Students get failing grades in finance
School may be out, but students still have a lot to learn.
We’re not talking physics, philosophy or anatomy. When it comes to money, most university and college students and grads are clueless about basic financial literacy.Post-secondary students are drowning in record student loan debts and don’t know the first thing about personal finances, experts say. According to a recent Money Matters on Campus survey, most respondents couldn’t answer six basic financial knowledge questions.
Financial illiteracy in Canada is high, says personal financial adviser Kelley Keehn.
“Students are looking to their parents to teach them financial basics, but their parents don’t know where to start — they’re not financially literate either!”
According to Keehn, “it’s insane that grads are entering the workforce or wrapping up their schooling without financial basics.” But it’s like health — “too often we don’t address this area of our life until there’s a glaring problem.”
Student financial stresses abound: 27 per cent worry about money, more than finding a job or their grades.
“Furthermore, 32 per cent of students have significant trouble paying their bills while at school and thousands of students each year are withdrawing from their program before graduation,” according to a 2013 BMO student survey.
“With the added anxiety of having to start paying their student loans only six months after graduating, it’s no mystery that students have to make hard financial choices, and many of them because of a lack of financial education and planning that could devastate their personal monetary future,” says Keehn, speaker and author at kelleykeehn.com.
She strongly advises spending five minutes a day learning about something in your financial life.
“Open up your credit card statements and examine every detail. Make financial goals and want lists — make it a priority in your life.”
Be sure to hit the books — money books, that is.
“After graduating is not an optimal time to do a crash course on budgets and living within your means,” financial expert Nathan Dungan says. “Suffice it to say it can be a harsh transition for grads when the First Bank of Mom and Dad is no longer open for business.”
With our society moving towards a cashless world, it’s even more dangerous for young people.
“Students don’t understand the tangibility of money,” Keehn says. “They’ve rarely held money in their hands or computed, ‘If I want to buy these shoes or go out with my friends to the movies, here’s the amount of cash I need and here’s how long it took me to earn it.’ They don’t understand negotiating skills and basics like shopping around for a better rate on their student loans.”
Keehn stresses that students need to examine needs vs. wants, and learn how to prioritize and how to save up for wants. They also need to realize the importance of a good credit score and how quickly it can be ruined.
Get educated on the cost of debt because it costs — lots! And learn the magic of compound interest, Keehn says.
“Einstein said it should have been the eighth wonder of the world…‘Those that understand it, have it and those that don’t, pay it.’”
— JOANNE RICHARD, Sun Media News Services