While high school and college students consider themselves confident in the basics of financial literacy, they continue to give themselves only average marks for money management, according to the latest results of a study of student and personal finances conducted by U.S. Bank.
“This is the second year we have checked in with students to see how financially literate they are,” said Robyn Gilson, U.S. Bank coach for student financial education. “What we found is that students continue to know the basics like budgeting and savings. But when the conversation shifts to credit and investing, the grades drop. We want students to know it’s not too early to understand credit or how to make solid financial investments for their futures. It’s so important to start young.”
In the 2016 study, students reported they feel knowledgeable about the basics of saving and checking accounts (42 percent) and about saving money in general (39 percent). But when it comes to their knowledge of understanding credit, there are a lot of misunderstandings. Most students (54 percent) incorrectly believe having too many credit cards can hurt their credit scores and 44 percent incorrectly believe using checks and debit cards helps to build credit. And less than half (46 percent) of students have checked their credit score.
“College is a good time to get your first credit card because establishing a strong credit history can set you up to get a loan for a major purchase — like a car — on your own once you start working instead of relying on a parent to co-sign,” Gilson said. “We recommend using your credit card responsibly by paying for bills and everyday expenses — without overspending — and then paying off the balance in full on time each month.”
Beyond understanding credit, students also lack knowledge of investing money (15 percent) and how to save for retirement (11 percent). They also reported a struggle to keep up with day-to-day expenses, but they’re getting a little bit better. Last year, 67 percent of students reported they’re barely keeping up in managing their daily finances, while this year that number improved to 60 percent.
There are slight differences when it comes to gender. Male students reported they’re more comfortable and feel prepared to meet financial goals, describing themselves as “savers.” Female students more often describe themselves as “spenders” and said they’re not prepared to meet their financial goals.
More than 1,600 high school and college students age 18 to 30 participated in an online survey upon which the 2016 student and personal finance study was based.