An Analysis of Personal Financial Literacy Among College Students
and experience;and the consequences of having inadequate knowledge.
Results suggest that college students need to improve their knowledge of personal finance. Although the questions included in the survey are fairly basic, the overall mean of correct answers for the survey is about 53%. None of the mean scores for each area of general knowledge, savings and borrowing, insurance, and investments are above 65%. By far the weakest area is investment, where on average the participants answered about 40% of the questions correctly. Lower levels of financial literacy are found among subgroups.They include those who are non-business majors, in the lower class ranks, women, underage 30, and have little work experience. It is also found that participants with less knowledge tend to hold wrong opinions and make incorrect decisions in the areas of general knowledge, savings and borrowing and investments. While there is little difference in their opinions regarding insurance, the less knowledgeable participants are more likely to act incorrectly. The predictive ability of personal finance knowledge shows that improving college students' knowledge is important. Without adequate knowledge, they are more likely to make mistakes in the real world.
Our conclusion is that college students are not knowledgeable about personal finance.The incompetency will limit their ability to make informed financial decisions. Together with evidence provided by the research conducted in the past three decades, the findings of this study suggest that there is a systematic lack of personal finance education in our education system. The lack of education has resulted in serious financial illiteracy found in the American public. The illiteracy and its costly consequences have made individuals worry about their finances to the extent that their productivity in workplaces is affected (CHRGI,1995). When individuals cannot manage their finances, it becomes a problem for the society.This challenging issue needs to be addressed.
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