New AICPA Survey Finds Disconnect Between College Students’ Perception of their Financial Literacy Skills and Reality

Virtually all students say financial management skills are important,
but only two-in-five follow a monthly budget

NEW YORK–(BUSINESS WIRE)–While a majority of college students give themselves good grades for
their financial literacy skills, many of them need to study up on the
basics. A newly released survey from the American
Institute of CPAs (AICPA) found that college students who rated
themselves as having excellent or good personal financial management
skills (57 percent) outweighed those who rated their skills as poor or
terrible (12 percent) by a more than a five-to-one margin.

However, almost half of college students (48 percent) reported having
less than $100 in their bank account at some point in the last year. In
addition, thirty-eight percent said that they had borrowed money from
friends or family in the last year and more than one-in-ten (11 percent)
missed a bill payment.

The survey, conducted online among 751 college students who will be
enrolled in fall of 2015, on behalf of the American Institute of CPAs by
Harris Poll in August, highlights the differences between students’
perception of their financial literacy skills and the reality.

The survey found that, despite the nearly universal feeling among
college students about the importance of personal financial management
skills – 99 percent said they were either extremely or very important
–they are not actively taking steps to develop their knowledge in this
area. In fact, only one-in-four college students (23 percent) say they
seek out personal financial management information and incorporate it
into their spending and saving habits frequently or often, compared with
two-in-five (41 percent) who say they rarely or never do so.

“For many students, college is their first time making independent
financial decisions. With this opportunity comes serious responsibility,
and if they aren’t making informed, intelligent decisions it can have a
negative impact on the rest of their financial lives,” said Ernie
Almonte, CPA, CGMA, chairman of the AICPA’s National CPA Financial
Literacy Commission. “This fall, we encourage students to take
‘financial literacy 101’ by establishing a budget, tracking their
spending and expenses, and reviewing it on a monthly basis. By
incorporating these positive behaviors, students will be better equipped
to make intelligent financial decisions later in life.”

Members of the AICPA’s Financial Literacy Commission say that
establishing and following a budget is one of the most important things
a person can do to take control of their financial situation and build
for the future. However, the survey found that only two-in-five (39
percent) students reported following a monthly budget. Of those who
follow a monthly budget, 42 percent said they learn how to budget from
their parents or relatives with 37 percent saying they learned on their
own.

“Parents of college students should definitely encourage their children
to establish a monthly budget as a means of keeping their spending in
check while they are in school,” added Almonte. “Establishing a monthly
budget is the foundation upon which other positive financial behaviors
are built. There are resources on the AICPA’s 360 Degrees of Financial
Literacy and Feed the Pig websites that teach students how to create a
budget and provide them tips and tools for staying on track.”

While many college students need to develop better financial habits, the
survey found that more than 8-in-10 (84 percent) say they are extremely
or very interested in learning how to make better personal financial
decisions.

This fall there will be 17
million students enrolled in 2 and 4-year undergraduate programs
across the U.S. The AICPA’s National Financial Literacy Commission
suggests the following tips to help them improve their financial
literacy and make better decisions while they are in school and beyond:

Get started. Visit the AICPA’s 360 Degrees of Financial Literacy
website to use
the free budget calculator specifically designed for college students.
The calculator allows you to input your expenses and income for an
eight-month school year running from September through April.

Review your plan. Look at your budget on a monthly basis and see
if there are differences between your budget and your actual spending on
a monthly basis. If there is a gap, determine if your budget or spending
needs to be modified.

Build a credit score. It’s a good idea to start to establish a
positive credit history by having a credit card in college. But it’s
critical that you don’t use it unless you can pay it off, or it is an
absolute emergency. Late night pizza or fancy lattes are not emergencies.

Set a goal for summer earnings. Figure out how much money you’ll
need to get through the semester to get you fixed things like utilities,
cell phone bill, transportation costs (i.e. car payment, insurance, bus
fare, etc.), and rent if you’re living off campus. Use that as a goal
for how much money you’ll need to save from working over the summer and
start the semester from a position of financial strength.

Methodology

This survey was conducted online within the United States from August 3
to 12, 2015 among 751 college students who will be enrolled full-time in
a 2 or 4 year college in the fall of 2015, by Harris Poll on behalf of
AICPA. Figures for age, sex, race/ethnicity, education, region and
household income were weighted where necessary to bring them into line
with their actual proportions in the population. Propensity score
weighting was used to adjust for respondents’ propensity to be online.

About the AICPA

The American Institute of CPAs (AICPA) is the world’s largest member
association representing the accounting profession, with more than
412,000 members in 144 countries, and a history of serving the public
interest since 1887. AICPA members represent many areas of practice,
including business and industry, public practice, government, education
and consulting.

The AICPA sets ethical standards for the profession and U.S. auditing
standards for private companies, nonprofit organizations, federal, state
and local governments. It develops and grades the Uniform CPA
Examination, and offers specialty credentials for CPAs who concentrate
on personal financial planning; forensic accounting; business valuation;
and information management and technology assurance. Through a joint
venture with the Chartered Institute of Management Accountants (CIMA),
it has established the Chartered Global Management Accountant (CGMA)
designation which sets a new standard for global recognition of
management accounting.

The AICPA maintains offices in New York, Washington, DC, Durham, NC, and
Ewing, NJ.

Media representatives are invited to visit the AICPA Press Center at aicpa.org/press.

Contacts

American Institute of CPAs (AICPA)
James Schiavone,
212-596-6119
jschiavone@aicpa.org
or
Mitchell
Slepian, 212-596-6177
mslepian@aicpa.org