WASHINGTON, Aug. 30 — From buying new books and clothes, to signing up for a credit card, to going out with their friends, back-to-school season means back-to-school spending for millions of students around the country. That’s why this school year, the American Savings Education Council (ASEC) urges parents to talk to their kids about personal finance. The 1999 Youth & Money Survey found that though personal finance classes are offered in schools, most students would rather get their savings lessons at home.
The 1999 Youth & Money Survey, released in April by ASEC, the Employee Benefit Research Institute (EBRI), and Mathew Greenwald & Associates shows that 94 percent of students ages 16-22 say they turn to their parents for financial advice. Ironically, the 1999 Retirement Confidence Survey (RCS) found that one-third of adults do not think they are disciplined at saving, 30 percent spend money compulsively, and over 40 percent do not pay off their credit cards at the end of every month.
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“Students today are more money savvy, but they are also bombarded with opportunities to spend,” said Don Blandin, President of ASEC. “Our survey shows that students are turning to family and friends (instead of schools) for financial advice, so it is vital that everyone learn the facts about saving and investing.”
The youth survey found that only 21 percent of high school and college students have taken a course on personal finance in school (almost 80 percent have not). That isn’t for lack of opportunity since 62 percent of students say their current school or a prior school they attended has offered a financial education class.
At the same time, students who took a personal finance course said they felt more knowledgeable about money management, but the survey found that they were no more likely than nonattendees to think it is important to save money on a regular basis, or to actually save money that they receive from jobs and/or allowances.
The survey also shows that today’s students have significant work experience and are making money. Forty-one percent of students worked full time last summer (35 or more hours per week), according to the survey. Twenty-four percent of students typically earned $5,000 or more annually, and only 36 percent earned less than $2,500 in a year. The youth survey, underwritten by the TIAA-CREF Institute, also shows that 39 percent of students receive an allowance or other regular money from their parents (59 percent of the allowance is tied to either grades or chores).
What are students doing with their money? According to the Department of Education, students used credit cards to borrow $38 million last year, compared to $27 million in 1997. The Youth & Money Survey found that 28 percent of students with credit cards already are rolling over credit card debt each month. Other top items and expenses paid by students include: entertainment (82 percent); clothes (58 percent); car or related expenses (50 percent); vacation or trips with friends (45 percent); and school needs (31 percent). Students are also investing their money in mutual funds (18 percent); stocks (18 percent), and CDs (16 percent).
