Photo (cc) by Jirka Matousek
Your college kids likely are flunking Money 101 and don’t even know it.
That’s the finding of a new survey from the American Institute of Certified Public Accountants (AICPA), which also has ideas on making the 17 million undergrads enrolled this fall financially literate.
A Harris Poll survey of 751 full-time fall college students on behalf of AICPA found 57 percent of college students rated themselves as having excellent or good personal financial management skills. Only 12 percent rated themselves poor or terrible.
However, almost half of college students reported having less than $100 in their bank accounts at some point in the last year. In addition, more than 1 in 3 said they had borrowed money from friends or family in the last year and more than 1 in 10 missed a bill payment.
Despite 99 percent of the college students rating the importance of personal financial management skills as extremely or very important, only 1 in 4 said they frequently or often seek personal financial management information and incorporate it into their spending and saving habits. About 2 in 5 say they rarely or never do so.
“For many students, college is their first time making independent financial decisions,” said Ernie Almonte, who chairs the AICPA’s National CPA Financial Literacy Commission. “With this opportunity comes serious responsibility, and if they aren’t making informed, intelligent decisions it can have a negative impact on the rest of their financial lives.”
Almonte said a “Financial Literacy 101″ course syllabus should include establishing a budget, tracking spending and expenses and reviewing it monthly.”
AICPA offers the 360 Degrees of Financial Literacy website to use the free budget calculator designed for college students.
Among AICPA tips:
Review your plan: Look monthly to see if there are differences between your budget and your actual spending.
Build a credit score: Establish a positive credit history by having a credit card in college, but don’t use it unless you can pay it off, or if it is an absolute emergency, which does not include the urge for late-night pizza or lattes.
Set a goal for summer earnings: Figure out how much money you’ll need to get through the semester, including the cost of utilities, cellphone, transportation (i.e. car payment, insurance, bus fare, etc.) and rent if you’re living off campus.
“By incorporating these positive behaviors, students will be better equipped to make intelligent financial decisions later in life,” Almonte said.
What strategies can you add for typically cash-strapped college students? Share in the comments below or on our Facebook page.