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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