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.

Feeling Financially Illiterate? Four Tips to Get Smarter This Week.

source: freedigitalphotos.net
source: freedigitalphotos.net

 

Have you ever overheard a friend or colleague talking about investing or financial planning and realized that you weren’t exactly sure what they meant? Do you know you need to be saving for retirement but aren’t sure where or how? Are you not sure why interest rates are rising and what it means to you? Don’t feel too bad about it. I have a secret for you. Having a Ph.D. in finance doesn’t mean I know everything about personal finance either. I am always learning something new because the markets are always changing. The good thing is that there are so many ways to get a little smarter starting right now.

 

1. Subscribe to some great personal finance bloggers. Just check their qualifications before taking their advice.  Obviously, if you are here, you’ve found one of those blogs! If you click over to the About Me page, you can get some more information about why I am qualified to talk about personal finance and real estate topics. I have a Ph.D. in finance and am a tenured professor at a large state university. Some of my other favorite personal finance blogs are:

 

2. Take an online class. If you don’t need college credit, there are a few places where you can take classes on specific finance topics. Khan Academy has an outstanding finance and capital markets course. Coursera also offers free, online courses taught by university faculty. They have introductory finance courses available a couple of times a year.

 

3. Read a book. There are a lot of books out there about personal finance and investing. I don’t like to read boring textbooks any more than you do. I’m also pretty picky about authors with whom I want to spend more than a couple of pages. So, I feel pretty good about giving you these couple of book recommendations as a start.

On My Own Two Feet: A Modern Girl’s Guide to Personal Finance
Get a Financial Life: Personal Finance In Your Twenties and Thirties
Financially Fearless: The LearnVest Program for Taking Control of Your Money

 

4. Find some online tutorials. Answers to every question you have can be found somewhere on the Internet. Many finance web sites include great basic finance tutorials. I like Investopedia, the University of Arizona, and the Federal Deposit Insurance Corporation (FDIC).

Games That Teach Money Management

games that teach money management
source: freeimages.com

Teaching finance and money management skills does not have to be boring. Games are a great way to teach these skills to children of all ages while having fun. Kids will have fun playing the games and may not even realize they are learning valuable life lessons. There are some great board games that are good for a whole family or group of kids to play together as well as online games for individual play. **This post does contain Amazon Affiliate links.

Board Games

Cash Flow 101 was created for teenagers, but kids as young as six years old can play with a parent or teacher. Robert T. Kiyosaki, author of Rich Dad, Poor Dad, created this game to teach kids about personal finance, investment, and money management. This game includes more advanced topics such as financial statements, understanding assets and liabilities, and personal accounting.

The Game of Life was created over 150 years ago and is available as a board game or video game. Kids as young as six years old can play the game with a parent or teacher, and it is fun for older kids as well. The Game of Life not only teaches kids about cash flow and money management but also career and family choices, education, borrowing money, and taxes.

 

Monopoly has been a family favorite board game for about 80 years. The game is best suited for players who are at least eight years old. Monopoly not only teaches money management and budgeting but also introduces kids to topics such as taxes, investment, and real estate development.

Payday is a classic board game that requires players to manage money over a monthly period. The game teaches the need for budgeting planned monthly expenses and emergency expenses out of a monthly paycheck. Payday also introduces the concept of loans and interest. It is best for players eight and older.

Online Games

Money Metropolis is a game presented by Visa’s Practical Money Skills program In this game players pick a savings goal and then need to go around their virtual town working to earn the money to reach their goal. They will be presented with other ways to spend their money and need to stay focused on their goal. This game is best suited for kids from age seven to twelve.

Road Trip to Savings is a game presented by Visa’s Practical Money Skills program. This game puts kids on a four week journey that requires budgeting expenses for their trip. Running out of money means you lose your car. This game is best for kids from seven to twelve years old.