Wednesday, June 06, 2007

Money Poem From 6th Grader

A money poem written by a 6th grader for a contest:

M — Millions and millions would be nice.

O — Or maybe you can double that twice!

N — Now that you know you can save in an account.

E — Even if you don't have a grand amount,

Y — You can start a savings account, this way you will never run out!

from Cape Cod Online

Thursday, April 12, 2007

College Students Learn Personal Finance From Their Parents

The majority of college students say they learn the most about personal finance from their parents, but less than half of students say their parents make a consistent conscientious effort to teach them, according to a new survey of over 2,000 students and parents conducted by The Hartford Financial Services Group, Inc. (NYSE: HIG).

Parents of college students have a somewhat different view. Nearly two-thirds (63 percent) of the parents surveyed say they definitely see personal finance education as their responsibility and consistently make the effort to teach their children about it, compared to the only 41 percent of students who say their parents did. About 70 percent of college students cite parents as their primary source of information.

The need for better personal finance instruction for young adults is one issue on which both groups see eye-to-eye: Students and parents agree that college students are not well prepared to deal with the financial challenges that lie ahead. Less than one-quarter of students (24 percent) and only 20 percent of parents say students are very well prepared to deal with the financial challenges that await them after graduation. Moreover, more than three-quarters of students (76 percent) wish they had more help preparing for their financial future, The Hartford survey found.

“These findings highlight the fact that many parents are stepping up to the task of teaching financial basics at home,” said Dr. Susan Coleman, Ansley Professor of Finance at the University of Hartford and advisor to The Hartford’s Playbook for Life financial education program. “At the same time, however, students don’t always get the message the first or even second time around. These concepts, which are new to most young people, require frequent reinforcement at home and elsewhere.”

Dr. Coleman emphasizes that acquiring personal financial expertise is a continuous learning activity that should begin at an early age. Parents can initiate and lead the learning process in any number of ways, but, she adds, “It’s important to invest time and effort on an ongoing basis to reinforce those lessons.” She offers parents the following suggestions for raising financially-savvy young adults:

  • Model good personal finance behaviors. Be a good role model by setting goals, creating a budget, using credit responsibly, and making saving and investing a regular practice. In other words, live your financial values.

  • Give children responsibility for their finances. Help your children accept personal responsibility for their financial situation at levels appropriate for their age. Require them to earn an allowance by doing chores and helping out, rather than just giving them money. Don’t buy them everything; instead, teach them to set goals and save for things they want. And don’t be so quick to bail them out – allow them to suffer the consequences of poor financial decisions.

  • Help students budget in college. For each year of college, help them determine the anticipated expenses – such as tuition, books, food, transportation, clothes and entertainment – for which they will be responsible. Then, determine how they will pay for those expenses – a part-time job, summer work – and make sure anticipated expenses and income match.

  • Be candid about credit. Have a frank discussion about responsible use of credit cards before your college student gets bombarded with offers at school, and before he or she gets into trouble. Explain that credit should be used for emergencies – not every small purchase. Also, make it clear whether you plan to subsidize that credit card usage, or whether he is on his own.

  • Discuss career options. Point out that there are different rewards – monetary and non-monetary – associated with different types of careers. It’s not obvious to young people that different career paths bring various economic outcomes and lifestyles.

  • Seize teachable moments. College breaks and summer vacations provide opportunities for renewed dialogue about personal finance. Recognize and praise responsible financial behavior whenever it’s exhibited.

    “Parents play a crucial role in financial literacy because students get the majority of personal finance information from them,” says Dr. Coleman, “Young people value their parents’ experience and look to parents for this kind of information and guidance. But it’s important to recognize that financial expertise is a life-long goal. Many young people are overwhelmed; they think they are supposed to know everything and are bewildered that they don’t. We must keep in mind that financial skills are acquired bit by bit over the course of a lifetime.”

    Few students head off to college with any formal instruction in personal finance. According to a study by the National Council on Economic Education, only seven states required personal finance classes in high school in 2004. Moreover, the study found that students entering college get a failing grade on personal finance knowledge, scoring 53 percent (F) on a basic 24-question quiz on economics and personal finance.
  • Saturday, March 31, 2007

    Frustration With Aid Applications

    One of the issues with applying for student loans that is often overlooked is the time and frustration that goes along with it. Even at my age, I don't like to become frustrated (and throw a tantrum when I do). The Chicago Tribune has an article on how College aid forms tests families' pain threshold:

    If you have just finished applying for financial aid for a college student you might have a few gray hairs.

    Filling out a FAFSA—the form required for obtaining low-interest federal loans and college grants and scholarships—is a grueling process. It's so confusing and time-consuming that parents often start to think of their tax return as a walk in the park by comparison.

    The good news? There's a bill called "College Aid Made EZ Act" that is intended to make it easier to apply for financial aid by simplifying the Free Application for Federal Student Aid form working its way through Congress. The best option is not having to apply for these loans by saving early, but for those that do, making the process as simple as possible is always a good goal.

    Thursday, March 29, 2007

    14 Ways To Find Financial Aid

    While this is not something that I am going to have to worry about since I'm starting my college savings early, that is not the case for everyone out there. Here are 14 proven ways to get financial aid from NextStudent

    1. Search Far and Wide
    2. Apply, Apply and Apply
    3. Remember Cutoff Dates
    4. Go Local
    5. Be Careful Where You Put Your Money
    6. Network
    7. Look into Fellowships and Grants
    8. Match up Your Interests
    9. Serve Your Country
    10. Look to Your Roots
    11. Go Rural
    12. There’s Always Begging
    13. Try Again, Ask Your Parents for Help
    14. Don’t Fall Behind

    Of course, the best strategy is to start saving early so you don't have to worry about any of this when it's time to go to college ;)

    Wednesday, March 28, 2007

    Should Personal Finance Be A General Education Class?

    Even at my young age, I can see the benefits of making personal finance a required course in both high school and college. This was the subject of an piece at the Daily Trojan college newspaper:

    While a student can't earn a bachelor's degree from our fair university without taking courses in writing, global cultures and scientific inquiry, the essential subject of personal finance is totally absent from the curriculum. With all due respect to the academy, understanding how to manage money will be far more important to most upon graduation than understanding the sexual rituals of vanishing tribes in Papua New Guinea...

    Some may argue that a school nicknamed the "University of Spoiled Children" wouldn't need to educate its students about money because they already have it; however, the problem with many spoiled children is that they've never known how to make it. With expenses reliably placed on parents' credit cards and the word "budget" absent from their vocabularies, students used to relying on an expense account while in school may face a rude awakening when they become independent.

    I'm all for basic financial education for all and I hope that this isn't even a topic of discussion when I reach college age.

    Monday, March 12, 2007

    Personal Finance Courses Popular In College

    Business week has written an article on personal finance courses in college:

    Personal-finance classes—for business and non-business majors alike—are in demand among undergrads, who are looking to get a head start on their financial future. Olin's personal-finance course, which is about 10 years old, has grown from 80 students per semester at its start to 200 today.

    Let's hope by the time I get there, it is a required class for graduation...

    Wednesday, March 07, 2007

    College Personal Finance Classes

    I hope that by the time I get to college that personal finance courses will be a requirement as in this article:

    Recent college graduate Erica Brooks wasn't exactly overcome with excitement when she decided to take a course in personal financial planning during her final semester at the University of Missouri-Columbia.

    "I thought, 'That's really boring,'" she recalled. "That's what parents are for."

    Nearly three years later, Brooks considers those lessons in debt management, retirement planning and prudent spending some of her most valuable college experiences.

    It doesn't surprise me even at this early age that real life classes would have a huge impact for those going out into the world on their own for the first time (^_^)

    Wednesday, January 17, 2007

    100 Best Values in Public Colleges

    Kiplinger's Financial Magazine has put together the 100 best values in public colleges which is worth taking a look at. Part of learning about finances is getting a good value for the money you spend. While many people don't think much about this when it comes to college, it can mean the difference between leaving college with no debt or a lot of debt.