Money Matters on Campus is a study conducted by Everfi that has been measuring the financial literacy and habits of new college students across America. In 2016, over 90,000 students were surveyed about their past financial education and current money habits.
The data from the study suggests that certain domains of financial literacy are closely tied to general development in young adults, including financial plans, attitudes, and general experience. Every other aspect of fiscal health varies in response to the context in which each student is facing.
The study identified significant decreases in nearly all responsible financial habits that students should take in their first year on their own. This included following a budget, paying bills on time, reviewing bills for mistakes, saving and investing, choosing debit over credit, and more. Over 40% of the respondents said they didn’t feel prepared to manage their own finances and 25% admitted to continuing to spend, even when their bank account balance was dangerously low.
College is the launchpad for many individuals to move from childhood into adulthood, but once your young man or woman heads off to college, they’ll need to know how to manage their finances immediately. With that in mind, consider going over these key skills with your young adult before they load in their belongings for their first semester away from home, with any luck, they’ll be able to avoid an all ramen diet for the next few years.
How to Check Their Balance and Access Funds
It may come as a surprise to some, but there are people out there that have money in the bank but don’t know how to access it or check their balance.
Before your son or daughter leaves home, make sure they know what accounts they have access to, how and where to access those accounts, and how to check the balance or remove money from them. It sounds simple because it is, but don’t take that skill for granted.
How to Read Their Bank Statement
Digital banking has revolutionized the way people manage their accounts. It’s not surprising that most high school graduates will never have to look at a paper bank statement. They should, however, learn how to read their e-statements! Whether it’s a monthly statement or checking their balance on their banking app, it’s important that they understand what they’re looking at. Get them into the habit of checking their accounts regularly and explain the difference between pending and posted transactions. That way they can also predict how their balance will be affected with each purchase.
How to Maintain a Simple Budget
Budgeting can feel overwhelming when you have a lot of bills to juggle. That’s why it’s important to get into the habit when costs are a little more simple. For a recent high school graduate, learning the basics should do. Whether they have a job or if they’ll receive a certain amount of spending allowance a month, make sure they consider food costs, paying for gas, and other small expenses. Make sure they know that spending $20 here and there adds up.
How to Balance Wants and Needs
It’s a major reality check when an independent young adult realizes that they may not have someone to lean on anymore, that their bills won’t be taken care of for them, or that their accounts may not automatically replenish. When you have fewer consequences or bills, it’s easy to spend money on wants over needs. But in this transition into adulthood, it’s important that young adults learn that spending based on wants can become a dangerous financial habit. Help your son or daughter identify monetary priorities and ways to keep them at the forefront of spending, before they move o to spending on their wants.
How to Understand Bank Product Offers
Only in recent years has the relationship between credit card companies and college students recovered from their predatory habits that were blocked by the government with new restrictions. Unfortunately, lenders are still looking to exploit young adults who don’t have a lot of experience with money. It’s important that your son or daughter learns how to read and understand the terms and conditions of basic credit card agreements, with special attention to rate increases and repayment options.
How to Build Good Credit
It’s a common misconception that no credit is good credit. Unless you’d like to cosign on your child’s future loans and purchases, it’s important to teach your children how to strategically build a positive credit history. Teach them how credit works, what can decrease their score, and habits that can increase their score.
How to Save for an Emergency
Most young adults consider their emergency savings account as “Mom and Dad”. While you’re teaching your kids to identify their wants over needs, make sure they’re aware of the important need for an emergency, should something bad happen in the future. Make sure they understand the importance of a nest egg that can grow as their needs grow and their surprise needs become imminent.
How to Ask for Help
Sometimes, as a young adult, it’s hard to admit when you need help. While you won’t be able to close your eyes and have someone fix your issues for you, it’s important to know how and when to seek out help when you do need it. Make sure your children know that they can find help before they get to the point of no financial return. Help them identify potential pitfalls ahead of time and show them where to go if they do fall into one of those traps.
You’ve had a lifetime to teach your kids everything you know, but sometimes what you know can’t prepare them for everything. All you can do is give them t he basic tools and guidance they need to make the right choices and deal with mistakes. Your first step can be sharing this article with them!