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.

By MSN Money Partner Sep 1, 2011 10:39AM

This post comes from Matt Brownell at partner site MainStreet.

When it comes to financial education and responsibility, college students seem to be headed in the wrong direction.

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:

Tags:

budgetingcollegecredit cardsfamilyfinancial planningraising children

< Back to Smart Spending

2Comments

Best

Sep 1, 2011 2:35PM

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.

Previous replies

Mikey Gato

Sep 1, 2011 11:21AM

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.

Previous replies

DATA PROVIDERS

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

Feedback

ABOUT SMART SPENDING

Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.

Editor Bev O'Shea lives and works in the foothills of the Appalachians. A former copy editor for The Atlanta Journal-Constitution and the Orlando Sentinel, she joined MSN Money in 2007. She's a fan of sunsets, college football and free shipping, among other things.

Having worked as a writer, reporter and editor for more than 25 years, Editor Julie Tilsner is the sort of person who can't help but correct grammar in Facebook postings and on billboards. She's written for BusinessWeek, the Los Angeles Times, Parenting, Redbook, AOL and others. She lives in Los Angeles County with her family and loves to drink wine and practice yoga, although not generally at the same time.

A writer for MSN Money since January 2007, Donna Freedman won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. She also writes about smart money tactics for magazines and on her own site, Surviving and Thriving.

Mitch Lipka has been warning people about scams and shining light on questionable business practices for more than 20 years. Mitch, the consumer columnist for The Boston Globe, has also been a reporter and editor at The Philadelphia Inquirer, Consumer Reports, South Florida Sun-Sentinel and AOL. He won the 2010 New York Press Club award for best consumer reporting online and was honored in 2011 for his reporting on child product safety.

Marilyn Lewis is an award-winning writer with a passion for getting readers clear, straight information that helps them stay out of financial trouble. A former reporter for The San Jose Mercury News, she works from her home in Port Townsend, Wash. Contact her at MarilynLewis@Outlook.com.