U.S. Bank, the fifth-largest commercial bank in the United States, recently released its 2015 U.S. Bank Students and Personal Finance Study based on a survey of 1,640 college students. Half of those surveyed said they would give themselves a “C” or below when asked how successful they are in managing their money.
The good news—parents can help. The survey found that 91 percent of students learned about money from their parents, either directly or by example, and 55 percent of students identified their parents as the number one influence on their financial habits, as well as their go-to source for financial advice.
“Personal financial knowledge and confidence is critical to the health of our national economy,” said Robyn Gilson, vice president of strategy and insights at U.S. Bank. “It has never been more important for parents to engage in an ongoing dialogue with their children about personal money management and ways to maintain good financial habits. Students need to feel informed, prepared and confident in the decisions they are making today, which can impact them for years to come.”
U.S. Bank’s survey, which included a 12-question true/false quiz, uncovered gaps in students’ overall understanding of personal finance, especially in three critical areas: budgeting, credit and/or saving for the future.
- Twenty-one percent of students say they are barely keeping up on day-to-day expenses. (Only five percent of students say they are prepared for unexpected expenses.)
- Forty-four percent say they have little to no knowledge of creating and maintaining a budget.
- Sixty-five percent grade themselves a “C” or worse in managing their money.
- Only 39 percent of students correctly know that paying off a delinquent loan or credit card balance is not enough to remove it from a credit report.
- Sixty percent believe using checks and debit cards can help build credit.
- Forty-seven percent believe a co-signer will not be held accountable for paying off the loan if the student doesn’t find a job.
Saving for the Future
- Sixty-three percent of students think 401k investments are guaranteed or don’t lose value.
- More than 60 percent say they had little to no knowledge of investments or retirement savings.
U.S. Bank also recommends parents work with their college-aged children to implement easy changes that can have a long-lasting positive impact on their financial futures. Find this and other useful information at U.S. Bank Financial Genius.
- Watch for opportunities to start the conversation. “I need a car” or “I landed that summer job” are perfect door openers. Identify wants versus needs. Budget weekly expenses and how much they need to save for school. Check in on a regular basis—but don’t nag.
- Be honest and open—don’t dodge the hard questions. Include your son or daughter in conversations about the family budget. Talk about times when you’ve had to wait to purchase something you really wanted to buy.
- Use your bank as a resource. Many bankers are parents too, often with similar college-age challenges. Ask how they relate to their students about money.
Use the resources banks have available—from mobile and internet banking to credit score tools and educational materials.
Teri Charest writes for U.S. Bank Corporate Communications.