Frequently Asked Questions about the APLUS Project
Cultivating Positive Financial Attitudes and Behaviors for Healthy Adulthood (Wave 1)
1) Did you examine the extent to which parents through role modeling or otherwise influence the financial behaviors of their college students?
This is the first research topic we are addressed.
We know that parents socialize their children as consumers, but we have not clearly defined the specific roles that parents play.
One of the first things we looked at was how family factors, as well as students’ experiences prior to college AND during the first year at college, affect their financial behaviors.
A powerful finding from this study is that parents play a key role in children’s financial well-being, through their own behavior, direct teaching, and role modeling – stronger than students’ experiences prior to or during the first year at college. The effect of a parent’s direct teaching regarding financial matters was twice that produced by high-school direct teaching and twice the effect produced by high-school work experience!
Parents influence not only their children’s financial behaviors, but their financial attitudes and perception of their ability to manage their finances as well.
Thus, programs that help parents’ to be more financially responsible represent an investment in the financial well-being of their children.
2) Why did you assess students’ current financial knowledge from three perspectives: Subjective, Comparative, and Objective?
Typically, a positive sense of self contributes to confidence in our abilities, which in turn contributes to success and well-being. Our interest is in examining this association specific to financial attitudes and positive outcomes (health, well-being, academic achievement, and responsible financial behaviors).
We included all three so that we could assess the contribution of each and examine the relationship among these perspectives.
In other words, is our well-being affected more by thinking we are competent (Subjective), thinking we are more competent than our friends (comparative), or knowing about personal finance (Objective)?
Or does knowing about personal finance (objective) affect our thinking about our financial abilities?
3) How are you going to bridge current Financial Knowledge to future attitudes and behaviors?
Our plan is to collect data from these students during and after college to see how current their financial knowledge during college predicts future attitudes and behaviors, and to understand how financial knowledge, attitudes and behaviors change over time.
4) Are you looking for changes in attitudes after taking financial courses?
We are capturing information on students’ exposure to financial education to see what impact formal education has on changes in their attitudes, behaviors etc.
However, having knowledge – and acting on it – may be two different things. That is why we are collecting information on attitudes. Typically, the association between attitude and behavior is stronger than the association between knowledge and behavior. We are also capturing information about students’ life circumstances to examine the role of present life circumstances on actual behaviors.
5) How do you assess “positive outcomes” of health or well-being that is specifically associated to financial knowledge?
We are interested in the association between financial knowledge, attitudes and behaviors and people’s health/ well-being, specifically the pathway FROM financial knowledge, attitudes and behaviors TO well-being. Simply put, we want to understand the process through which these factors lead to well-being.
As a starting point, we asked students to self-report on several domains of well-being, e.g., physical, psychological, financial, academic, and overall sense of well-being, in addition to collecting information on the factors that might influence the outcomes.
We then test these relationships using a statistical modeling technique (structured equation modeling or SEM) to tell us which pathways have evidence to support the relationship. You can learn more about these findings in the Wave I Study Report.
Our next step will be to test to see if financial knowledge actually “causes” well-being. We need longitudinal data (from future waves of data collection) to conduct these analyses.
Economic Impact Study (Wave 1.5)
1) In your observation did you find that the economic crisis pushed students closer to independence or to relying more on their parents/guardians?Although the majority of the respondents are still dependent on their parents (80% were still being claimed as a dependent on their parents’ tax returns), their narrative responses provide anecdotal evidence that they were taking on more of the day to day expenses that their parents used to pick up.
2) Did you survey what, if any, financial education programs or access to resources/information the students had prior to the financial crisis? If so, were there any correlations?In the first survey, we asked students about their activities in learning about personal finances - that is classes, both in high school and since coming to college as well as seminars/workshops, reading books - though the options were not very specific.
In the first wave, those with more high school financial education reported more responsible financial behaviors. In this study, the results were not so clear cut: we found that those with high school financial education
- Exhibited more responsible borrowing behaviors
- Experienced a greater decline in saving
- Experienced a greater decline in financial satisfaction
Interestingly, we saw a greater increase in the likelihood of completing their BA among respondents with no financial education, closing the gap between them and the respondents with previous financial education. This could be because young people see a value in graduating from college as the job market tightens up.
3) What do you anticipate would restore women’s self confidence? Would it be the economy turning around, access to financial education, or something else?Women’s financial knowledge did not differ from men’s so we don’t think it is a question of knowledge. We conducted some follow-up analyses on what might account for the differences, for example, socioeconomic status diminished the effect, but it was still significant (higher SES students showed a smaller difference). We did find that men were more likely to engage in active learning about personal finance, that is, taking financial classes, attending seminars/workshops, reading books on personal finance. Women, in contrast were more likely to conform to parental expectations and influence - so it may be that women are more compliant, deferring to others, wheras men take on a more active role in managing their finances.
We are planning to conduct a more thorough analysis to see if perhaps there are social pressures on women to avoid taking control of their finances.
4) What was your most troubling finding?Perhaps the most disturbing trend is the increase in frequency of extreme financial coping strategies: While typical cost-cutting strategies rose moderately, risky coping strategies rose at an alarming rate: three times as many students (+169%) dropped classes, twice as many (+106%) took leaves of absence, and 78% postponed health care. We also saw a 26% rise in the use of one credit card to pay another.
5) Did you look at life insurance as an investment and are college students less apt to plan for their future?This is one of the questions we will be asking in our next wave of data collection (fall 2010) . In addition to information about life insurance, we will ask about participation in other financial instruments including money market and savings accounts, as well as health, life and car insurance.
6) These poor college students often overuse or abuse credit cards. Are banks taking advantage of these perilous economic times?
We do not have the data to say - but we do know that the average amount of credit card debt increased by 60% in the one year period since we collected the baseline data. We also know that the increases were not distributed evenly across racial groups, that is, credit card debt tripled for Black respondents and doubled for Latino/a respondents.
7) How have things changed since the beginning of 2008 and what are the long term ramifications and repercussions?For young adults undergoing a transition from financial dependence to self-sufficiency, the current economic climate may play an important role in re-shaping their financial values, attitudes, and behaviors.
We saw this after the Great Depression, with many people adopting a conservative approach to money management. Many young adults at that time never did recover from the lack of job opportunities available as they began their careers. Career uncertainty and limited job opportunities may prompt many students to re-consider their course of study - or whether or not to continue their studies at all.
Given the decrease in their financial self-confidence, this generation may benefit from basic financial education to make sound financial decisions for their future well-being and avoid costly mistakes as they navigate the financial challenges of the next few years.
