“Financial Literacy in College: Students’ Budgeting and Spending Habits”

Joseph Oloba

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(+256) 785-552288

Livingstone International University

Abstract

Spending is a universal matter among today’s college students and those in the past.

Emphasizing on budgeting as a major notion to all students who join college gives an

opportunity for every student to learn how correct spending can be reached. This article

analyses the use of budgetary measures to attain positive results in spending. As a point of

concern, curtailing disbursements remains the leading generally accepted tactic towards

avoiding debt heaps while in college. Moreover, it also explores how best students can live a

modest life to reduce the load on their parents, especially when it comes to supporting them and

paying off their college fees. Following how college students do their purchasing and their

outlay habits, student’s money management skills can be questioned and weighed.

Subsequently, the results will let slip how constructive a student’s college experience was.
Introduction

Managing money in college, coupled with today’s higher education costs makes most students

disgraceful for living on a restricted budget. This also makes them to try as much as thinkable to

magnify their cash inflow. Today, students must decide on short-range savings and borrowing

for a vacation, a deposit for rent, and manage their personal health and life protection needs

(Chen & Volpe, 1998). According to Marsha (2011), many people consider the attainment of

personal effects as a principal focus in their lives. These are the type of people who willingly

make outsized sacrifices to acquire sought after stuff and possessions. Additionally, they

dedicate considerable time to planning key future purchases and visualizing future spending

outcomes. It is pertinent to give children monies before becoming college students without

checking their accounts. This allows freedom to practice spending responsibly because managing

personal funds has increasingly revolved to be a very important facet in today’s world economies

(Chen & Volpe, 1998). As an opinion, helping students learn how to make clever choices with

their money and achieve financial obligations makes their lives safer and stress-free.

A college spending perspective

College students, especially in the Western world do not take the advice of their mentors or

parents seriously when it often comes to financial management and responsibility. Many social

critics that focus on spending habits of individuals have blamed extreme debt and other unsafe

financial conduct on materialistic trends that are perceived as “inherent in Western society”

(Marsha, 2011, P. 5). Spending habits that will make graduates poor are always associated either

with the myth that everyone these days is finishing college broke or in debt. Frequently, buying
new items instead of looking for old items like; used textbooks, used furniture, and other used

school supplies accounts for students’ higher expenditures in college.

According to Chen & Volpe(1998), it is also proven that individuals with less knowledge tend to

hold wrong opinions and make incorrect decisions in the areas regarding savings, borrowing, as

well as investments. This is usually common among uninformed college students, yet various

attempts have been made to introduce money management courses to this people to move them

out of the terrible box. Knowing how to budget in college is a discipline that takes time to

master, yet it cannot be achieved by taking a forum, an economics course unit, or overnight. On

the other hand, when persons cannot manage their funds, it becomes a society’s challenge to be

addressed (Chen & Volpe, 1998).

Why college students spend lavishly

Most students do not set years of waiting and having actually saved up the money for what they

intend to acquire in their future. Too often, I see students rushing to buy the latest and greatest

technology even in poor countries like Uganda. Today’s present belief is that all you need as a

student is assumed a basic cell phone and a standard laptop in the technology-wise college part

of life. Notably, possessions like having electronic game equipment or a good television set is

also described as a way to enhance social contacts among male college students (Marsha, 2011).

Many college students feel pleased to buy the best plasma TV or the latest high-end laptop, but

are not sure of what follows the order of the day when it comes to accounting for their

expenditure. In addition, many students feel that working hard at school give them entitlement

purchases like; a new car, a super-rank bike. This is because of their craving to arrive at school in

style.
In the real world, driving the new car to school may cost more than a student’s tuition. Yet, the

cost of that car, insurance, gas and other maintenance costs, interest payments and parking fees

will only put that student into debt. In a research conducted by Marsha(2011), “One college

student was looking forward to buying a car so she could socialize more frequently with friends

and have more control over those social interactions” (p. 14). On the other hand, taking random

courses without considering how they will help you progress toward your degree accounts for

wasteful expenditures by college students. That is to say, every time you take an unnecessary

course, you are barely tossing money away that could have been used to pay for courses that help

you get the degree, or possibly, could have deposited it in a high return savings account.

Budgeting and purchasing

Largely, many have fallen victims to at least one of the strange spending routines. It is so

fortunate that once you have learned how to draw a parallel between the two, that is; budgeting

and purchasing, life during college becomes easier and simpler. Since most parents tell their

offspring that paying for college is their responsibility, especially in the Western nations,

students have always tried to get as many grants and scholarships as possible. That is to say,

friends and family who want to show love to their intimates give some pocket money and credit

college students’ accounts as perfect gifts. While others have attended college with so many

financial aid grants and scholarships, many have been able to pay without resorting to borrowing

due to proper budgeting. Therefore, learning from past mistakes has some benefits when in come

to budgeting and spending. According to Mandell (2008) in his literacy survey, as cited by

Llewellyn(2012), most college students are financially knowledgeable. However, the result

indicated that only a lower percentage of students graduate from college with the budgeting and
decision skills. Therefore, the remaining higher percentage makes critical financial decisions

poorly due to inefficiency.

Money management courses and benefits on many college students

According to Chen & Volpe(1998), “One reason for the low level of knowledge is the systematic

lack of a sound personal finance education in college curricula”. (p.6). similarly, “most of the

higher education institutions put little emphasis on students’ personal finance education”. (Danes

&Hira, 1987) cited by Chen & Volpe (1998, P. 6). Llewellyn(2012) argues the Financial Literacy

and Education Commission to team up with the Department of Education and State governments

to cultivate a consistent strategy for providing financial training to students in the college

institutions. These would speed the smooth provision of viable money management education

programs.

Surprisingly, most available research studies concentrate on high school students and adults’

financial literacy levels. Yet, a small number of them have surveyed college students (Chen &

Volpe, 1998). Therefore, Chen & Volpe (1998) suggest that the analysis on financial literacy

shows how level of finance knowledge tends to influence people's opinions, beliefs, as well as

their final choices. It is also recorded that more members from the less conversant group often

make erroneous choices. They also tend to hold wrong beliefs and make incorrect decisions

when it comes to general knowledge on savings, borrowing, and investments (Chen & Volpe,

1998).When taking money management courses, focusing on customized budget planning will

make students learn how to budget practically.

Building confidence, applying real-world skills, and displaying functional behaviors related to

money management would make college students make better financial resource decisions,

harness earning dimensions, care for their belongings while adapting to sudden events. This is
because; the application of sound foundational financial decision-making principles is expected

immediately after finalizing the program and in the future, which is of great benefit to

themselves and their folks. Consequently, charting monetary units learning at age five followed

by taking a special finance course at age seventeen would prove equally ineffective if formal

financial education is not offered sooner than high school, preferably from prime school

(Llewellyn, 2012).

Moreover, Chen & Volpe(1998) claim that “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” (p. 16). While Marsha(2011) on the

other hand, states that a wide-range learning curriculum makes students learn various credit

terms, the constituents of an everyday budget, comparing different credit deals and their personal

credit ranking, as well as related crucial realities and skills. The foretelling skill of individual

finance understanding shows that improving college students' awareness is vital. Eventually, it is

clear that “without adequate knowledge, they are more likely to make mistakes in the real world”

(Chen & Volpe, 1998, p. 16). Results of several studies suggest that adults do not have a good

command of personal finance and investments. The conclusion is that students are exiting

college schools when they are short of competency to make critical financial decisions affecting

their lives (Chen & Volpe, 1998).

Acquiring a better spending exercise in college and its benefits

At whatever time I received money while attending school, the habit of saving some and

spending the rest lavishly was my only road to happiness and satisfaction. Considering the past, I

wish I had been more cautious with my money because it would have put me in a better
condition as compared to my status. The overhead being the instance, I sought to share some

recovering manners to use in your spending money or any other dividend.

In the first course, advancing the financial literacy of students from pre‐nursery through college

helps develop a comprehensive curriculum with many initiatives to offer support and stimulate

awareness among college students on the day-to-day spending involvements (Llewellyn, 2012).

There is no proven formula when it comes to styles of better spending. Yet, media literacy

programs can help college students learn to question media messages that are transformational.

These are media literacy programs target elementary, high school, and college students. College

students are expected to develop and use critical thinking skills when interacting with communal

media. Openly, integrating financial literacy within media programs reduces the influence of

advertising messages to create transformation expectations. Thus, probably help college students

manage their fondness to overspend with an improved approach (Marsha, 2011).

In order to spend wisely, start mounting up your emergency fund. This can be a smart move

since being in college does not mean that emergencies will not surface. If you have not done so

by this time, establishing an emergency fund looks crazy. However, keeping your money in a

high return savings account can even help it gain a lot of interest while you attend school. Many

college students have lower necessary expenses, to the extent that even a small amount of offers

from friends can be of a big advantage. Each semester, a student can grow the fund with your

investments. An additional benefit will be seen after graduating because of having a bit of

enough financial needs to help you shift onto the real world.

There is one belief that by staying in universities or colleges longer, students will naturally pick

up more about private finance responsibility. It is argued by (Chen & Volpe, 1998) that students

do not gain more familiarity over personal funds and budgeting by just taking more time in
college learning other distinct subjects. Instead, they can “learn the subject through a business

course, seminars, or their own mistakes” (Chen & Volpe, 1998, p. 10). Therefore, the opinion

that business majors are more educative than non-business majors are. In order to do well in the

field of budgeting and spending, college students must have preceding exposure to personal

financial management. This means that college students are not more literate just because they

have attained a higher education level (Chen & Volpe, 1998).

Fortunately, for college students, the other best way to spend minimally is by setting aside some

money for fun. Having worked so hard, luxuriating a bit, of your earning is not a strange idea.

Yet, you must remember to set a boundary and hold unto it. Putting aside some money for the

nearby vacation or holiday in your savings account may serve as an example. With that manner,

you can have a pleasing experience to recall without getting distressed about debt. However, this

should not be taken as compulsory, yet it is up to you as to what fun you unconditionally

consider gratifying.

Conclusion

Many college students do not get this knowledge even after attending several workshops,

seminars and courses on financial literacy. Even though you are starting young, you will

probably gain the advantage by working in your favor through investing for your long-standing

future prospects. The simple and fundamental point of view is that you become duty-bound to do

whatsoever you can to style up good habits as timely as possible. Subsequently, you will be

contented that you started on the right base after you have graduated. Therefore, if you are still in

college like me, you need to apply for as many scholarships and grants that you can at the time of

realization. With assurance, this takes some work, yet it is soundly worth the determination. On
the other hand, for those of you who have made an exit from college, the challenge is that if you

were given a second chance to go back; what would you change, (in case of anything)? Finally,

there is an urgent need for college students to ascertain the current level of their financial literacy

in relation to their behavior, knowledge, as well as accurate decision‐making.

Bibliography

Chen, H., & Volpe, R. P. (1998). Financial services review. An analysis of personal financial
literacy among college students, 7 (2), 107-128.doi: ISSN: 1057-0810

Llewellyn, T. R. (2012). Financial literacy of college students and the need for compulsory
financial education. A senior honors thesis, 1-56.

Marsha, L. R. (2011). Materialism, transformation expectations, and spending: Implications for