We speak to Swati Patel, founder of Common Cents at The Wharton School, University of Pennsylvania, a personal finance programme for MBA students. Find out why she thinks the financial crisis has led to better engagement among millennials and what advice she has for students looking to set up a similar programme at their own institutions.
What made you set up Common Cents? What’s the thinking behind it?
Common Cents at The Wharton School was born out of a need to help my MBA classmates better navigate personal finance information and decision-making. Through numerous peer conversations, I recognised that there was interest in a number of personal finance areas, which unfortunately are not addressed in the traditional educational system. Therefore, I viewed the two years on the course as a valuable opportunity to extend our knowledge arcs.
Can you tell us a little about your background prior to studying for an MBA?
Prior to business school, I worked on the Sales & Trading desk at J.P. Morgan, where I focused on Foreign Exchange derivatives; however, my career began at Bear Stearns in mid-2007. Witnessing the collapse and dissolution of an investment bank offered perspective on a number of corporate governance matters, which ultimately positively or negatively impacts each employee. I have indelible images of shock, grief, fear, and regret etched into my mind as I witnessed many whose savings evaporated, lost jobs, and were penalised for the improper actions of others. At this point in time, it had not even been a full year since I had graduated from college. Thus, the Bear Stearns episode proved to be a treasure trove of accelerated learnings on leadership, organisations, and most certainly, personal finance.
How do you think millennials save differently to other groups?
I believe that a fair percentage of millennials are acutely aware of the potential financial challenges that lie ahead. If we zoom out to assess the larger picture, millennials recognise how coupling increasing life expectancy and rising costs (along with downside risks such as the minimisation or depletion of social security) could dim their financial future; however, I believe there is a silver lining. The level of engagement around this potential economic uncertainty has moved concepts around savings such as retirement vehicles to the forefront of conversations. They also recognise that there is no better time to start saving than now and that despite how much they may have, every dollar matters.
You run the programme for MBA candidates. In what ways have you tailored the programme to fit their needs?
Given that MBA students enter with a minimum of a few years of work experience, we want to ensure that content and delivery resonate in the context of their lives. One of our main goals is to make discussions engaging, practical and relatable. To that end, we empathise with our classmates and also reflect on our own experiences to identify which financial matters are top of mind and how they can be prioritised. For example, at a minimum, the shared cash outflows associated with business school present a baseline starter for conversations. As we begin to layer other considerations, events such as weddings, home purchases, and children become relevant. Naturally, many of these discussions can be used as entry points into the investment arena as well as budgeting and saving practices.
What has surprised you most about this group? Do they have any common misconceptions or are they better informed than the media tells us?
The willingness to experiment is what I have found most surprising. Examples of how this manifests include the proliferation of financial applications to the utilisation of shared resources such as AirBnB or Lyft. They are focused on creatively leveraging technology to achieve cost reductions through tools that are interactive and immersive. At the same time though, they still value human touch points in the financial process, particularly when their needs are more nuanced.
“Millennials recognise that there is no better time to start saving than now and that despite how much they may have, every dollar matters.”
In many ways, we are implementing the same financial principles that our parents and grandparents have crafted in tackling the financial challenges of their respective times. Fundamentally, when we spend, we do so by stretching our dollar as far as possible without significantly compromising on value. It is this optimal balance that leads us to be far more comfortable with experimentation than the generations that have preceded us.
To what extent do you think a lack of financial education is affecting how millennials go about saving and investing?
The bottom line is that conversations around money need to be introduced at an early age. I would argue that formative periods of development in which habits are formed present an opportune time for one to build his or her personal finance muscle. To carry the analogy further, if one cannot strengthen these muscles by practising personal finance skills, then how can we expect for him or her to have sound financial performance as an adult? Elementary, middle, and high schools need to teach students about money in a hands-on way. The potential negative ramifications of a lack of financial understanding compounds with age. In my opinion, this is a matter that no country can afford to ignore as it’s such a vital driver of individual and national prosperity.
“The potential negative ramifications of a lack of financial understanding compounds with age.”
Do you have any plans to roll the programme out further?
At the moment we are focused on strengthening the programme at the University of Pennsylvania; however, we are happy to speak with students at other schools and engage in knowledge sharing! We would love to hear from you and our contact information can be found on our website: https://whartoncommoncents.com
And finally, what advice would you give to other university/professional organisations who might be thinking of setting up something similar?
Firstly, it’s important to partner with administration and faculty who are supportive of your work. Common Cents at The Wharton School has received incredible support from such partners and they have been part of our valuable backbone that allows us to grow even stronger.
Prior to approaching stakeholders, clarify the goals and vision that your organisation will address and the specific ways in which it will solve for the pain points you have identified. There is also value in conducting a historical search to understand if others have previously tried to tackle these challenges and uncover potential blockers.
As you put together this programme, you will quickly realise that it is a massive undertaking for one individual to conduct on his or her own. Thus, you must put together a strong team. I cannot stress enough how important it is to have the right people working alongside you. My team has been a huge asset and our progress has been a function of our collective passion for the changes we believe in. So, you should seek out a group of passionate individuals on campus who believe in the idea and are equally excited to see the vision materialise.