Financial Literacy Now Ensures Financial Health Later – Advice for College Students

April 5, 2022

Categories: Budgets, Debt Management, Education, Financial Goals, Financial Planning, Financial Security, Tips, Youth

By Dawn Kellogg

April is Financial Literacy Month! As college students, financial literacy is especially important now as it’s a sign of how financially successful you’ll be later in life. A national study by the Financial Industry Regulatory Authority (FINRA) found that only 34% of Americans could answer basic financial literacy questions. Adopting basic financial skills and knowledge now can absolutely impact your adulthood. And you are lucky – today’s technology makes financial tools and info more accessible than ever!

What exactly is financial literacy?

Financial literacy is the understanding of fundamental financial skills and concepts. It’s not just knowing the info, but actually putting it into practice in your own life.  People who are financially literate have the confidence to make informed financial decisions, they responsibly manage their money, borrow, save, plan, and invest in their future.

The sad fact, however, is that money habits of most Americans don’t reflect a good understanding of their personal finances. Individual debt is on the rise – the average household holds more than $7,000 in credit card debt and more than $27,000 in auto loan debt. Savings are decreasing – only 50% of Americans have an emergency fund. Wages remain stagnant. And half of those with student loan debt regret their decision to borrow as much as they did.

What issues should concern you now, at this point in your life?

Student Loan Debt

This is on the increase. The total student debt has exceeded $1.6 trillion and more than 45 million individuals owe money. Of the students who graduated in 2019, 70% took out student loans with an average debt of $30,000.  Unless policies and the price of college changes, this is likely to continue to increase.

Income

A recent study found that wages for young workers have barely increased over the past 50 years, taking into account the rate of inflation. Despite their level of education, college graduates are not making more money than their parents and grandparents were at the same age comparatively, so it’s even more important to learn how to manage your money now.

Retirement

Okay, you’re probably not thinking about retirement now, because you haven’t actually started your career yet, but keep in mind that after you retire, you will have approximately 50% of your life left to live. No one knows what will happen to the Social Security program by the time you are ready to retire, and current reserves will only cover benefits through 2037. When these reserves run out, the federal government will only be able to pay 75% of scheduled payments, so you would be very wise to plan on funding your own retirement.

How can you get started?

You are a college student in a thriving learning environment. Why not take a finance course? MCC offers a course in Personal Money Management.  There are also many online resources to get you started on the road to financial literacy (see below). Make sure that the info you obtain is from a reputable resource. You might want to seek out the advice of a financial professional who can help you set some long-term goals. Your school might have access to financial professionals who can offer advice at a free or reduced rate. Also, check with your bank or credit union to find out what tools or services can help you learn more.

Members of The Summit Federal Credit Union have access to a wealth of resources and tools including GreenPath Financial Wellness: Click here for more information on financial literacy matters!

Taking steps now can ensure your financial health for the rest of your life!

Other online resources:

MyMoney.gov – a financial education website created in 2003 by the Financial Literacy and Education Commission.

Consumer Financial Protection Bureau – resources including answers to money questions, housing resources and more.

U.S. Securities and Exchange Commission – tools to help you protect your investments and financial future

United Way – has information on financial planning in their MySmartMoney section.