Fifty-seven percent of college students classified themselves as having good or excellent personal finance skills, according to a recent study.

The American Institute of Certified Public Accountants conducted the study to determine if college students are financially astute. The AICPA conducted the study online during the first two weeks of August. Results were drawn from a sample of 751 students who are currently enrolled in a higher education institution. The study was weighted to account for how participants might respond in an online setting.

The study found that 12 percent of participants classified themselves as having terrible personal finance skills. Forty-nine percent of students admitted to having an account balance below $100 in the last year. Ninety-nine percent of participants believe that being financially savvy is extremely important, but only 23 percent said they frequently seek to educate themselves on money management, according to the study.

“The idea that people would believe that their own skills are better than they actually are is common,” said Randy Elder, an accounting professor in the Martin J. Whitman School of Management at Syracuse University, regarding why most students think that they have good personal finance skills but in reality have less than $100 in the bank.

Elder said that while Whitman students may have more exposure to budgeting based off of their curriculum, all college students should be actively seeking ways to be better financial planners.

The rise of technology may have caused the generation of current college students to have problems with budgeting and long-term financial planning, said Maryann Monforte, a professor of accounting practice in Whitman.

“I gained a lot of my skills from watching my parents budgeting,” Monforte said. “But today, so much of it is online, kids aren’t watching their parents sit at the table and pay their bills.”

Monforte said with the rise of technology — particularly online monitoring and banking apps — students think they already know how much money is in their bank account, and aren’t making budgets because they are aware of how much money they have. However they aren’t usually thinking about how long the money will last, she added.

Susan Weinstock, director of consumer banking at Pew Charitable Trusts, a financial research and public policy organization, said the statistic that 50 percent of college students who had less than $100 in the bank at some point in the last year could put these college students at risk of having to pay an overdraft fee.

Many banks have an optional program in which the bank will charge an overdraft fee if there are not sufficient funds in an account to complete a transaction. This will prevent the consumer’s card from getting declined, allowing the transaction to go through. Pew Charitable Trusts found that 52 percent of people who opt into this program do not realize they are even in it.

Weinstock added that it is important for students to find out whether they have opted in to pay these fees, and that they can always contact their bank to opt out.

Elder, the accounting professor in Whitman, said it’s usually after graduation when the learning takes place.

Elder said: “It is when a student graduates and is truly on their own, that’s when the real learning of personal finance comes in.”

Published on September 20, 2015 at 10:13 pm

Contact Joanna: jorland@syr.edu