a seasoned professional, understanding money management can shape your path toward financial freedom. I recently sat down with Professor Larry Harris, the Fred V. Keenan Chair in Finance at the USC Marshall School of Business, to discuss the fundamentals of financial literacy and why it’s so important. I was also fortunate to have him featured at my high school, where he shared his insights on empowering young people through financial education.
Q: Why is financial literacy considered essential for everyone, regardless of age or background?
"Financial literacy is not just about managing money; it’s about understanding how money affects every decision we make," says Professor Harris. "From choosing a college to planning for retirement, a strong foundation in financial literacy empowers individuals to make informed, confident choices throughout life."
Professor Harris emphasizes that financial literacy equips individuals with the skills needed to manage not just their finances, but also the emotions that often accompany money matters. "Understanding concepts like budgeting, saving, and investing builds confidence. People who know how to handle their finances feel more in control, even in unpredictable circumstances."
Q: What’s the best age to start learning about financial literacy?
"Teaching financial literacy early—ideally in high school—lays the groundwork for responsible financial behavior," Professor Harris notes. "When young people learn about budgeting, saving, and investing, they’re more likely to establish good habits that benefit them in the long run."
Harris points out that many students enter adulthood with little understanding of debt management, credit scores, or even basic budgeting. He argues that learning these skills early can make a significant difference: "Imagine a high school graduate who already understands how to avoid credit card debt, maximize savings, and invest wisely. That’s a student who’s set up for success."
Q: Some people believe that financial success requires starting with a lot of money. Is that true?
"Many people believe that financial success is out of reach if they don’t start with wealth," Harris acknowledges. "However, it’s often more about the consistency of saving and investing rather than the amount you begin with. Compounding interest, after all, is called the 'eighth wonder of the world' for a reason."
Professor Harris insists that the true challenge is building consistent habits. "Even small amounts, when invested regularly over time, can grow significantly. It’s the discipline, not the dollar amount, that makes the biggest difference."
Q: What role does budgeting play in achieving financial freedom?
"Budgeting is not about restricting spending; it's about redirecting your resources toward what matters most," says Harris. He believes that a budget acts as a map, helping people navigate their financial priorities without feeling deprived.
Harris suggests a simple starting point: "Track your spending for a month, then categorize it. You might be surprised by how much goes toward things you don’t truly value. From there, you can adjust your budget to focus on what really matters, whether that’s paying off debt, saving for a home, or building an emergency fund."