Financial Literacy Among American College Students (2024)

FAQs

Financial Literacy Among American College Students? ›

When asked to do a self-assessment of their financial know-how, just 18% of high schoolers and 26% of college students said they have a “somewhat high” or “very high” knowledge of finance. Looking ahead, only 46% of high schoolers and 55% of college students marked that they know enough to reach their financial goals.

Making Informed Financial Decisions

Whether choosing between student loan options, understanding the terms of a lease agreement, or evaluating job offers based on salary and benefits, students with strong financial literacy skills are better equipped to navigate the complexities of adult life.

Many college students graduate without understanding how to manage their money effectively, which often leads to financial struggles later in life. In fact, according to research, more than 40 percent of college students are not equipped with financial literacy knowledge and skills.

Greater financial literacy can lead to better money management and higher savings, a MarketWatch Guides study finds. But only about half of U.S. adults are financially literate, one study found – and few states require financial literacy courses to graduate from public schools.

Financial literacy is the knowledge and ability to manage your money in a way that helps you grow stability and feel confident and resilient. Key aspects of financial literacy are budgeting, saving and managing debt.

College students are constantly worried about money.

Ohio State University's 2015 National Student Financial Wellness Study found that a staggering 70 percent of college students reported feeling stressed about their finances.

Money plays a critical role in our lives and not having enough of it impacts health as well as academic performance. Financial stress is repeatedly found to be a common source of stress, anxiety and fear for college students.

Where does US rank in financial literacy? ›

Per Zippia, “The US ranks 14th in financial literacy.

Financial Illiteracy is a Worldwide Debilitating Condition.

Financial competency is a basic requirement to lead a healthy financial life. Individuals afflicted by financial illiteracy are simply not able to discern between different financial choices and are often unable to reach their financial goals.

In fact, much of the downward trend in financial literacy can be traced back to respondents increasingly selecting “don't know” as their response option to the underlying questions. The rise in “don't know” responses accounts for 75 percent of the drop in financial knowledge from 2009 to 2021.

Students classify those characteristics based on the three C's of credit (capacity, character, and collateral), assess the riskiness of lending to that individual based on these characteristics, and then decide whether or not to approve or deny the loan request.

Key steps to attaining financial literacy include learning how to create a budget, track spending, pay off debt, and plan for retirement.

Financial literacy is having a basic grasp of money matters and its four fundamental pillars: debt, budgeting, saving, and investing.

Saving Money in College

Savings can be of utmost importance in times of need. Whether it be unexpected medical bills, paying off long-term debt, or retiring with an adequate amount of money, it is important that students start saving money in college.

Some students borrow to pay recurring expenses such as rent and utilities. Efforts to satisfy these unmet needs cause students with meager savings and earnings to fall behind peers from middle-income and wealthier families in college attainment.

College is an investment of your time and money. While being a college student can sometimes feel financially stressful, learning to manage your money can empower you to feel more in control of your budget and financial future. For many students, college is the first time you need to pay for things independently.