What Is Financial Literacy? And Why Is It Important?

Financial literacy is the set of skills individuals use to make appropriate decisions in managing their personal finances.

For college students — who must balance their investment in the future (i.e., the costs of earning a degree) with their expenses (e.g., room, board, and books) and their current financial situation — financial literacy is crucial.

Yet many students come to college without even realizing that they need those skills.

Studies show the financial challenges many college students face today:

• More than 21 percent owe $3,000–$7,000 on personal credit cards.
• Almost two-thirds do not know what the interest rate is on their credit cards.
• Bankruptcies by people under 25 years of age increased by more than 900 percent since the mid-1990s.

The bottom line
Many students come academically prepared for college, but unprepared to tackle financial decisions.

 

Yet students become financially literate win in two ways: They learn to manage their finances, which is a valuable skill to have post-college. And they are more likely to graduate — on time.

To help your students become financially literate, Student Financial Services at Seattle Pacific University offers quarterly financial education sessions.

 

At these sessions, your student will cover topics ranging from how to understand financial aid and loans to how to manage a budget.

 

Don’t let your student become another financial statistic. Encourage him or her to attend these sessions.

After all, when students gain financial literacy, everyone benefits.

 

For more information, check out personal budgeting resources your students (and you) can use.

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