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Spending and Debt Issues Top List of Worst Financial Mistakes by College Students, First Command Reports

FORT WORTH, Texas--(BUSINESS WIRE)--As colleges and universities gear up to meet a July 1 deadline to overhaul student-loan programs, parents should spend the summer break fostering financial responsibility in their college-bound children, according to First Command Financial Services, Inc.

"The U.S. Department of Education's new Direct Loan program may help make college a bit more affordable for some students, but parents should continue to drive home the importance of sound financial behaviors"

"The U.S. Department of Education's new Direct Loan program may help make college a bit more affordable for some students, but parents should continue to drive home the importance of sound financial behaviors," said Terri Kallsen, CFP® and executive vice president of strategic development at First Command. "Spending and debt issues are significant problems for many college students, who have grown up in a world that often promises instant gratification. Even in today's troubled financial climate lenders are still all too willing to extend credit to young adults who may not yet have the life experience and judgment to properly manage these types of products."

A recent survey of more than 340 First Command Financial Advisors reveals that the poor financial behaviors exhibited by many college students are of even greater concern than the overall debt issues associated with paying for a college education. When asked to identify the worst financial mistakes made by college students, three out of four advisors mentioned spending without a budget and credit card debt. No. 3 on the list was overall debt, which was selected by 60 percent of advisors.

Other financial mistakes identified by advisors include:

  • Not having enough savings (48 percent).
  • Not having a plan for the future (41 percent).
  • Lacking knowledge of financial issues (40 percent).
Don't wait until your child is in college to talk about the importance of frugal living and financial responsibility. You can start teaching younger children now with these tips:

  • Offer to match the amount the child saves.
  • Take your child with you to open a savings account.
  • Don't always refuse when a child wants to withdraw money for a specific purpose, as this may discourage saving.
  • Provide an allowance in denominations that encourage saving. For example, divide a $10 allowance into a $5 bill and five $1 bills, with the encouragement to put one or more dollars into savings before spending the remainder.
"The economic downturn has been a wake-up call for many Americans, and they are making meaningful, long-term changes in their household finances," Kallsen said. "People are saving more and spending less, reflecting a newfound appreciation for responsible financial behaviors. It's important that parents share this new perspective with their children, especially as they move into adulthood. Parents need to talk to their children about developing frugal habits today to prepare for the financial challenges of tomorrow."

To learn more about talking to your children about money, see our survey results at www.firstcommand.com/education.

About First Command

First Command Financial Services and its subsidiaries, including First Command Bank and First Command Financial Planning, assist American families in their efforts to build wealth, reduce debt and pursue their lifetime financial goals and dreams-focusing on consumer behavior as the first and most powerful determinant of results. Through personalized financial plans that emphasize accumulating wealth while reducing risk, First Command Financial Advisors have established lasting relationships with hundreds of thousands of client families since 1958.

First Command Financial Services, Inc. is the parent company of First Command Financial Planning, Inc. (Member SIPC, FINRA) and First Command Bank (Member FDIC). Financial planning services and investment products, including securities products are offered by First Command Financial Planning, Inc. Insurance products and services are offered by First Command Financial Services, Inc. Banking products and services are offered by First Command Bank. Securities products are not FDIC insured, have no bank guarantee and may lose value. In certain states, First Command Financial Services, Inc. is a separately registered domestic corporation and does business in California as "First Command Insurance Services." A financial plan, by itself, cannot assure that retirement or other financial goals will be met. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNERTM and CFP (with flame logo) ® in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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