College Prep: Preparing Your Children for Their Financial Future

preparing students for college finances

 

 

Dear Dad and Moms,

 

College students really do not know what they are doing when it comes to their money. They worry about student loans and debt but don’t have a clue about what they might earn when they graduate, credit reports, or how to manage their money during the semester (let alone after college graduation). Some of them are going to take a college finance class and learn something, but others will not. It’s so easy to dig yourself into a financial pit these days, and it is very hard to get out of that place when the job market is brutally tight.

 

I’m not sure why parents as a whole are failing at this point, but I do have some ideas. Maybe parents just have not thought about the need to pass on personal finance skills. I think this is entirely possible because I can tell you that if anyone sat down and talked to me about managing my money or anything related to personal finance that I don’t remember. In college, I had money I earned during the summer and saved, but I never thought about a budget. I never sat down and calculated my income and expected expenses after graduation. Life skills that were important: making mac and cheese, doing laundry, putting transmission fluid in my car so it would run. Life skills that were not important: budgeting. So, maybe you aren’t thinking about it because you had a similar experience where you figured out the whole money thing as you went. College students are no different today. Studies show that they don’t know just how much they don’t know.

 

Unless you are living under a rock, you probably know that today personal finance is more important than ever. High school and college graduates are heading out into a tough economy where they will be burdened with high health care costs, taxes, and debt. While employees could once depend upon the government and an employee pension to cover retirement expenses, individuals are now expected to adequately save and invest themselves. Many states have begun to require high school courses in personal finance, but parents should not rely on these classes to fully prepare their children for the financial freedoms of college.

 

Maybe we are just uncomfortable talking about money since it can be such a stressful topic in our own lives. Perhaps some parents don’t feel like they understand personal finance enough themselves to be able to give advice to their children. Students going off to college, however, really need basic skills that they are going to use every day. They don’t need to know how to pick investments and the different type of retirement accounts. Start out by making sure they can do simple things like write a check and make a budget for the semester. Empowering your children to take responsibility for their own financial future sets the stage for good choices beyond graduation as well.

 

 

 

Financial Literacy in College Students: Re-visited

college high school financial literacy education

Last year I wrote about a project my honors thesis student completed on the topic of financial literacy in business students. The hypothesis for the thesis was that business majors are more financially literate than non-business majors. On the surface, it seemed like it should be a simple answer. Business students are trained in the ways of accounting, finance, marketing, and management. Financial literacy should be a result of their education. Over 400 university students responded to a survey that included sixteen financial literacy questions from the JumpStart Coalition’s test. On average, students answered half of the questions correctly. Business students, however, did not do any better than the non-business students. As a finance professor, this was not a pleasant discovery. It turned out that only age and measures of financial experience resulted in higher financial literacy scores.

 

This year I had another student working on an honors thesis related to financial literacy. She, however, wanted to focus on high school education. Some states either require a high school course in personal finance or at least are exploring the idea. Given the poor results from last year’s study, we decided to take a different approach to measuring financial literacy. Financial education is not required in Mississippi high schools, but those that offer courses predominantly utilize the Ever-Fi financial education curriculum. So, we designed our financial literacy metrics from this curriculum. The Ever-Fi curriculum focuses on basic, personal finance applications that young adults are most likely to encounter within five years of high school graduation.

 

The good news is that according to these metrics, college students have a higher level of financial literacy than expected. Over 90% of students were able to answer most of the questions correctly. At least half of students were getting the correct answers to the most challenging questions. So, perhaps college business majors are more financially literate than the previous study indicated and the measure of financial literacy should be carefully considered.

 

Financial experience and finance education both resulted in higher financial literacy. Educating high school and college students about personal finance is extremely important to the economic health of our country. Curriculum, however, should focus on what students are most likely to encounter after graduation and incorporate applied learning opportunities.
top career mistakes college students make

Top Five Career Mistakes That College Students Make

top career mistakes college students make

 

It’s the start of a new semester at the university, which means graduation is just months away for many college seniors. The “real world” is just around the corner, and yet I see so few students really prepared for that moment. Now, I will admit to you that in many ways I was not all that different. At this time, I did not have a job lined up waiting for me after graduation. I didn’t know exactly where I was going or what I would be doing. I was, however, actively looking for work. I had a plan, and I had been putting in the time and taking opportunities throughout my college years that would eventually lead me in the right direction.

 

When I graduated from college I went home for a couple of weeks and then left to take a summer job as a lab assistant. It did not pay much money, and I lived in a large house with about 25 other college students. Still, I took the opportunity to work in my field. While I was there, I got a call with a job offer related to an application I submitted months earlier. I moved hundreds of miles away, and the rest is history. The point is that I was always working towards something and answered the door when opportunity knocked. Unfortunately, I don’t see that attitude in a lot of college students today. They seem to be making a lot of mistakes when it comes to their career search and prospects.

 

  1. Unrealistic salary expectations. Long before the first interview, you should have a good idea about what starting salaries in your field actually are. Unfortunately, a lot of college students seem to have inflated salary expectations. Talk to recent graduates and find out what kinds of jobs and salaries offered to them. Research average salaries here and understand how those numbers vary by location. For example, working in NYC, you will likely be at the high end while in Mississippi you could be at or below the bottom of the range.
  2. Unwillingness to relocate. My first job out of college took me from the Northeast to the foreign land of Mississippi. I had never stepped foot in the state before the day I moved there to start my career. It never occurred to me not to take the job because I would have to relocate. Life is an adventure, and in today’s economy, you cannot afford to limit your options to a small geographic region. Your dream job could be waiting across the country, so step outside your comfort zone and go for it!
  3. Feelings of entitlement. A college degree entitles you to nothing other than a piece of paper that you can hang in an expensive frame. Graduation is just the first hurdle and likely makes you no different from any of the hundreds of other applicants for a job. You are entitled to nothing. Consider yourself fortunate to get an interview and fortunate to get a chance to prove yourself to an employer. Be willing to work hard and do what is required even if you think you can handle more. Show that you can succeed in the small tasks, and bigger things will come your way. Plus, we all started at the bottom. Good colleagues are willing to pay their dues just like everyone else.
  4. Lack of professionalism. I’m not sure what makes students want to call me by my first name, call me Mrs. Goodwin, text emojis to me, or expect me to answer their emails at 2 am. I’m thinking it’s the same thing that causes them to show up to a professional event in shorts and a T-shirt or short skirt and 5-inch heels. I don’t think this behavior is unique to their interactions with me, and I worry about how this translates into an overall lack of professionalism that extends beyond the classroom.  Wear a suit and nice shoes, lose the backpack, and stop sending emails that use “hey” as the salutation.
  5. Not using the social network. Millennials are great at liking on Facebook, instantly Gramming, and snapping their Chat. Despite this social fluency, they tend to miss the mark when it comes to the actual value of developing their social network. Networking is crucial to career development and advancement. Take every opportunity you have as a student to meet people working in fields that interest you, get their business card, write them an email, and add them to your LinkedIn network. You never know what door that connection can open for you one day.