MONEY MANAGEMENT PRACTICES OF COLLEGE STUDENTS



MONEY MANAGEMENT PRACTICES OF COLLEGE STUDENTS. | |

|Authors: |Henry, Reasie A. |

| |Weber, Janice G. |

| |Yarbrough, David |

|Source: |College Student Journal; Jun2001, Vol. 35 Issue 2, p244, 6p, 4 charts |

|Document Type: |Article |

|Subject Terms: |*COLLEGE students |

| |*FINANCE, Personal |

| |UNIVERSITY of Louisiana (Lafayette, La.) |

|Geographic Terms: |LOUISIANA |

| |UNITED States |

| |LAFAYETTE (La.) |

| |NAICS/Industry Codes522291 Consumer Lending |

|Abstract: |Many college students are living on the edge of financial crisis and many of them do not possess the |

| |knowledge needed to manage their money. The purpose of the study was to determine the use of money |

| |management practices of Education college students at the University of Louisiana at Lafayette. The |

| |sample consisted of 126 Education majors in randomly selected Education courses which were being |

| |taught, at each academic level, in the Spring 2000 semester. Subjects were administered a 13-item |

| |questionnaire including items concerning demographic data, income, debt, and budgeting practices. |

| |Frequency distributions and Pearson Chi-Square were computed. Findings showed that women were more |

| |likely to have a budget than men, married students with budgets were more likely to follow them, and |

| |those aged 36 to 40 were more likely to follow them most of the time. [ABSTRACT FROM AUTHOR] |

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|Full Text Word Count: |2005 |

|ISSN: |0146-3934 |

|Accession Number: |5010948 |

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|MONEY MANAGEMENT PRACTICES OF COLLEGE STUDENTS |

|Many college students are living on the edge of financial crisis and many of them do not possess the knowledge needed to manage their money.|

|The purpose of the study was to determine the use of money management practices of Education college students at the University of Louisiana|

|at Lafayette. The sample consisted of 126 Education majors in randomly selected Education courses which were being taught, at each academic |

|level, in the Spring 2000 semester. Subjects were administered a 13-item questionnaire including items concerning demographic data, income, |

|debt, and budgeting practices. Frequency distributions and Pearson Chi-Square were computed. Findings showed that women were more likely to |

|have a budget than men, married students with budgets were more likely to follow them, and those aged 36 to 40 were more likely to follow |

|them most of the time. |

|Many college students are living on the edge of financial crisis and many of them do not possess the knowledge needed to manage their money.|

|While students at the university, they are constantly accumulating debt, through student loans and credit cards. They may not realize how |

|their current debt can negatively affect their future credit rating. Without consistent money management practices, students will find it |

|difficult to reach financial goals (Bowen & Lago, 1997). |

|What does a good money management plan include? According to Musk & Winter (1998), it will include "regular generation of financial |

|statements; budgeting; control of spending; recording income and expenses; and tax, insurance, investment, retirement and estate planning" |

|(p. 1). The difficulty in creating and using a money management plan is that many students are not familiar with money management practices |

|(Chen & Volpe, 1998). Chen & Volpe (1998) blames the colleges for not providing financial management courses for students. The Youth and |

|Money Survey (1999), found that even though 65% of the students had an opportunity to schedule a money management course, only 21% of them |

|took the course. The amount of financial information a student has usually impacts their ideas and choices regarding finances (Chen & Volpe,|

|1998). Kendrick (1999) stated that only 44% of students understand the term 'budget'; in fact, only 18% of the general population possesses |

|a basic appreciation of simple money management practices (Elliot, 1997). Another hindrance to students is simply that they are not as |

|capable of coping with actual circumstances involving finances that they will encounter when they are older (Family Values, 1998). One |

|reason is that most of them are in the beginning phase of their "financial life cycle" and a majority of their money is spent rather than |

|invested (Chen & Volpe, 1998, p. 5). |

|Although the primary rationale given by students for obtaining a credit card is to establish a good credit history (Murdy & Rush, 1995), 28%|

|of students carry monthly credit card debt (Youth and Money Survey, 1999). Due to the easy access to credit cards in colleges, approximately|

|80% of full-time undergraduate students have credit cards with an "average outstanding balance (of) $2,226 and 10% of them have outstanding |

|balances of more than $7,000" (Kendrick, 1999, p. 1). |

|Method |

|The sample was drawn from randomly selected Education courses, offered at the University of Louisiana at Lafayette, which were being taught,|

|at each academic level, in the Spring 2000 semester. The instrument used was a 13-item questionnaire. It was constructed by the researchers,|

|because our study only required a limited amount of data and some of the other questionnaires either included unnecessary items or contained|

|items inappropriate to our population (education majors). Items contained in the questionnaire included demographic data, such as gender, |

|race, marital status, classification, major, citizenship, and age. The second section dealt with employment status (full- or part-time), |

|number of jobs, and total gross yearly income estimate. The final section required students to describe their budgeting practices, such as |

|whether they had a written budget, how often they followed it, if they had one, and estimate their total debt. |

|The data were collected over a one week period from both undergraduate and graduate education majors registered in randomly selected |

|education classes. Students were administered the questionnaire at the beginning of class and steps were taken to ensure that no one |

|completed more than one questionnaire. All were informed that participation in the study was voluntary and all responses were anonymous. |

|Results |

|Data analysis was performed for the entire population and also various subcategories. Both frequency distributions and Pearson Chi-Square |

|were computed. Crosstabulations were also performed. There were 106 females, which corresponded to 84% of the sample and only 20 males. A |

|majority of the students were Caucasian (76%), 84% were 30 years old or younger, and 98% were U.S. citizens. The two largest classifications|

|represented were freshman at 26% and graduate students at 21%. Fifty-three percent were elementary education majors, 29% were secondary |

|education majors, and the remaining 12% were comprised of either music, special or vocational education majors. Sixty-nine percent of the |

|students were never married. The results showed that the average student income was almost $16,000, while the average student debt was |

|approximately $13,000. Based on reported yearly income, 44% of the students had more than 31% debt. The researchers wanted to determine if |

|students actually had a written budget and whether they followed it. Of the 42% reported having a budget, 38% did not follow it all the |

|time, and only 4% of them never followed their budget. Also of interest, was whether undergraduates had more debt than graduate students. It|

|was found that only 40% of undergraduates had debt as opposed to 96% of the graduate students. Gender was related to having a budget with |

|women (35%) more likely to have a budget than men (10%) (see Table 1). Age was significantly related to how often students follow their |

|budget, with those students in the 36 to 40-age group (100%) more likely to have a budget and follow it most of the time (see Table 2). |

|Married students with a budget were more likely to follow them, although they followed them only 52% of the time (see Table 3). Fifty-two |

|percent of the graduate students had a budget and followed it (see Table 4). No significance was found between major and total debt, number |

|of jobs and having a budget, classification and total debt, gender and debt, and age and debt. |

|Discussion |

|Those participants who followed their budgets fairly often were 32% of the sample, while those interviewed in the Youth and Money Survey |

|(1999) were 30%. Though our sample was limited to a specific population and was not as large as the above-mentioned study, our findings were|

|similar to theirs. The statistics seems to imply that students are either not knowledgeable of money management practices or they are not |

|willing to spend the time to manage their money. Even though our students asked students to estimate debt and income, some gave both |

|household and individual estimates of debt and income. Due to this problem, a debt-to-income ratio was not able to give an accurate picture |

|of the students debt. More research should be performed concerning college students and money management practices. Budgeting was only one |

|aspect of money management, but savings, retirement planning, and investments should also be studied. An accurate picture of their |

|debt-to-income ratio would be something they might want to see and may provide motivation to manage their money better. |

|Conclusion |

|Our data showed that a majority of the students do not have a written budget, that women were more likely to have a budget than men, married|

|students with budgets were more likely to follow their budgets, and those aged 36 to 40 were more likely to follow their budgets most of the|

|time. Based on the findings, it appears that University students are vulnerable to financial crisis. |

|Table 1 |

|Gender and Budget |

|Count Yes No Missing Row |

|Row percent Completed Completed Total |

| |

|Male 2 17 1 20 |

|10.0 85.0 5.0 100.0 |

| |

|Female 36 68 1 105 |

|34.3 64.8 .9 100.0 |

|Table 2 |

|Age and How often students followed their budget. |

|Legend for Chart: |

| |

|A - Count Row Percent Column Percent |

|B - No Budget |

|C - Always Followed |

|D - Mostly Followed |

|E - Fairly Often |

|F - Sometimes, Rarely, or Never |

|G - Row Total |

| |

|A B C D E F G |

| |

|Under 20 27 4 4 1 6 42 |

|64.3 9.5 9.5 2.4 14.3 100.0 |

|36.9 44.4 18.1 11.1 50 33.6 |

| |

|21 to 25 30 3 5 3 4 45 |

|66.7 6.7 11.1 6.7 8.9 100.0 |

|41.1 33.3 22.7 33.3 33.3 36.0 |

| |

|26 to 30 11 0 5 2 1 19 |

|57.9 0.0 26.3 10.5 5.3 100.0 |

|15.1 0.0 22.7 22.2 8.3 15.2 |

| |

|31 to 35 2 1 2 0 0 5 |

|40 20 40 0.0 0.0 100.0 |

|2.7 11.1 9.1 0.0 0.0 4.0 |

| |

|36 to 40 0 0 4 0 0 4 |

|0.0 0.0 100.0 0.0 0.0 100.0 |

|0.0 0.0 18.2 0.0 0.0 3.2 |

| |

|41 to 60 3 1 2 3 1 10 |

|30.0 10.0 20.0 30.0 10.0 100.0 |

|4.1 11.1 9.1 33.3 8.3 8.0 |

| |

|Column 73 9 22 9 12 125 |

|Total 58.4 7.2 17.6 7.2 9.6 100.0 |

|100.0 100.0 100.0 100.0 100.0 100.0 |

|Table 3 |

|Current Marital Status and How often Students follow their Budget |

|Legend for Chart: |

| |

|A - Count Row Percent Column Percent |

|B - No Budget |

|C - Always Followed |

|D - Mostly Followed |

|E - Fairly Often |

|F - Sometimes, Rarely, Never |

|G - Row Total |

| |

|A B C D E F G |

| |

|Never 56 6 10 5 10 87 |

|Married 64.4 6.9 11.5 5.7 11.5 100.0 |

|76.7 66.7 45.5 55.6 83.3 69.6 |

| |

|Married 14 3 9 4 1 31 |

|45.2 9.7 29.0 12.9 3.2 100.0 |

|19.2 33.3 40.9 44.4 8.3 24.8 |

| |

|Separated/ |

|Divorced 3 0 3 0 1 7 |

|42.9 0.0 42.9 0.0 14.3 100.0 |

|4.1 0.0 13.6 0.0 8.3 5.6 |

|Column 73 9 22 9 12 125 |

|Total 58.4 7.2 17.6 7.2 9.6 100.0 |

|100.0 100.0 100.0 100.0 100.0 100.0 |

|Table 4 |

|Classification and How often Students follow their Budget |

|Legend for Chart: |

| |

|A - Count Row Percent Column Percent |

|B - No Budget |

|C - Always Followed |

|D - Mostly Followed |

|E - Fairly Often |

|F - Sometimes Rarely, Never |

|G - Row Total |

| |

|A B C D E F G |

| |

|Missing Data (1) |

| |

|Freshman 24 0 2 2 5 33 |

|72.7 0.0 6.1 6.1 15.2 100.0 |

|33.3 0.0 9.1 22.2 41.7 26.6 |

| |

|Sophomore 11 2 5 3 4 25 |

|44.0 8.0 20.0 12.0 16.0 100.0 |

|15.3 22.2 22.7 33.3 33.3 20.2 |

| |

|Junior 11 5 6 0 1 23 |

|47.8 21.7 26.1 0.0 4.3 100.0 |

|15.3 55.6 27.3 0.0 8.3 18.5 |

| |

|Senior 14 1 0 1 2 18 |

|77.8 5.6 0.0 5.6 11.1 100.0 |

|19.4 11.1 0.0 11.1 16.7 14.5 |

| |

|Graduate 12 1 9 3 0 25 |

|Student 48.0 4.0 36.0 12.0 0.0 100.0 |

|16.7 11.1 40.9 33.3 0.0 20.2 |

| |

|Column 72 9 22 9 12 124 |

|Total 58.1 7.3 17.7 7.3 9.7 100.0 |

|100.0 100.0 100.0 100.0 100.0 100.0 |

|References |

|Bowen, C. F., & Lago, D. J. (1997). Money management in families: A review of the literature with a racial, ethnic, and limited income |

|perspective. Advancing the Consumer Interest. [Online], 9 (2), p32, 11p. Available: ehostvgw8. [2000,February 25]. |

|Chen, H., & Volpe, R. P. (1998). An analysis of personal financial literacy among college students. Financial Services Review [Online], 7 |

|(2), p107, 22p. Available: ehostvgw. [2000,February 10]. |

|Elliot, J. (1997). Young and in debt: A focus on prevention. Credit World [Online], 85 (4), p35, 3p. Available: proquest.oadweb |

|[2000,March 31]. |

|Family values. (1998,December). Kiplinger's Personal Finance Magazine. [Online], 52, p62, 1/3p. Available: ehostvgw2. |

|[2000,March 21]. |

|Kendrick, E. (1999). Give 'em credit: When is it right for students? Austin Business Journal. [Online], 19 (25), p26, 3/8p. Available: |

|ehostvgw2. [2000,March 25]. |

|Murdy, S., & Rush, C. (1995). College students & credit cards. Credit World [Online], 83 (5), p13, 4p. Available: |

|proquest.pqdweb [2000,March 31]. |

|Musk, G., & Winter, M. (1998). Real world financial management tools and practices. Consumer Interests Annual [Online], (44), p19, 6p. |

|Available: ehostvgw. [2000,February 10]. |

|Youth and money survey. (1999). American Savings Education Council [Online], 16p. Available: [2000,April 14]. |

|~~~~~~~~ |

|By Reasie A. Henry; Janice G. Weber, Dr. and David Yarbrough, Dr., University of Louisiana at Lafayette |

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