Institutions of higher education are moving beyond helping students learn about financial aid options to teaching students how to manage their personal finances and spending habits.
Recent research reveals that an alarming percentage of Americans struggle with meeting monthly living expenses. According to the 2016 Financial Literacy Survey conducted by the Harris Poll, only 40 percent of U.S. adults (ages 18 or older) say they have a budget and keep close track of their spending. This percentage has remained steady since 2007.
Which raises the question: How are the remaining 60 percent of U.S. adults managing their personal finances? Perhaps the answer is in the statistic that one in three U.S. adults says that their household carries credit card debt from month to month.
In institutions of higher education, there is an even bigger issue. Many college students tend to lose focus on their educational goals when financial struggles take over. Students working full-time or even part-time jobs find that when choosing between work and the requirements of college, work often has to take priority over studying. This results in poor academic performance, which in turn impacts students’ future eligibility for financial aid. It can be a vicious cycle that eventually leads to students dropping out and not completing their educational goals.
As anyone who has faced financial difficulties can attest, money problems can be overwhelming and stressful. Managing finances, particularly when money is limited, can impact a person’s overall health and well-being. When working with students to create a budget, if a person is living beyond his or her means, the initial response is to increase income by getting a job or even a second job, taking on more hours at work, or looking for a new job with a higher salary.
The focus becomes how to increase income, but what about the other side of that equation — reducing expenses? The reason that solution doesn’t automatically come to mind is that reducing expenses requires sacrifice, and depriving oneself is not always easy. In essence, financial education starts by changing mindsets. As Dave Ramsey, financial author and radio host, states, “Living on less than you make is a matter of controlling yourself, not a matter of math.”
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“Putting numbers on paper is just the first step. Teaching people how to live within the means of a budget is the root of financial education.”
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Moving beyond the numbers
Financial education moves beyond creating a budget. Putting numbers on paper is just the first step. Teaching people how to live within the means of a budget is the root of financial education. If someone’s monthly budget only allows for $50 a week for groceries, how does someone shop to get the most of that money? What sacrifices have to be made? How can someone use coupons and comparison-shopping to keep the grocery bill within the determined budget? What about variable expenses that can be negotiated, such as cellphone bills and cable television?
The discussion then becomes needs versus wants and goal setting. Goal setting also allows students to see that working more hours to afford personal expenses can result in taking fewer classes or performing poorly in academics. This is sacrificing long-term goals (education can lead to higher income and more financial stability) for short-term gains.
The results
Financial literacy does not just impact the individual. It has a significant impact on the overall health of the nation’s economy. When young people delay marriage due to financial issues, delay buying a house or car or cannot qualify for credit, the economy suffers from a decrease in consumer spending.
Financial literacy is a lifelong process as financial concerns and challenges change depending upon age; however, the process of educating people on basic financial principles has to start somewhere. Higher education is the best place to start. If financial education awareness and healthy financial habits start early, students will carry these financial literacy skills with them throughout life.
Greenville Technical College is working to become part of the solution. In April 2016, Greenville Tech opened a new Financial Education Center. The Center’s vision is to provide financial education to empower students and employees to attain their academic, career and life goals. This includes programming and individual consultations on budgeting, spending, understanding credit and credit scores, debt management and online security.
To learn more, visit gvltec.edu/financial-education.
