As students at colleges such as Boston University struggle to manage their finances while living independently, a new report shows early financial education could have alleviated their stress.
“There’s enough pressure in college to not have the added pressure of not being able to figure out what’s happening with your money and why you’re always broke,” said Barton Lipman, a professor of economics at BU’s College of Arts and Sciences. “… If you mismanage your money, you realize all of a sudden that you don’t have the money you thought you had when you need it and you risk … having to quit school and work full time in order to deal with a financial hole that you’ve dug yourself into.”
The study, which was conducted by education technology company EverFi, surveyed 65,000 college students to investigate the attitudes, behaviors, and knowledge of students coming on to the college campus in regards to saving, banking, spending and planning, said Dan Zapp, associate director of research for EverFi.
“We found individual and community level differences in attitudes, behaviors and knowledge surrounding financial literacy,” he said. “Most compellingly, we found healthier responses in all these categories from students who graduated high school in a state that mandates a financial literacy course for graduation.”
Financial literacy education refers to any pedagogy that attempts to improve the money management resources and skills of students, Zapp said.
The socioeconomic statuses, genders, ages and races of surveyed students were also compared to explore the differences in financial literacy between these categories, Zapp said.
“Males were healthier than females in almost every aspect,” he said. “Students became more financially literate with age, and the race differences we found were likely driven by socioeconomic disparities more than cultural variations.”
Encouraging financial skills and awareness into students before they are responsible for their own finances is a valuable asset for teenagers, Lipman said.
“It’s important in high school that people develop key life skills, and managing your finances certainly counts as a key life skill,” he said. “It would be nice if they [students] could start thinking about investments, although I think most high school students probably don’t have a lot of investments, but starting to understand the nature of investment and the stock market and things like that is valuable.”
Lipman said students in their junior or senior years in high school would benefit the most from this education, as students below those grade levels are not as capable of comprehending the intricacies of a financial world so unfamiliar to them.
“Even [in] middle school, starting [to teach] kids to think about how to handle money is not a bad thing, but serious financial literacy really couldn’t start until a bit later,” he said. “A kid in seventh or eighth grade just isn’t dealing with money, isn’t quite close enough to it yet, but a kid who’s getting to be a junior, senior in high school — that seems about the right time to me.”
Zoe Neubauer, a CAS freshman, said learning about finances would have better prepared her to navigate the financial intricacies of the real world.
“I would probably know more about the financial system in general,” she said. “I feel like I’m unprepared for the real world. In college I think I’m okay because you just work and study.”
Olivia Kramer, a Sargent College of Health and Rehabilitation Sciences sophomore, said financial literacy education would have helped her manage her student loans.
“I would have realized that you are supposed to save for college and not just have taken out a ton of loans to get here,” she said. “It would have been helpful to know that it’s actually really expensive to come, and it’s not just a free for all. “
Jaime Bennis contributed to the reporting of this article.