Financial Attitudes and Spending Habits of University Freshmen

INTRODUCTION A person's ability to manage his money is essential to being successful in life. Effective financial management strategies are important for all members of society, including college students. It has been hypothesized that students' financial management capability is pivotal to their overall academic success and retention. Views toward money have changed over time and students are now being raised in a society comfortable with debt. Instead of saving for emergencies, people are now turning to credit and credit cards to cover these expenses--and even to pay normal everyday bills! Staying out of debt is no longer valued as an important social norm. In fact, the debt-free lifestyle sought after by prior generations has been replaced with simply "paying bills on time"--and in many cases "only making minimum payments" (Diamond & O'Curry, 2003). To complicate the issue, college students are being inundated with credit card offers. University campuses have become the perfect place for credit card companies to lure students into applying for credit cards. Students are offered candy, free t-shirts, and other trinkets in exchange for their credit card application (Jones & Roberts, 2001). Four out of five universities allow on-campus solicitations from credit card companies. In return, universities charge these vendors several hundred dollars each day they are on campus soliciting students (Jones & Roberts, 2001). Students are caught up in the rush and excitement of starting college. Because of this, they are easily seduced and overwhelmed by these offers. For many, this is also a period in which they experience financial independence for the first time. These two variables (lifestyle change and financial freedom), coupled with being raised in a society comfortable with debt, can easily become a formula for a series of poor choices with money. The attitude of Americans toward debt has changed dramatically. This change has resulted in a generation of students desensitized to debt and not completely prepared to handle the financial stresses of higher education. College students are exposed to credit card offers and other opportunities to incur debt around their college campuses. Many high school students take courses that include personal financial education. However, the enormous amount of debt incurred by college students raises questions as to whether or not this financial education in high school is effective. College students need to be prepared before they are faced with important and mounting financial decisions. Current research indicates they in fact may not have the necessary financial background. A lack of financial management has actually been identified as one of the key reasons students do not complete a higher education degree. REVIEW OF LITERATURE A person's ability to manage their money is essential to being successful. All members of society, including college students, will benefit from effective financial management. Students' financial management capabilities are pivotal to their academic and personal success. Changing Perceptions of Money Americans' current views on money have a significant impact on the upcoming generation of consumers. A survey by University of California Los Angeles/American Council on Education Annual found that three out of every four students surveyed said a "very important" reason for going to college was to "make more money" (Jones & Roberts, 2001). In 1971, only one out of two (twenty-five percent fewer) students had this same response. Becoming "very well-off financially" was "very important or essential" to 74 percent of college students surveyed (Jones & Roberts, 2001). In 1971, only 39 percent of students said the same (Jones & Roberts, 2001). Having money is clearly becoming increasingly important to students. The United States has evolved from cherishing savings to revering spending (Jones & Roberts, 2001). …