Parenting Strongly Influences College Students Financial Decisions

By Neil Gonzales

What shapes college students’ financial behavior?

“Financial parenting is by far the strongest link,” Joyce Serido told the crowd at the Financial Literacy and College Persistence Conference at Menlo College on January 18.

Serido, an assistant research professor at University of Arizona’s Norton School of Family and Consumer Sciences, shared that finding from the Arizona Pathways to Life Success for University Students project, which she is leading. That effort is investigating how young adults develop financial capability.

“A lot of parents directly and explicitly teach financial behavior,” Serido said. “This is how you balance a checkbook. This is how you use a spending plan. You pay your bills every month. You always pay your credit-card bill in full.”

It also helps if parents communicate with their college-age children as the young adults they already are, she said. That means parents are “cultivating positive adult relationships” with their children rather than telling them what to do, which is more of a one-way kind of interaction. Such financial parenting leads to students feeling “better about themselves physically, mentally (and) emotionally,” she said. Students also show improved academic results.

Coupled with parents’ teaching, formal financial education can make a difference in students, she said. Her project found that when students took a financial literacy course it reinforced their parents’ money management teachings at home.

But the current social and economic context also drives the financial decisions of young adults, Serido said. That context today involves challenging realities such as the fact that one in three 20- to 29-year-olds is unemployed, she said.

“Historical milestones of young adults have shifted,” she added. “Part of it has to do with the fact that we have a lot more young people moving in with their parents because they can’t find jobs.”

A gap also exists between what today’s young adults are achieving and what the previous generation was able to do, she said. “I find that sobering.”

Her project has sought to study the family and other dynamics behind students’ financial behavior because “if we understand how it happens, how it gets there [and] what contributes to it” then effective interventions and programs can be created to improve people’s money management skills, she said.

Serido also pointed out that financial capability does not result from one single class. “This is a lifetime learning thing,” she said. And it’s never too early to raise financial awareness among children, she said. Early financial education may kindle continued learning.

Serido’s talk resonated with conference participant Carla Wood, a doctoral student from Oklahoma City whose interest lies in financial literacy. “She’s got some great ideas,” Wood said. “I’m definitely going to use it in my dissertation. It’s about embedding financial literacy strategies into developmental reading.”

Wood particularly liked the notion that planting the seeds of financial literacy in young people can trigger ongoing learning. “That is probably one of the most useful things I heard,” Wood said. “This is fruitful for me.”