Skip The Fancy Present: College Graduates Need The Gift Of Financial Literacy
Can you remember how you felt after you graduated from college? Aside from being happy I had a degree, it made me feel like a real adult. Granted I was already living in my own apartment and starting my career (I had a salaried position with a design company my senior year), I didn’t feel like I had all the answers.
No matter how much you try to prepare, there’s always some area where you lack basic knowledge. It’s understandable considering many college students had assistance from their parents and never truly tasted what the real world has to offer. If only there was a “Real World 101” course during my time in school that prepared me for what’s in store.
Maybe there is now.
One thing is quite clear: college graduates today lack a basic understanding of financial management and planning. Failure to grasp these essentials unfortunately can and will lead to high debt and improper planning for the future.
Perhaps we need to focus on teaching our loved ones personal finance instead of patting them on the back and handing them an expensive gift when they cross the stage.
A new survey called Money Matters on Campus is taking a look at first-year college students across the United States, and sheds light on what they know about debt and personal finance. With tuition and student loans on the rise, the study also reveals college graduates have an 8.5 percent unemployment rate and 16.8 percent underemployment rate. More than half of the students surveyed fear not being able to pay back their student loans (many will default) with a general consensus of feeling ill-prepared to manage money.
Young adults today aren’t acquiring wealth like their parents and as a result are holding off on marriage, having kids and home ownership. More are managing money on their own and are likely to have credit cards, but not budget, save or invest. What’s sad is that some will even resort to payday loans which are usually a financial kiss of death.
After reading the survey I found something very interesting that sheds light on students in two and four-year institutions. According to the survey, graduates from two-year college programs are more likely to possess money savvy and responsibility. While 26 percent live paycheck-to-paycheck compared to 16 percent of four-year students, they lead in areas of balancing checkbooks, using budgets (60 percent of two-year students have one compared to only 39 percent of four-year students), and mindful spending when their money is low.
I have a younger sister finishing up her sophomore year in college, enrolled in the business honors program. We have frequent chats about life after graduation that include what to expect and common banking practices. While she thankfully won’t have college debt thanks to academic scholarships, she is concerned about finding a good enough job that will help make her as self-sufficient as possible.
My son and my bun baking in the oven are way too young to understand anything about money. My husband and I invest in their academic future through 529 college savings plan but will keep an open dialogue regarding personal finance and what to expect. As parents, it’s our job to give as much financial advice as possible so they can reach greater heights and hopefully not make the same mistakes.
What conversations are you having with your children about money? Here are some reads you might want to check out.