Evidence of Financial Literacy and Financial Knowledge Among College Students. (Term Paper Sample)

Assessment 2 Student’s Name Institutional Affiliation Evidence of Financial Literacy and Financial Knowledge Among College Students. College students are at a crucial point in their lives as they move from financial dependence to financial independence. Healthy financial management is, therefore, an essential factor for a student’s sustainability and success. Research indicates that there is an increasing debt issue among college students. The paper aims to compare and contrast researches articles for evidence of financial literacy and financial knowledge among college students. The study by Blair Kidwell and Robert Turrisi- An examination of college student money management tendencies- purpose to determine budgeting tendencies of college students. The study involved 189 college students of 18 to 26 years, who participated in a 30-minute session as part extra credit opportunities for required upper division course. The results were drawn from the following determinants; affect, attitude, past behavior, subjective norm and perceived control. All these components of the model for budgeting tendencies contributed to the prediction of the perceived control. The study found that negative affect, attitude, subjective norm, past behavior, and moderating influences of perceived control were a significant determinant of intention to keep a financial budget. The study proposed that maintaining a budget may suppress the negative feelings associated with the consequences of financial debt. The study, “Personality Factors, Money Attitudes, Financial Knowledge, and Credit-Card Debt in College Students’, explores the issue of credit card among college students (Norvilitis et al., 2006). The determinants in the study were; personality factors, attitudes towards money and financial knowledge as predictors of credit card debt. The participants were 448 students from five colleges in three states in the United States. Students answered a 35 question survey about credit card and commercial use. The study found that lack of knowledge is directly related to debt. They also note debt is also as a result of other multiple factors but not necessarily limited to financial education. Jing Jian et al. paper on ‘Earlier financial literacy and later financial behavior of college students’ explores effects of financial literacy among young adults. The study conducted its research twice- with first year students (baseline, T1) and secondly with fourth year students (T2)- on an online survey. T1 survey involved 1924 students while T2 surveyed 1511 students. The data analyzed was from 1100 students who responded positively. The control variables in this study accounted for; gender, parental SES (Socio Economic Status), cognitive ability measured by GPA (Grade Point Average) and credit card holding status. The study finding observed that prior financial knowledge has less impact on borrowing behavior. Lower GPA was associated with risky paying behavior. The opposite is exact for students with higher GPA (higher academic achievement). The research was necessary in highlighting the limitation of content knowledge in encouraging financial behaviors. ‘Financial Socialization of First-year College Students: The Roles of Parents, Work, and Education’ by Soyeon Shim et al. study confirms the Jing Jian et al. study. It affirms that financial knowledge was directly linked to financial behavior. In this study a total of 2,089 first-year college students participated in the survey. The purpose of the project was to explore the financial socialization of young adults to their family, friends, and associates. The participants completed surveys and conclusion drawn from analyzed results. The finding in the research indicates perceived behavioral control plays a crucial role in the financial socialization process. The research also asserts that parent’s financial behaviors impact on their children. Cliff A. Robb article on Financial Knowledge and Credit Card Behavior of College Students also delves into the topic of financial knowledge. He argues that credit card decisions go hand in hand with financial knowledge. The sample in his study consist of 1,354 students. Data were collected over an online survey. The financial variables were sex, race, year in school, parent’s income, employment and whether students had taken a course in personal finance. Like Jing Jian et al. greater financial knowledge is associated with more responsible credit card use behavior. The six-question measure limits the nature of the financial knowledge measure. The researches were limited in that they used different measures of financial knowledge. Emphasis should be place on the development of a consistent, universal and harmonized measure. Such efforts will be crucial for future comparison of such kinds of research. All studies found a correlation between financial knowledge and the accumulation of financial debt among college students. Subjective financial knowledge individual’s belief about one’s understanding of financial knowledge increases risky debt payment. Objective knowledge is defined as accurate knowledge of credit content. College students in an prior financial understanding was associated with decreased risky paying behavior (de Bassa Scheresberg, 2013). Jing Jian et al. refutes this claim by suggesting that prior financial knowledge-both objective and subjective play a minor role in reducing young adult’s risky financial behaviors. If parents have better financial literacy they can contribute to their children financial success later in life. He however upholds financial literacy which is an accumulation of knowledge from handling finances both positively and negatively. Their research advocate for inclusion of financial literacy to the curriculum. Clearly, in a culture that demands individual responsibility and self-sufficiency financial literacy is vital. Attitude toward financial matters intertwines with financial knowledge. Attitudes, values, and beliefs toward financial practices are influenced by how financially literate one is. These then encompass the final decision making and are reflected in a person’s financial habits and spending. It is essential to have financial knowledge to guide on financial management practices such as savings, spending, loans, credit card debt. Having a positive attitude toward financial management produces an overall positive effect on an individual’s intention to utilize his/her finances. From the research, College students with a positive attitude were found to embrace positive practices such as budgeting and saving. One of the research questions the survey answers is about the relationship between three components of financial literacy; knowledge, attitudes, and behavior (Kidwell & Turrisi, 2004). From the studies, college students have better financial attitude and behaviors than financial knowledge. Furthermore, it is shown that there exists an increasing relationship between the three components. The better the knowledge of the student about the financial topic (knowledge) the better the financial attitudes. The use of GPA as a measure of financial knowledge shoul...