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NEW YORK (MainStreet) — If learning how to save and master financial literacy is something people should learn young — the future may be bleak.
A new study looking at what first-year college students know about finances shows most can only answer about a third of general financial questions correctly. The questions — ranging from topics like the right amount of money to set aside in case of a financial emergency, to how long a late payment remains on your credit history — were part of the “Money Matters on Campus” survey sponsored by education finance site Higher One and education technology site EverFi.
“The results of the survey are disappointing, but not unexpected,” said Tom Arnold, professor of finance at the University of Richmond. “Most money habits come from experience and example. Incoming freshman are not very experienced and have more than likely relied on their parents for financial guidance and financial support."
“Consequently, prior to college, many students do not have to budget their money nor be concerned about paying off debt,” he added.
While not knowing the correct answers to questions is one thing, actual risky financial behaviors are much worse. The research showed 12% of first-year students at four-year schools do not check their account balances because they are “too nervous,” and only 39% use a budget. The study also found while students were more financially literate if they took financial literacy courses in high school, those that had checking accounts were even more so. Also, students attending two-year schools proved to be slightly more knowledgeable — possibly because they may have a higher degree of personal financial knowledge due to their “age, financial experience and general lifestyle differences,” the study suggested.
Investment experts like Tony Amaradio think of financial literacy as a right of everyone, regardless of social class, gender, or age. Subscribe to this blog to know how you can improve your financial status.