The importance of personal-finance education

By James Bowers

College campuses are buzzing with the start of classes. Whether you're a graduating senior or the parent of a kindergartner, paying for college has surely crossed your mind.

The National Association of State Treasurers' College Savings Plan Network has declared September College Savings Month. It could not come at a more appropriate time.

In conjunction with the Opinion Research Corp. of Princeton, N.J., this summer the Center for Economic and Entrepreneurial Literacy conducted a survey of 500 college students about personal finance.

What we learned is that today's youths are fumbling in the dark, financially speaking. Two-thirds of college students have taken out loans to pay for their education, and 25 percent expect to have that debt more than 10 years after graduation.

Consumer debt is gloomier still. Sixty-four percent of college students have at least one credit card. Of those, 61 percent carry a balance, but 44 percent didn't know what the APR was. Eighty-one percent severely underestimated the amount of time it would take to pay off a credit card balance making only the minimum payments.

The results suggest another credit crisis in the making. But there is hope. Most of the college students surveyed -- 58 percent -- said they learned the most about saving and spending from their parents.Ideally, parents can lead by example by creating and following a household budget. Families shouldn't be afraid to talk about money openly.

Getting the family's financial information out into the open will go a long way when you start talking astronomical figures like college tuition or on a more global scale, the federal deficit.

Learning basic economic principles is just as important as Shakespeare and organic chemistry -- and arguably more universally practical. America's youths need to be taught the information needed to succeed financially, yet CEEL's survey shows that many of these future leaders are already dependent on credit cards, don't understand the basics of borrowing and may not have the tools to manage their personal finances successfully in the future.

James Bowers is managing director of the Center for Economic and Entrepreneurial Literacy. www.Econ4U.org