College students worse at managing money
A new survey says students are losing interest in financial basics like saving money and paying credit card bills in full each month.
That's the conclusion drawn by an extensive survey of the personal-finance habits of college students conducted by the University of Arizona and the National Endowment for Financial Education. The authors surveyed University of Arizona students as part of an ongoing project known as Arizona Pathways to Life Success for University Students.
When the authors published their first wave of findings back in April 2009, the news was bleak: Students on the whole got a failing grade when it came to financial literacy, and some respondents admitted to engaging in such behavior as putting off medical care to save money. Now, America's (or at least Arizona's) students are in an even worse situation.
The new survey rates students' overall financial behavior 7% worse than it was in the initial survey, and fewer students were found to be tracking monthly expenses and living within budgets in 2011 than in previous years. Saving is likewise losing popularity among the college set. (Will you be able to pay back your student loans? Try MSN Money's calculator.)
What, me worry?
In each survey, students were asked to rate on a 1-5 scale how often they invest in long-term goals; between 2009 and 2011, the frequency of that behavior dropped 15%. And perhaps most disturbing is that much of this decline in behavior is due to apparent disinterest in personal financial responsibility.
Students now have less favorable attitudes toward virtually every aspect of personal finance, no longer looking as favorably upon such virtues as paying credit cards in full every month and saving money for the long term.
There was one exception, though: Students' attitudes toward learning more about money management are improving, which is at least one ray of hope for the future. And NEFE suggests that if that improvement is going to continue -- and if students are going to start living more responsibly in their financial lives -- it's going to start with the parents.
"Parents, more than anything, exert most influence over children when it comes to developing positive financial attitudes and behaviors -- 1.5 times more than continuing financial education and more than twice as much as what children hear from their friends," the organization said in a statement.
More on MainStreet and MSN Money:
Wow, shocking. We've devised a system where we tell our kids for the first 17 years to watch what they spend, get a job when they're able, be responsible, don't spend what you don't have. Meanwhile, parents manage to forget that "spoil" used to be a bad word, and provide every electronic luxury that comes down the line. And then they graduate high school, and everyone is encouraging them to take out 10's of thousands of dollars and ignore it for four years. (What we've devised for higher education borders on the criminal.) "Hey Student, sign on the dotted line at the faint hope of having a good salary one day that hopefully will be immune from off-shoring, but for GOD'S SAKE, don't sign up for a credit card. Because those cc companies are evil and only want your money."
Those aren't mixed messages at all! Is it really any wonder a kid today says to himself, "Hell, I got 60K worth of loans racked up, I might as well have a credit card and enjoy life a little."
I pay my credit cards off in full every month (I only use them for he cash back), and I would encourage parents to teach their kids the same, and show them how much interest costs them. But it's an uphill battle when they see everyone around them (parents, municipalities, pension funds, govt) racking up debt like it's going out of style.
I would also encourage all parents to lead by example, stop spoiling your kids by buying every game system and phone on the market (leave that to grandma), and show them that if they want something, it will have to be saved for.
How much influence I have as a parent depends entirely on the child, Two kids - one gasps in horror at even the idea that his credit card wouldn't be paid in full each month - one beams with pride because he discovered (and he seems to think he is the first person in the world) that you only have to make a minimum monthly payment. What is the NEFE's basis for the suggestion that - once again - this is the parents fault? I think the best financial advice a parent can give is "when you turn 18, you are on your own." Put responsibility where it belongs.
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