Money 101: How students can get a grip on their finances

Gene Natali Jr. is on a crusade.

Alarming financial statistics -- $1 trillion in student loan debt; 70 percent of Americans living paycheck to paycheck; 43 percent spending more than they make -- prompted Natali to co-author a book on financial literacy. "The Missing Semester" ( themissingsemester.com ) is a breezy, 65-page read that teaches high school and college students how to manage a paycheck, save and use credit responsibly.

"These statistics are horrifying. They make you want to hide in a cave. But they're solvable," said Natali, a client service manager with C.S. McKee, an investment firm in Pittsburgh.

Natali, 33, wrote the book with Matt Kabala, a high school friend who is a Hilton Head, S.C., firefighter and manages the fire department's supplemental retirement plan.

Natali recently took his gospel of financial literacy to his alma mater, Fox Chapel Area High School in Pittsburgh. He preached to 11 seniors who had expressed an interest in the topic to marketing teacher Jill Tabis, one of Natali's former teachers.

During a presentation that lasted more than an hour, they discussed the credit card habits of the students' parents; whether to choose a more affordable college over a big name, high-priced school; paying off credit card balances monthly; and not buying things you don't need, like the $15 that one senior said her sister in medical school spends each day at Starbucks.

But most of all, students more than 40 years away from retirement wanted to know more about Roth IRAs. Natali told them the retirement account could be worth $1.4 million if they saved $5,000 a year starting at age 18.

"I went home and told my mom that I wanted to open a Roth IRA and make a million dollars," said Natalie Bonaroti, 17.

Tabis said her students' interest in the topic was piqued last fall, when a first-semester college freshman spoke to her students about the things no one tells you about being on your own in college.

Although there's no doubt students need more financial literacy education, budget cuts to school systems and state-mandated testing on certain subjects leave little time for it, Tabis said.

Nor is there much time for it in college, said Thomas J. Nist, director of graduate programs at Duquesne University's business school.

"You don't really have to look too hard to see that financial literacy is a problem," Nist said.

He used Natali's book in Gateway to Business, a freshman-level course, and was pleased with how interested students were in the topic. When he asked if any of them had put anything they learned from the book into practice, one said he started saving $10 of his paycheck. Nist rewarded him with a $20 bill.

"It was buzz on campus for three or four days," he said.

Jay Sukits, a University of Pittsburgh finance professor, used the book last fall and this spring. In his course, 5 percent of a student's grade is based on work related to the book, including developing one-, three- and five-year personal financial plans.

He said the book should be required reading for college students. That would avoid some of the problems Sukits sees as an expert witness in securities arbitration cases, where he runs into plaintiffs with a lot of money "who have no idea what they're doing with it."

Natali warned the students about using credit to purchase things they think they need, saying self-gratification "is the single biggest trap for any of us at any age." Someone who puts $5,000 on a credit card, never uses the card again and makes only the minimum monthly payments will pay more than $22,000 interest on the $5,000 loan.

"Don't fall into that trap where that $5,000 becomes $27,000," he warned them. "You guys are in control."