How One Personal Finance Class Changed my Life

Taking a personal finance course in college was the best decision of my life. It taught me life skills that many never learn and got my life on track early!

“How One Personal Finance Class Changed my Life,” discusses the impact an elective in college had on my life. This post may contain affiliate links. 

Before my senior year of college I was like 70% of Americans who lived paycheck to paycheck. Being a college student, most of my money went towards parties, alcohol, and the infamous Ramen noodles. The concept of saving money seemed like a foreign concept to me as I had the mentality, “I will save money later.”

I distinctly remember having $500 in my bank account going into my senior year and thinking this should be enough to get me through the first couple weeks of parties. However, my mindset would rapidly change in one personal finance class.

During my junior year of college I had the ability to pick an accounting elective. I had the option of choosing corporate taxes or a personal finance class. To be honest, I chose the latter because I thought it would be far easier and more interesting than another accounting class. As an accountant, I believed I understood money which would make this class easy to understand. Well let me tell you, I was completely wrong.

The class itself was not hard but the material we learnt in the course itself was all new to me. On the first day of class my teacher did a general overview of the course and brought up topics such as an emergency fund, a retirement plan, mutual funds, and a load of other topics we would be covering and quite frankly I did not know any of the topics he was talking about other than a 401(k) and stocks.

Towards the end of class he wanted to leave us with a quote. The quote is by the infamous Dave Ramsey who said, “Personal finance is 20% knowledge and 80% behavior.” To illustrate this, he showed us the power of compounding using a retirement calculator. He assumed we would have a starting salary of $50,000 and that we would save 10% of our salary a year for 30 years; he assumed we were going to start saving at the age of 30 until 60 as many of us would blow our salaries on the impulses of our youthful 20s.

After this example, he took the same information but rather than starting at 30 we started at 21 and worked until 60 which gave us 39 years of the same savings and interest rate. The results were shocking as a mere nine year difference resulted in almost a doubling of our retirement nest due to compounding. This example forever changed my mindset about money, showed me the importance of starting early, and made me want to learn more about personal finance.

Here are two ways this class changed my life:

Proactive vs Reactive Mindset

Before this course I had a reactive approach to finances. Rather than planning ahead, I would react to events when I had to. For example, I would purchase an item out of impulse due to a great sale rather than thinking about the consequences it would have on my bank account. The deal seemed good in the moment but it was rarely a necessary purchase.

I believe a reactive mindset drives the paycheck to paycheck lifestyle many people live. We are so used to living in the moment we forget to think about the future as we will “figure it out later.”

Thankfully, this course changed my mindset and made me proactive. There was no more “figuring it out later.” I needed to understand what “it” was and for me that was early retirement. Having a proactive mentality made me realize that living paycheck to paycheck will keep me in the rat race until I am at the age of 65 and have money be a constant worry. Rather than having this stress I decided to learn about budgeting, investing, tax advantage programs, building an emergency fund, and many other topics.

While many of these topics were covered in my course I wanted to see how real people were integrating these techniques into their lives rather than pure academia. I stumbled across many great financial blogs, which you can find on my Blogroll page, which I still read to this day as the information is free, tangible, and realistic.

Since taking this course I have funded my emergency fund, began investing heavily in stocks, and laid out a plan of how I want to build passive income in the future. The next time an unexpected situation arises money will no longer be a stressor thanks to my proactive approach.

Behavior is more important than Knowledge

While the knowledge has certainly kick started my drive towards financial freedom it will ultimately be my behavior that gets me there.

It is easy to set up a plan, crunch the numbers and get excited about how long it will take to achieve financial freedom. However, personal finance is more than numbers on a piece of paper.

For example, the New Year’s “Wannabes.” I refer to the New Year’s “Wannabes” as the people who create goals every New Year related to exercise, eating healthy, improving work ethic etc. For the first two months of the year everybody is in the gym, on a diet, and feeling great about life. Then they slowly take a day off then another day off until they are back to their former lifestyle. This is poor personal finance habits in a nutshell.

It takes years to accrue enough wealth to retire early and it will not happen overnight. Being a millennial who lives in a world of instant gratification this is a hard pill for people to swallow as we do not see the results until much later in life.

This is why it is important to have a vision of the larger picture and set smaller goals to achieve it. One way I do this is that I incorporate a travel fund into my budget so I can travel the world in the future. We are only on the planet for a short amount of time so we need to ensure we live life at every stage but do so in moderation.

Final Thoughts

Taking a “fun” elective forever changed my life and turned out be the most important class I took throughout my college career. It provided me with the knowledge to move forward in life and achieve my goals. Now that I have some of the knowledge it is up to me to continue learning about more efficient ways to make and save money while being committed to my early retirement plan.

Readers, what life changing event made you more conscious of your finances? What is the most challenging part about setting a goal several decades out? How do you stick to these long-term goals?


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43 comments… add one
  • Jon @ Be Net Worthy Aug 17, 2016, 9:44 am

    First of all, good for you for taking what you learned in that class and putting it to good use! I’m sure 90% of the other students just let it wash right over them without sinking in !

    I had a great class in business school, “Power, Politics and Leadership” that had a similar impact on me. It was basically a class about self-improvement by a guy who had interviewed 1,000 people at their “death bed” to get their lessons on living a great life. It was similarly impactful on me.

    • Stefan Sharpe Aug 18, 2016, 12:37 am

      Could not agree more Jon! I am sure most of them took it as another class but for some reason I found that this would actually help me in life. Most of the classes we take in college are just for credits and will have little impact on our lives but this one really stood out.

      Thanks for sharing your experience it sounds like the lessons learnt carried through your amazing career!

  • The Green Swan Aug 17, 2016, 11:39 am

    That’s funny how one class made such an impact and changed your life so drastically and positively. I think that is the perfect example of why it is so important personal finance is a required course in high school.

    My beginning with personal finance was a bit different and more gradual as I would learn and pick things up from conversations with my dad and other family members as early as middle school or high school. My interest continued to grow and so I sought out other resources as well.

    Thanks for the post!

    • Vicki@Make Smarter Decisions Aug 18, 2016, 12:25 am

      I followed a similar path as GS. My parents always talked about money and modeled good money “behaviors” – and I never took any kind of class. I think some type of personal finance course during the final year of high school is key. Any earlier and nothing will “stick” – but when students are looking at colleges or considering getting jobs and apartments – they are more likely to be responsive to what’s being taught.

      • Stefan Sharpe Aug 18, 2016, 12:40 am

        Appreciate you two sharing your experience. My parents also had a great affect on my money habits but we do not have half the luxuries here in the US so I had to learn a lot on my own about 401ks, stocks, tax and all that jazz. Ultimately though they impacted my behavior just like you guys and ever since this blog I have had much better conversations regarding money.

        I think you both bring up a great point about having it in the education system. I agree with Vicki that senior year of high school, or even the end of junior year, would be crucial as this is when the dreaded student loans become a conversation. Anything higher than high school is an added bonus but I believe many colleges now offer these courses.

  • Dollar Engineer Aug 17, 2016, 1:59 pm

    I love the quote there from Dave Ramsey about “20% knowledge and 80% behavior” because it’s so true. You can all there is to know about personal finance but without acting on it none of it will matter. Glad the class and professor changed your mindset. For me, it was after I started working and really began to read up on personal finance when I had that similar change.

    • Stefan Sharpe Aug 18, 2016, 12:42 am

      Glad you found your influence!

      That quote shows that anybody can be financially successful but many choose not to in order to enjoy the moment. If this was brought to the attention of people at a young age I am sure society would be different.

  • Matt @ Optimize Your Life Aug 17, 2016, 2:16 pm

    I find that sometimes information just hits you at the right time to really sink in and change your actions. Whether it is a well-timed class, book, blog post, or TED Talk, it just connects with us on that day in a way that other sources haven’t.

    I think the proactive vs. reactive mindset issue is important everywhere in life. It sometimes seems like we are naturally reactive in all areas of life and need to work at getting each one under enough control that we can become proactive.

    • Stefan Sharpe Aug 18, 2016, 12:46 am

      TED talks are one of my favorite things to lay down and watch. They are packed with great information and valuable lessons. We will all connect with information differently but we also need to be exposed to it.

      Having a proactive mindset is a game changer in every aspect of life. Like you said, our nature is reactive but if we become proactive it can be empowering as our stress goes down significantly.

  • Paige @ Live, Laugh, Budget Aug 17, 2016, 4:05 pm

    Sounds like that was a great class! It is unfortunate that so many people never take a class like this. I was lucky that my parents were very focused on being debt free and retiring early so I learned about that at a young age compared to many of my peers in their 20s that still don’t know a ton about personal finance.

    • Stefan Sharpe Aug 18, 2016, 12:48 am

      Sounds like you had a great influence in your life Paige! Getting ahead early on makes the world of a difference.

  • Mr. Compounding Aug 17, 2016, 5:45 pm

    I had a very similar story. On my very last semester I took an investing elective that covered some of the same concepts you described and it chamged my life forever. I came in just looking for the 3 credits and came out a personal finance addict.

    • Stefan Sharpe Aug 18, 2016, 12:49 am

      That is literally my story! I have learnt so much more about personal finance since I started blogging but that class kick started it all. Glad you had the same experience

  • Gwen @ Fiery Millennials Aug 17, 2016, 6:38 pm

    The lesson that had the biggest impact on me was from my 6th grade math teacher. He used his personal example of credit card and student loan debt to teach us compound interest. I decided right then and there that debt was something I never wanted to experience and then it snowballed from there.

    • Stefan Sharpe Aug 18, 2016, 12:53 am

      Wow sounds like you learnt from a very early age! Debt can spiral out of control but sometimes it is necessary. It is how you choose to pay down your debt that truly matters. Enjoy FinCon!

  • Michael Aug 17, 2016, 9:04 pm

    Personally, I love the proactive approach over reactive. This mindset should be used in all facets of life. Great post.

    • Stefan Sharpe Aug 18, 2016, 12:49 am

      Thanks Michael!

  • Dividends Down Under Aug 18, 2016, 2:33 am

    It’s awesome that you can point to one moment where your whole life changed around. I don’t have anything as specific but it was a period of a few months of reading TheSimpleDollar, DividendMantra and learning about (Australian) Franking Credits altogether that convinced me of the way we should be working our finances. I’m glad we did!

    Tristan

    • Stefan Sharpe Aug 18, 2016, 10:46 pm

      Bet that was one of the best decisions of your life to read those as it got you kickstarted with a killer blog!

  • Tawcan Aug 18, 2016, 9:25 pm

    That’s pretty awesome that you can point to one instant where you life changed. I certainly haven’t come across any classes that changed my life though… well if you count an electronic lab class where I blew up a capacitor right in front of my face. Luckily nothing happened to me, I just got really scared because of the really really loud pop.

    • Stefan Sharpe Aug 18, 2016, 10:48 pm

      Haha I am glad that you are ok! That could of turned out to be pretty nasty. I am very glad I had the opportunity to take this class as I actually ended up taking corporate taxes in my MBA and CPA studies.

  • Andrew Findlaytor Aug 18, 2016, 9:27 pm

    I love articles like this that show where it “clicked” for people. Even better that it was in a college class that gave you the tools to apply it right away!
    I also appreciated reviewing Dave Ramsey’s 20% / 80% rule. I am probably sitting closer to 70% efficiency as far as behavior, and its a nice reminder to keep focused and not let the little things slide!

    • Stefan Sharpe Aug 18, 2016, 10:49 pm

      Thanks Andrew! Having the right behavior is very hard but once you make it a habit it will get much easier. Personal finance requires very little knowledge outside of tax so it really does come down to the individual!

  • Investment Hunting Aug 18, 2016, 9:57 pm

    Great stuff Stefan. It’s awesome that you chose a class because it was easier and you took so much from it. Haven taken both classes, I can tell you that you chose wisely 😉

    • Stefan Sharpe Aug 18, 2016, 10:50 pm

      Classic college student decision process haha. Thankfully this decision was very rewarding. I ended up doing corporate taxes in my MBA so I am even happier I took this class!

  • Fatal Jay Aug 19, 2016, 12:12 am

    Once you push the ego out the way, you will realize its some people out there with deep knowledge about money, awesome post

    • Stefan Sharpe Aug 20, 2016, 3:28 pm

      Appreciate it man

  • Amanda @ centsiblyrich Aug 19, 2016, 2:18 am

    It’s great the class had such an impact on you, Stefan! I love how the professor brought up the Ramsey quote about personal finance being 80% behavior. This is such an important thing to realize about personal finance and one that gets missed by many.

    You’re right – many set goals and become “wannabes”. I think they dive in trying to change too much all at once, which causes enough discomfort that they end up quitting. Those smaller goals are the key!

    • Stefan Sharpe Aug 20, 2016, 3:34 pm

      Exactly Amanda! You need to realize what your goal is and take baby steps to achieve it. You cannot go from saving nothing to saving half your salary in one shot as that will likely have an adverse effect.

  • Finance Solver Aug 19, 2016, 2:23 am

    I absolutely love hearing about others whose classes have changed their lives. Mine was interestingly an accounting (Financial Statement Analysis) course that made me really think and questions about the assumptions and analysis I’ve been making on not just companies but on daily life decisions.

    I agree 100% that it’s mostly behavioral that makes the difference between someone having a big retirement fund and not. Taking action is far better than talking about it or knowing about it.

    • Stefan Sharpe Aug 20, 2016, 3:37 pm

      Man financial statement analysis was a game changer for me as well. There was a lot of creative accounting we saw and a lot of ethics came into play.

      Action is always better than talking as talking gets nothing done!

  • candy Aug 19, 2016, 9:15 pm

    Amazing what some education can do for a person. One class changed your world.

    • Stefan Sharpe Aug 20, 2016, 3:37 pm

      It sure did candy

  • Charlotte Burkholder Aug 20, 2016, 2:04 am

    It’s great you are putting that to use. Too many people wouldn’t. Getting an early start might be helpful for the fact that it can easily get derailed when one has a family. At least you have something already if you have to stop for a while.

    • Stefan Sharpe Aug 20, 2016, 3:39 pm

      Fully agreed Charlotte, there are many curveballs we are thrown and everything needs to be reevaluated if I were to have a family. Right now I am just going to try and develop good habits that can carry me through the latter stages.

  • Francis Aug 20, 2016, 2:46 am

    “Being a millennial who lives in a world of instant gratification this is a hard pill for people to swallow as we do not see the results until much later in life.” This is so true.

    I think we millennials are one of the most information saturated generation, so our issue is not knowledge… It’s the application thereoff. I also fooled with debt for a few years before I finally decided to pay it off.

    Looking back all the resources I needed we’re right there for me, I just didn’t act up on it. I was busy satisifing myself with “now”. I wish I knew the importance of starting early.

    • Stefan Sharpe Aug 20, 2016, 3:43 pm

      That is a perfect example and I am glad you woke up and realized everything was at your fingertips. We have everything we need right before us but it is up to us to use the resources.

  • Colin @rebelwithaplan Aug 20, 2016, 2:47 am

    It was so great you got to take the class! I wanted to take one while in college but the class would fill up super fast (college class registration is like The Hunger Games).

    “Personal finance is 20% knowledge and 80% behavior” LOVE it! Are you going to FinCon in September?

    • Stefan Sharpe Aug 20, 2016, 3:44 pm

      Hahaha they really were! I knew so many people that cried when they didn’t get their course selection. Luckily I was an athlete so we got to go earlier… big stress reliever!

      I wish I was going but now is not the right time for multiple reasons. How about you?

  • Ms. Montana Aug 21, 2016, 10:02 pm

    I love this story! It’s amazing when all of a sudden, it “clicks.” Instead of just one moment, we have had a few over the years. First to pay off all our debt. Then to try to build our net worth. When I got it in my head that I really wanted to pay cash for a house. (did it!) Or when we decided to have more financial independence, because maybe we wouldn’t have to work jobs we hate till 65.

  • Sarah@themoneydiary Aug 23, 2016, 9:55 pm

    You’re lucky it ‘clicked’ for you when it did, sounds like a great class! I’m in my early 40s and had my financial ‘awakening’ only recently when I realised I’m not on track for retirement. I’m trying to change that now, wish you luck in your journey!

  • Deanna Aug 26, 2016, 2:43 pm

    This is such a wonderful blog post! Thank you so much for sharing our story- and good for you!

  • Millennial Millionaire Aug 31, 2016, 1:55 am

    Great blog post, Stefan. I think we all have that one moment we can recall where the light went off, financially speaking. I remember reading Suze Orman’s book The Money Book for the Young, Fabulous & Broke right after graduating college and wanting to save like crazy for retirement. Well I did just that…however, I failed to follow the “living within my means” philosophy that eventually caught up with me. I randomly listened to Dave Ramsey a couple years ago and he’s the one who set the light off for me and getting on a budget. I realized my wife and I were spending more than we made each month. Amazing what a simple monthly budget can do for your finances! We’ve made huge strides in less than two yeas and now saving more and spending less is contagious and the only way we operate now. Keep up the good work…I’ll be following along now.

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