Top 6 Ways Money Skills Give College Students an Edge

Last Updated Jan 7, 2011 1:44 PM EST

Most adults understand that good money habits are closely linked to a secure and happy life. Live within your means and you'll generally avoid the kind of money stress that saps your energy and may lead to emotional and even physical health issues.

Well, the same is true of college students. Kids on campus who stick to a budget, manage credit well and are able to save tend to be happier, healthier and ultimately smarter, according to a study by the Take Charge America Institute.

Yet our kids get little formal financial education before college and not much more than that at the university level. We must be nuts sending them off to campus without the basic money skills that bear on their happiness and success as students.

The frightening part is that money skills appear to erode, not build, by senior year of college. Look at the chart below, which comes from data in the Take Charge America Institute study. This chart is based on an index derived from a series of questions regarding how well students manage their credit and savings.


Each year proficiency in both areas declines. This is partly because seniors are more active with credit cards and more likely to be managing their own affairs; they have more chances to screw up. But that's little comfort to a concerned parent.

According to the study, college students who handle money well:
  • Feel good about their finances Students who "never" or "seldom" manage their money, credit and savings well reported the lowest level of financial satisfaction while those who "often" or "always" do reported the highest level of financial satisfaction.
  • Stay physically fit Students who "never" or "seldom" manage their money, credit and savings well reported the worst physical health while those reporting that they "often" or "always" do reported the best physical health.
  • Have a good mental outlook Students who "never" or "seldom" manage their money, credit and savings well were most depressed and had the lowest self-esteem while those who "often" or "always" do were least depressed and had high self-esteem.
  • Get better grades Students who "never" or "seldom" manage their money well have the lowest grade-point average while those who "often" or "always" do so have the highest grade-point average.
  • Enjoy their education Students who "never" or "seldom" manage their money, credit and savings well reported the lowest level of academic satisfaction while those who "often" or "always" do so reported the highest level of academic satisfaction.
  • Enjoy their life Students who "never" or "seldom" manage their finances well reported the lowest level of life satisfaction while those who "often" or "always" do reported the highest level of life satisfaction.
So it's official: students who are comfortable being in control of their money are comfortable with their life. But it's up to parents to get them there; schools don't teach this stuff.

Photo courtesy Flickr user carmichaellibrary
More on MoneyWatch:
· Top 6 Signals That a College Student is Abusing Credit
· The Top Reason Kids Don't Learn Money at School
· Teaching Kids About Money, What We're Up Against
· Financial Education Takes a U-Turn
· Taking Financial Education to the Next Level
· Financial Education: Where We're Headed
  • Dan Kadlec

    Daniel J. Kadlec is an author and journalist whose work appears regularly in Time and Money magazines. He is the former editor of Time’s Generations section, which was written and edited for boomers. Kadlec came to Time from USA Today, where he was the creator and author of the daily column Street Talk, which anchored the newspaper's business coverage. He has co-written three books, including, most recently, With Purpose: Going from Success to Significance in Work and Life. He has won a New York Press Club award and a National Headliner Award for columns on the economy and investing.

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