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Millennials Show Alarming Gap Between Financial Confidence and Knowledge


Millennials are overconfident and under-prepared when it comes to managing their money, according to new research funded by the National Endowment for Financial Education® (NEFE®) and conducted by George Washington University. They consider themselves far more knowledgeable financially than they actually are.

“Millennials are known for having unrelenting belief in their own abilities. This generation is diverse and highly educated. However, their overconfidence puts them in an extremely fragile financial position, and sadly, they don’t realize it,” says Ted Beck, president and CEO of NEFE.

Only 24 percent of respondents showed basic financial literacy in the study, with just 8 percent showing a high level of knowledge. Yet, 69 percent gave themselves a high self-assessment of financial knowledge.

“What young adults don’t know about money can hurt them,” says Beck. “This is our opportunity to reach them with relevant financial education to help close the gap.”

Financial Strengths: On paper, millennials are highly engaged in their financial lives. “It’s time to stop defining this generation solely by their student debt load. The picture is more nuanced,” says Beck.

The majority (88 percent) are banked, and 51 percent have a retirement account. Over 40 percent own their homes and one-fourth have investments in stocks, bonds or mutual funds.

Debt: However, on the other side of the balance sheet, millennials are heavily indebted and borrow against their assets. The majority (53 percent) feel they have too much debt. Two-thirds have at least one source of long-term debt (student loan, home mortgage, car loan), and 30 percent have more than one source of outstanding long-term debt. More than one-third have unpaid medical bills. About 20 percent of those with a self-directed retirement account either took a loan or made a hardship withdrawal in the prior 12 months.

“Young adults may not understand the consequences of their actions, such as how taking money out of their retirement accounts now has an exponentially negative effect on account balances in the future,” adds Beck.

Financial Satisfaction: Young adults also don’t feel good about their finances. Nearly one in five (18 percent) are “not at all satisfied” with their current personal financial condition; only 6 percent are “extremely satisfied.”

Financial Fragility: Many millennials are financially unprepared to handle sudden economic shocks. When asked if they could come up with $2,000 if an unexpected need arose within 30 days, nearly half (48 percent) said they probably or certainly could not come up with the funds. Less than one-third (32 percent) have set aside funds to cover three months of household expenses. Nearly 30 percent of those with bank accounts had overdrawn their account in the prior 12 months.

“The financial picture isn’t all bad,” says Beck. “But it’s not where it needs to be.”

For complete findings of the research, click here.

Study Details
This research analyzed data from the 2012 National Financial Capability Study (research brief of 2015 data also available), a state-by-state online survey commissioned by the FINRA Investor Education Foundation. The analysis focused on 23-35-year-olds, with a total of 5,525 observations. The study was led by Annamaria Lusardi, Ph.D., academic director of the Global Financial Literacy Excellence Center (GFLEC) and Denit Trust Chair of Economics and Accountancy at the George Washington University School of Business; and Carlo de Bassa Scheresberg, senior research associate at GFLEC.

 

Today’s Guest Article Comes From The National Endowment for Financial Education (NEFE)
NEFE is a nonprofit foundation that inspires empowered financial decision making for individuals and families through every stage of life. For more information, visit www.nefe.org.

 

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3 Key Ideas to Save Your Wallet While Still in College


A concept related to saving early in a childs life for their future education.

There are three keys to saving your wallet while still in school: make money, save money and be smart with your money.

Make Money

Your class schedule may make “regular” jobs hard to find, but earning supplemental income doesn’t need to be an obstacle. There are 53 million freelance workers in the U.S. today, according to Freelancers Union. You can join them, while still in school.

First take stock of what you have to offer.

  • Are you crafty? Turn your fun hobby into income on Etsy or similar sites.
  • Don’t forget to consider the standard-bearers of independent work. The powerhouse Amway is built on the work of people working for themselves. You get the name recognition of an international company, with the self-directed flexibility of the gig economy.
  • Whatever your talent, consider offering it up on a platform like Fiverr. Everything from singing a jingle to researching a domain name nets a “fiver,” hence the site’s name.
  • TaskRabbit offers a different model. Check to see if your city is listed. If so, you can apply to become a tasker. Jobs range to standing in line (seriously) to delivering groceries to assembling IKEA furniture.
  • If you have a car, there’s Uber if you’re willing to drive people around, and Getaround if you’re willing to rent your vehicle. Make your assets work for you. (If the car is actually in your parent’s name, you probably need to discuss it with them first.)
  • Does your school have a psychology department? Check to see if there are trials, experiments or testing going on and whether they pay. Do it for science (or for twenty bucks).
  • There is a constant need for plasma. And it usually pays somewhere between $25 and $50.

Save Money

  • You most likely have access to Wi-Fi on campus, so take full advantage of what your school offers technology-wise. If you have sufficient access to the Internet for free, why pay for it at home too?
  • You may need a cellphone, but you can let cable go. Check out music and DVDs from the library instead.
  • Textbooks shred your wallet, so be on the look out for a good source of used textbooks. Then, sell yours when the semester ends. Another option is renting those tomes through services like Bookrenter.
  • Many campus social events feature food, so attend and eat for free.
  • Always keep your student ID handy. Discounts at museums, movies and transportation all add up.
  • Many big companies offer students special deals that no one else can get. For example, Amazon has Amazon Student.

Be Smart With Your Money

When evaluating what kind of jobs to take, keep in mind the ratio of your time and energy spent to the dollars earned. If your grades suffer because you’re too busy on Fiverr doing five-dollar gigs, it’s time to rethink your position.

It won’t do you any good to save money by buying an old textbook if the content has changed too much. Do some research. Very often there is virtually no difference, but it’s better to be safe than sorry.

Keep in mind the skills you want to build on for the future. And finally, don’t sell yourself short.

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3 “Easy” Steps to Student Financial Literacy on Your Campus


For those that don’t know, April is National Financial Literacy Month.  This represents the time of year when there is a concerted effort to help increase the financial acumen of people representing all generations. Student financial literacy efforts on campuses have been gaining momentum in the higher education industry as colleges and universities attempt to equip their students for success by helping them feel more comfortable and knowledgeable about their personal finances. Most universities and colleges have been successfully weaving small components of financial literacy into their programmatic endeavors for the past couple of years. However, there is no better time than the present to start ramping up those efforts exponentially.

financialliteracyIn an attempt to help you work through the process of implementing a successful financial literacy initiative on your campus, I have devised this “quick and easy” three-step approach.

1.     Identify The Need

Before you even begin contemplating a financial literacy program on your campus, you first have to justify that your student population needs help in the area of personal finance. And trust me, the more effort you put into this task on the front end, the better your chances of securing resources (time and money) on the back end.

The good news is that white papers from the industry (COHEAO) reflect that financial literacy initiatives on a campus can improve student financial behaviors and, in some cases, make the difference on whether a student successfully achieves their education goals or makes the decision to leave school entirely.  We all know that it is more cost effective to retain a current student versus trying to recruit a new one.

If you need additional justification for starting a financial literacy program on your campus, I would encourage you to refer to the recently released Money Matters on Campus Survey Report sponsored by EverFi and HigherOne.  This survey provides some very sobering statistics about the financial acumen of first-year college students.

2.     Discern Your Target Market

Some may think that financial literacy is just for currently enrolled traditional college students but I would encourage you to think outside of the box and ponder the many different populations that interact with your campus community. The following represents many of the different groups in which you could promote your Financial Literacy Programming (FLP).

  • Prospective/Deposited Students – Incorporate your FLP as a value-added service that your school provides for interested students – could be extremely timely when paired with the delivery of financial aid packages. Also helps to distinguish you from other schools…
  • Incoming/First Year Students – If you have a first year experience program, this could be the gateway to implementing a FLP component into your curriculum.
  • Current Traditional Students– Your FLP can serve as an ongoing resource for students as they move through their educational career
  • Upward Bound/TRIO Students – The Federal TRIO program has a requirement for student financial literacy in its funding stipulations – your FLP could satisfy that mandate.
  • Adult Students – Regardless of what phase of life your students are enjoying, a refresher on financial literacy can never hurt.
  • Parents – Your FLP is mostly focused on students but I see no reason why parents can’t have access (and possibly utilize it with any high-school age siblings)
  • Faculty/Staff – Similar to the same reasoning referenced above for Adult Students and Parents
  • Alums – Your FLP could be a useful tool as your alums are embarking upon real-world financial challenges and need some guidance.

3.     Find The Best Approach For Delivery

Unfortunately, there is no silver bullet concept when it comes to promoting financial literacy at your college. Every campus community is different and each individual student (or target group identified above) is unique in what will grab their attention and spur them to engage your resources. So, the best approach to delivery usually incorporates multiple channels and varied mediums. The following represent a few approaches for your consideration.

  • Email Campaigns
  • Events/Presentations/Workshops
  • Classroom Curriculum
  • Social Media
  • Posters/Flyers/Table Tents
  • Interactive Games (Financial Football)
  • Free Online Resources (CashCourse.org among others)
  • Custom Email Signatures Highlighting Your Online Resources
  • 3rd Party Financial Literacy Providers (iGrad.com, SaltMoney.org & GradReady)
  • Individual Counseling

As you can see from the information provided above, student financial literacy programming on your campus can be as simple or complex as you make it – ultimately, the choice is yours.  However, at the end of the day, the most important thing is that you are doing something to help encourage the financial success of your student population. Remember, financially prepared students = happy students.  And happy students = retained students. And retained students = graduated students. And graduated students = donating alumni. It’s hard to argue with that…

About The Author

Doug Schantz currently serves as the director for the Office of Student Accounts at Wittenberg University and thoroughly enjoys topics related to paying for college, saving for college, financial literacy, scholarships, financial aid, education loans and just about any subject matter that you can think of related to college expenses. Feel free to connect with Doug on LinkedIn, Twitter, or Facebook.

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Beware the Debt Monster (video)


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Money Management Tips (video)


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Scary Finance Terms Explained for Students – Infographic


Nearly 22 million students will be heading off to college this coming Fall semester and many admit to not knowing very much about personal finances. In an effort to try and help educate college-bound students about some financial terms that they may encounter, I am pleased to share the following infographic with you. In addition, if you are looking to increase your financial literacy acumen (and have some fun along the way), please don’t hesitate to visit Financial Football on CheapScholar.org.

(click on picture to view in larger format)
MoneyTalksAttribution: CreditLoan.com

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5 Tips to Securing Your Finances While In College


mediumpigCollege is typically the first time that young people get a real taste of adult life. For many, that means taking on a higher level of responsibility in different areas. Financial responsibility is one important lesson to be learned during this time. Keeping track of cards and cash, maintaining bank accounts, and protecting personal data are all major components of being smart when it comes to finances.

Lock Down Info on Laptops

Laptops are one of the most essential tools for any student today. While their primary purpose may be school related, they can also be an integral part of one’s personal life, as the Internet is used for so many different things. Managing bank accounts online is very common, but it is crucial to protect the information stored on sites at all times. Laptop theft is always a concern, especially when taking it to different places like the college library, to class, or to coffee shops and cafes. Never allow passwords to be auto-saved for banking websites so that thieves cannot access an account.

Keep Smartphones Safe

Smartphones are another item that people tend to carry with them frequently. In fact, most people do not leave home without their phone today. Using the Internet with a web browser on a smartphone provides a convenient way to keep tabs on accounts, but it also leaves personal info vulnerable. College students should avoid using public wireless networks that are not secure for data transmission. Turn on password security so that not just anyone can pick up the phone and use it.

Check In With Checking and Savings Accounts

Online banking has made it easier than ever for people to access their accounts and check transactions and balances quickly. Frequent monitoring of an account is a great way to catch any suspicious activity or fraudulent charges right away. Make it a point to log into accounts often and check up on the activity to ensure that it is all correct.

Many credit and debit cards/bank accounts offer customers to set up free alerts which will be sent via email. The alerts will let customers know when transactions have been made, or when suspicious activity has been detected on an account.

Change Passwords Often

Even when a person thinks that have a really strong password, there is always the risk that someone else can figure it out fairly quickly. It is important to change up passwords frequently. Aim for a combination of letters, numbers, and special characters, when possible.

Leave Credit Cards at Home

Most people carry their debit and credit cards around in their wallets, but this puts the cards at a high risk of being lost or stolen. Once a credit card is stolen, a thief can wrack up charges in a matter of minutes. It can cause a big headache at best, and a loss of funds at worst.

Unless a college student is heading out with the intent of using a card to make purchases, it would be best to simply leave it at home or in the dorm in a safe, hidden spot. Hide cards away in a drawer or a secure safe with a lock when they are not needed. Just be sure to check up on them from time to time.

Financial responsibility is a lesson that cannot come too soon for young adults. Keep finances safe and secure by taking the right preventative steps and keeping tabs on accounts, cards, and personal electronic equipment. Being smart with bank accounts, credit cards, and debit cards is the best way for a college student to protect their money.

About the Author:

Today’s guest article comes from Ryan Ayers. He is a writer who creates informative articles in relation to education. In this article, he offers financial security tips to students and aims to encourage further study with an NJIT Online Masters of Computer Science.

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What Every Graduate Should Know About Credit Cards


creditcardsFor the majority of graduates, college tends to be an amalgam of learning and personal discovery, however, there are some things that a graduate will discover cannot be learned from a book : money management.

Credit Cards for Students

For the most part, students will live alone or with a roommate, but some will live at home in order to save money. No matter where they live most students will need some money to purchase books and equipment. One of the easiest ways for a student to borrow money is by applying for a credit card; however, credit cards can lead to debt and other financial difficulties if they are not managed properly. Suzanne Boas of credit counseling group CredAbility says, “Every year, our credit counselors see young adults whose credit card bills got out of hand shortly after leaving home for college or a job. Many were charging without a plan on how to pay off their purchases.”

On the flip side, student credit cards can be handy for emergencies, and it is advisable to have one in case something needs to be paid for at short notice. There are a number of credit cards that are being targeted at students by  banks and financial institutions, and it can be quite confusing for a lot of students who are new to the credit card market.

Avoid Unnecessary Fees

One of the most important aspects of any credit card is be able to find one that does not charge an annual fee or a fee when you sign up. For the most part, credit card companies that charge an annual fee or sign up charge will try and tempt you with a gratuity such as free cinema tickets or similar; however, do not fall for this offer as this is just a ploy to get you to sign up and thus fall into the fee trap.

Get Something in Return

A lot of cards offer cash-back bonuses,  this works by giving you a percentage of your total spend back at the end of the month. The amount you receive depends on how much you spend, and is one way a credit card company will lure you into using your card on a regular basis. This is a good offer, so long as you are in a position to pay off the balance, in full, in order to avoid interest payments.

Aim to Find the Best Interest Rate That you can

One of the most important aspects to any credit card application is to make sure you are signing up for a credit card that has a low interest rate. The lower the interest rate, the more money you can save on annual interest payments, although, this does depend on how much money you owe on the card, and it’s always advisable to spend only what you can pay off at the end of the month. The interest rate is important, as is cash-back, but try to opt for one that has the lowest interest rate possible, regardless of cash back offers. In the long term a lower interest rate will save you more money. Interest rates on student cards are around 30% APR, but they do vary so it is best to shop around.

Over all, avoid cards that want to charge you an annual fee or fee to sign-up. Try to get a card that gives you cash back, but not if you can find one that has a very low interest rate, resulting in a better bang for your buck. Try to pay off the outstanding balance at the end of the month in order to avoid paying interest on your purchases.

About the Author:

Today’s guest article comes from +Chris Mettler , a personal finance blogger.  His blog is comparewallet.com where he shares his insights about credit cards and personal finance tips.

 

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