Money Management Practices of College Students

By Henry, Reasie A.; Weber, Janice G.; Yarbrough, David 2001

Article excerpt

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. …

https://www.questia.com/library/journal/1G1-77399632/money-management-practices-of-college-students

A DESCRIPTIVE RESEARCH ON ALLOWANCE AND BUDGET OF ABM SENIOR HIGH STUDENTS (GRADE 11-12) OF

ST. MICHAEL’S COLLEGE IN ILIGAN CITY

Kro Kro

 
CHAPTER 1The Problem and Its Background
This chapter covers the introduction, background of the study, statement of the problem,conceptual
framework, scope and delimitation, significance of the study and definitions of terms.
Introduction
Going to Senior High School is an important part of any person's life. It is probably the first timestudents get to
experience independence. Being independent is both a privilege and responsibility. To be aresponsible student
isn't something that can be achieve overnight. It needs to be put in mind and be anattitude. One of these responsibilities is
managing their allowance (Kazmier, 2004).
 
One of the challenges thatevery student encounter is to manage the money their parents provide them. Many students are
having ahard time in terms of budgeting their allowances. Money as one of the main necessity plays a
significantrole in every student to survive Senior High School (Babbie, 1997 ).
 
Students on the other hand, learn to save their allowance as they grow and meet differentrequirements in school
as well as things they want to buy for their own. Budgeting is one of the practicalskills that come in useful for them
(Norvilitis, et al., 2006). It helps them to attain a better understanding offinancial matters that would become
handful in their future. The manner in which the students manage theirmoney depends on their daily needs;
somehow it changes due to some factors. Students have theirpersonal needs, and through this study we will know how and
where they generally spend their money. Themore knowledge students have about their financial responsibility and status the
less likely they are to be indebt (Norvilitis, et al., 2006). According to study women are more likely to report having
a budget than men(Norvilitis, et al., 2006). Allowance is a necessity for every student (Micomonaco, 2003). It is
a means ofsurvival. It can also help students be financially responsible. Being essential, it just is right to state
that students shall be able to budget their allowance appropriately. The problem is how to do it. Doing so
isn'teasy since students need to manage their allowance between their needs and wants. Also some only havea limited
amount of money. Proper budgeting is important. If done responsibly, it can give both thestudents' needs and
wants.Due to factors that can affect budgeting, there exists a difference on planning a budget. Themanner in
which college/senior high school students manage their money is based on several factors suchas age, personality traits, and
knowledge (Gordon, 2010). This is the main focus of the study - thepersonal budgeting practices of students. To assess if the
students possess financial management skill. Toknow how they manage their finances and the impact of the variables
to their personal budgeting practices.This study focused on the students of
ABM Senior High School of the St. Michael’s College in doing their budget daily. This study will also benefit the
students as well as helping them to improve their budget planning, make a recommendation based on the respondents
what are the best thing to do in budgeting their allowances and also the things that they need to change in
their budget planning. The main purpose of this study is to find answers from the respondents as to how and where
theyspend their money every day. Budget as the main subject of this study will focus on the proper allocation
ofallowances of every student in order for them to properly utilize their daily, weekly or even
monthlyallowances. Of course budgeting will be different depending upon the student. Budgeting will be
morecrucial most especially if the student is living in a dormitory wherein he himself is the master budget of
hisdaily needs.

https://www.academia.edu/37042669/A_DESCRIPTIVE_RESEARCH_ON_ALLOWANCE_AND_BUDGET_OF_ABM
_SENIOR_HIGH_STUDENTS_GRADE_11-
12_OF_ST._MICHAELS_COLLEGE_IN_ILIGAN_CITY_CHAPTER_1_The_Problem_and_Its_Background

A Literature Review On Financial Literacy

Introduction
2014

Financial literacy has ever-increasing importance in our day. Especially in economic and
nancial domains, whether people are nancially knowledgeable helps greatly in explaining
various fnancial or economic behavior. Decision makings of economic agents are highly shaped
by their nancial literacy regarding understanding fundamental nancial topics. In the course of
time, individuals have increasingly been more active agents who are responsible for their nancial
planning than even before. In fact, this increased responsibility fundamentally could have
stemmed from an humanistic need- preserving self, since recent crises predominantly damaged
the naive and the inexperienced. In one hand, global crisis, known as subprime mortgage crisis in
2008, can be said to bring nancial comprehension into the forefront (Mandell and Klein, 2009, p.
16; Robb and Woodyard, 2011, p. 60; Shahrabani, 2012, p. 156). On the other hand, the two main
issues may contribute to this nancial comprehension’s importance (Rooij, Lusardi and Alessi,
2007, p.2). First, the diversity of nancial products, many of which are rather complicated and
inapprehensible necessiates knowing and understanding nancial concepts and matters. Mandell
and Klein (2009, p.16) states that this variety of nancial products in US has been come along
aer the advent of nancial markets deregulation. Second, last social security change in US, in
fact all over the world, requires individuals to actively act in their nancial management. One
way or another, understanding nancial concepts and recognizing nancial instruments seems
substantially essential for individual’s all nancial decisions.
Akerlof and Schiller (2010, pp.147-162) in their book of “Spiritus Animalis” argue the saving
problem in that many people, on average, do not save enough and this problem could direct
them to remain unprotected in their old age at that time they could no more money and their consumption
could exceed their income. However put mainly emphasis on cultural di erences

in savings, they also refer to the power of compound interest and to their students’ unawareness
of this power.
Moreover, there have been some studies revealing that nancial knowledge made a di erence
in investment risk perceptions. More specically, Diacon (2004, p.187) detected signi cant
dierences between nancial experts and lay people who have less nancial knowledge compared
to nancial experts. Accordingly, lay people tended to have more risk averse than nancial
experts and to expose to aliation bias (i.e., nding suppliers and salesman more credible than
lay people). Also, these people viewed as having less nancial knowledge think more likely that
nancial products are too complicated. In another study (Wang, Keller &Siegrist, 2011, p.11),
authors conducting a risk perceptions survey in Switzerland highly correlate knowledge-related
scales with risk-related scales. And they conclude that the participants viewed some investment
products more understandable perceived the same products less risky. erefore, nancial literacy
would make greater dierence in nancial settings than it is thought.
Nevertheless, there is a large and growing body of literature revealing that individuals have
the deciency of nancial literacy which would assist them to make wise nancial decisions (e.g.,
Guiso and Jappelli, 2008, pp. 1-36; Al-Tamimi and Bin Kalli, 2009, pp. 500-516; Shahrabani, 2012,
pp. 156-163). In a study conducted by OECD in 14 countries, Atkinson and Messy (2012, p.7)
concludes that nancial illiteracy is prevalent in many countries (e.g., Albenia, Poland, Malaysia,
UK, South Africa). It seems that people around the world suer from the lack of nancial
knowledge no matter in which country they live-developed or not. Beside, recent evidence
displays that being unable to understand nancial topics may be the underlying reason of
portfolio underdiversication (Guiso and Jappelli, 2008, pp. 1-36), lower stock participation (Van
Rooij, Lusardi and Alessi, 2007, pp. 1-46), unpreparedness for post-retirement times (Lusardi
and Mitchell, 2007b, pp. 35-44), wealth unaccumulation (Van Rooij, Alessi and Lusardi, 2012, pp.
449-478), etc. Although the existence of a considerable and valuable prior research describing the
role of nancial literacy on nancial behavior, little eort has been exerted to explain in which
way nancial literacy may inuence nancial behavior. Beside, this studies- however manifested
in some- while investigating the eect of nancial literacy on any nancial behavior or outcome
have not included any other explaining variable. Limited studies have examined several variables
other than nancial literacy such as risk aversion (Van Rooij et al., 2011, p.23), self-regulation,
future orientation (Howlett, Kees and Kemp, 2008, pp.227-230), risk tolerance (Van Rooij, Kool
and Prast, 2007, p.705), negative emotions, past behaviors and attitudes (Shahrabani, 2012, pp.
157-158), role of self-perception (i.e., internal versus external locus of control) (Perry and Morris,
2005, p.300), trust (Lachance and Tang, 2012, p.213). A great majority of studies regressing a
tough and complicate nancial decision making or intricate nancial behavior on merely nancial
literacy estimator implys that relevant literature requires to be expanded for more thoroughly
comprehension of this complex and uneasy processes.
1. Defining Financial Literacy
In social sciences, it is indispensable to dene an abstract concept to be able to operationalize
or to measure it. Yet, it seems that large body of nancial literacy literature has been lacking in
dening nancial literacy (Huston,2010). Indeed, there are limited number of studies giving an
exact denition.
Lusardi and Mitchell (2007b, p.36) used the denition of OECD (2005). Accordingly,
nancial education is dened as “the process by which nancial consumers/investors improve
their understanding of nancial products and concepts, and through information, instruction, and/
or objective advice, develop the skills and condence to become more aware of nancial risks and
opportunities to make informed choices, to know where to go for help, and to take other e ective
actions to improve their nancial well-being”. Servon and Kaestner (2008, p.273) de nes nancial
literacy as “a person’s ability to understand and make use of nancial concepts”.
According to Huston (2010, p.306), nancial literacy such as health or general literacy might
be conceptualized with two main dimension: understanding personal nance knowledge and
using it. Hence, it could be described as “measuring how well an individual can understand and
use personal nance-related information”. It is also added that this description is coherent not only
with other literacy concepts but also with denitions in the extant nancial literature.
On the other hand, it would be better to remunerate some prior research. Albeit the absence of
an exact or explicit denition, few authors have identied this concept with its important aspects.
To exemplify, Wachira and Kihiu (2012, p.42) states that nancial literacy helps consumers in
being prepared for dicult times by determining risk mitigant strategies, and in using nancial
products eectively, most importantly in making plausible decisions. Also, in other study,
becoming nancially literate refers to possessing knowledge and cra in order to handle money
well (Howlett, Kees and Kemp, 2008, p.231).
Finansal Araştırmalar ve Çalışmalar Dergisi • Cilt: 5 • Sayı: 11 • Haziran 2014, ss. 33-49
37
Meanwhile, in nancial literacy studies, it can be largely seen that nancial literacy is
interchangeably termed with nancial education, nancial knowledge or nancial sophistication
in the literature (e.g., Howlett, Kees and Kemp, 2008, pp.223-242; Al-Tamimi and Bin Kalli,
2009, pp.500-516; Smith, Finke and Huston, 2011, pp.3-15; Yoong, See and Baronowich, 2012,
pp. 75-86). Here, it necessiates to clarify one issue. Researchers should behave cautiously to the
term “nancial education”. Some studies, indeed, does not mean nancial literacy with the term
“nancial education”. More specically, Bayer, Bernheim and Scholz (1996, pp. 1-29 ) examine a
retirement seminar’s possible impact on nancial decision makings with the title of “ e E ects
of Financial Education …….”. Similarly, profounding that uncertain e ect of nancial education
on succeeding nancial behavior in the extant literature, Mandell and Klein (2009, pp. 15-24)
explores the inuence of a particular nancial course on subsequent nancial behavior. Although
it must be careful to make inference from results due to the very small sample size in this study,
the aim of this exemplication here is to warn researchers not to cause any misunderstandings.
In other words, however substituting for nancial literacy at times, nancial education in some
authors’ studies may really refer to “nancial education”
https://www.researchgate.net/publication/267641595_A_Literature_Review_On_Financial_Literacy

Importance of Money Management

By Brian Hill & Reviewed By Ashley Donohoe, MBA - Updated January 26, 2019

Good financial sense – sticking to a monthly budget and living within your means – is part of money
management. But it also takes study and effort. You have to learn how to keep an eye out for bargains and
when to avoid a bad deal on a purchase. As you progress in your career and earn more money, understanding
how to invest it wisely becomes important to reaching milestones such as having the down payment for a
home.

Have Better Financial Security

Being a good money manager allows you to accumulate savings. This gives you the security of knowing that
you have the resources to deal with unexpected expenses – such things as the car breaking down, your dog
destroying your new sofa while you were at work or your boss politely suggesting you should seek
employment elsewhere. If you reviewed your expenditures for an entire year, you would see that unexpected
expenses inevitably occur. Having savings available means you don’t have to use credit cards to pay for
emergencies.
Take Advantage of Opportunities
From time to time, we all encounter opportunities to make more money or have an interesting experience. A
friend may alert you to an investment opportunity, or you may find a terrific deal on a once-in-a-lifetime
vacation. It’s frustrating to not have the cash available to take advantage of these opportunities. People who
have been successful at managing their money get to go to exciting events like the Masters Golf Tournament,
while those who have mismanaged their money stay home and play miniature golf with their somewhat
annoying relatives.
Pay Lower Interest Rates
Your credit score is one measure of your money-management skill. A high score means you have paid your
bills on time and kept your total debt level relatively low. Achieving a high score has rewards that can help you
keep more of what you earn because you will be charged lower interest rates for home mortgages, credit
cards and auto loans – even insurance on your car. And, of course, you can brag about your high score at
parties.
Reduce Stress and Conflict
Not being able to pay your bills by the due date, or finding you are always broke at some time during the
month can lead to significant amounts of stress for a couple, resulting in conflict over financial objectives and
spending habits. A 2017 study from the American Psychological Association found that 62 percent of
Americans are stressed about money. That stress can lead to health problems, experts say, including
migraines, cardiovascular disease and insomnia. Learning how to manage your finances so you have a surplus
of funds can relieve this pressure and allow you to enjoy life with your partner rather than being in a constant
state of worry about the future.
Earn More Money
As your incomes grow, your financial planning will not just involve budgeting so that all the expenses are
covered each month, but also determining how to invest the surplus that accumulates above what you spend.
Becoming knowledgeable about investment vehicles such as stocks and mutual funds can allow you to earn
more on your investment funds than you could by leaving them in a savings account at the bank. Bear in mind
that dog tracks or offshore casinos are not generally recognized as sound investment vehicles. The great thing
about having investments is that while you are at work earning money, your investments are also working for
you.
https://budgeting.thenest.com/importance-money-management-3204.html

Reasons Why You Should Budget Your Money

BY MIRIAM CALDWELL 
 
Updated August 04, 2019

Budgeting is one of the biggest keys to managing your money. Many people are often turned off by
the simple term budget. They associate it with restrictions and a lot of hassle and headaches. They
may feel like they are too poor to budget or have other budgeting excuses. However, budgeting can
save you money, and allow you to have more to spend by helping you to make the most of your
money. Your budgeting style can determine how successful you are at budgeting.

Here are five things that will help you look at budgeting in a new light. You may also want to review
these reasons to start budgeting.

01 Stops Overspending
Most people who do not have a budget end up overspending each month. It limits their spending
power in the future as more and more of their salaries have to be applied to debt payments. If you are
worried about restricting your spending, consider what it would feel like to have the majority of your
paycheck be applied to credit card payments. The stress of finding a way to pay for the rising cost of
gas and food can be astronomically when most of your paycheck is already planned.

 User your budget to help you determine when to stop spending.

 An envelope system or budgeting software can make the process easier.

02 Helps You Reach Your Goals

A budget is a plan that helps you prioritize your spending. With a budget, you can move to focus your
money on the things that are most important to you. It may be getti ng out of debt, saving up for a
home or working on starting your own business. Your budget creates a plan and lets you track it to
make sure you are reaching your goals.

 Set aside money in your budget each month for your goals.

 Your budget will help protect the money you have already saved.

03 Helps You Save Money

People who do not have a budget tend to save less money than people who do. It is because when
you budget you assign your money to do certain things. It allows you to automatically put money into
a savings or investment account each month. A budget can help you stop dipping into your savings
each month. As you do this, you will begin to build wealth. It will give you true financial freedom in
the future.

 Budget money to transfer into savings each month.

 Use your budget to help you stop dipping into your savings or emergency fund by planning for
your expenses in advance.

04 Helps You Stop Worrying

Most people do not like the restrictions that having a budget puts on them. However, you decide how
much you spend in each category. So if you want to put a large portion of your money towards your
leisure activities, as long as you are saving and meeting your other needs, you shouldn't feel bad
about that. However, once you set up limits, you need to stick to them. If you aren't doing that, you
may have a budgeting weakness that you need to address. Budgeting is not about limiting the fun in
your life, but opening up opportunities and money to have more fun. The key is remembering to
include these categories in your budget.

 You will know how much you have to spend on each category.

 You will be able to stop spending when you no longer have money available.

05 Allows You to Be Flexible

Budgeting can be flexible. You can move money between categories as you need to throughout the
month. Generally, you should restrict yourself from touching the money you have set aside for
savings, but you can adjust the amount you spend on each category as you go. It is another way that
you can keep yourself from overspending. It also allows you to recognize issues and adjust so that you
do not end up eating ramen at the end of every month.

 Budgeting lets you adjust to cover unexpected expenses as they happen.

 Learn how to transfer money between categories in your budgeting software.

06 Budgeting Puts You Into Control

If you feel like you are not in control of your money and you are constantly wondering where it went
and what happened to it, budgeting can put you in control. It allows you to prioritize your spending,
track how you are doing and realize when you need to stop. It puts a solid plan into place that is easy
to flow and gives you the chance to plan and prepare for the future. It is the biggest tool you have to
change your financial future, and it gives you the power to make changes starting today.

 Checking on your budget each day can help you to monitor it and keep you from overspending.

 Making decisions at the beginning of the month makes it easier to manage your money.
07 Budgeting Can Be Simple

A simple budget written on a notepad

Budgeting can be simple. You can simplify the process by using percentages of your income to cover
your set expenses, savings amounts, and your spending money. Then you simply track the money as
you spend it. This means there are fewer categories and a lot more flexibility. You may decide to
switch to an envelope system, which eliminates the need to track your spending.

https://www.thebalance.com/reasons-to-budget-money-2385699