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  Tae Care Aerica Institte fr Cnser Financial Edcatin and ResearcJn and Dris Nrtn Scl f Fail and Cnser SciencesCllee f Aricltre and Life Sciences Neer 2007 ACADEmIC SuCCESS ANDWELL-bEINg oF CoLLEgE STuDENTS:FINANCIAL bEhAvIoRS mATTER Te uniersit f Arizna  2 FoR moRE INFoRmATIoN   about how the ake Charge America Institute or Consumer Financial Education and Researchcan help you or to order additional copies o this publication, contact Soyeon Shim, Ph.D., Director and Proessor, Norton Schoolo Family and Consumer Sciences at shim@ag.arizona.edu FoRWARD I   CAI           Az  . C          . B,                       ,   . CAI        . I’       U’        z         .I     J X, P.D ( D  CAI)          . B   , D. S S     , AP (Az P  L S  U S)    UA   007. T                UA’ -   E, R  O. Dr. Michael Staten Directorake Charge AmericaInstitute or ConsumerFinancial Educationand Research UA Te mission o the ake Charge AmericaInstitute or Consumer Financial Educationand Research at Te University o Arizonais to improve consumer nancial well-beingthrough our research and outreach programs. mISSIoN  3   ACkNoWLEDgEmENTS T      J Nz,    O  S F A  T U  Az,          . W   R Lz     W. T        : J S, C ,  J. T   -    C A I  C F E  R  O  S F A  T U  Az. AuThoRS J J X, P.D., P, U  R I ( D, CAI)S S, P.D., D  P, T U  AzB B, P.D., P, T U  Az, M U, W AA L, P.D., A P, U  I, U-C College students are at a pivotal time in their lives asthey ace nancial independence and responsible decision-making. In moving rom dependence to independence, they will chart a course with ar-reaching consequences or theiruture happiness and security. Te methods by which collegestudents orm desirable nancial habits has been largely shadowed in supposition. Because the process is not yetunderstood, but is o tantamount importance to the uture o young people, urther study is imperative. Universities havea unique opportunity to inuence the development o soundscal practices because they combine a pivotal time rame,an educational setting, and a population with newly emergingresponsibility or their nancial aairs. Further, young adultswho are nancially responsible as college students are morelikely to become well-rounded, happier, and more successulalumni.Te ollowing report examines the nancial behavioro undergraduate students at Te University o Arizona.Specically, the study examines cash management, creditmanagement, savings, and risky credit use. We are interestedin what elements inuence nancial behavior, and whetherresponsible nancial habits aect students’ quality o lie,including nancial satisaction, physical and mental health,academic satisaction and perormance, and lie satisactionin general. A total o 781 undergraduate students respondedto our online survey.In short, we ound as predicted, that sound nancialdecisions and practices are undoubtedly linked to a betterlie, in a variety o ways. Te importance, then, o developinghealthy nancial habits cannot be overstated. As previously stated, colleges are in a unique position to assist this process,and in act, we believe they have a responsibility to studentsas part o an overall educational ramework.Specically, our study ound: ã Undergraduate students manage cash better than creditand savings. ã Students who have a positive attitude about cashmanagement, nd it easy to do, and eel a sense o accomplishment do better with cash management. ã Upper-class students, particularly seniors, demonstrate asurprisingly more careless attitude with regard to creditmanagement. Being a rst-generation college student,being nancially independent, having a higher personalincome, taking ewer credit hours, and living o campusalso result in a riskier attitude toward credit use. Negativeattitudes, spending less time on studies and more timeon the job, and money management also seem to lead tounwise credit use. ã When it comes to saving money, upper-class students doworse than their lower division counterparts. Others whodemonstrate poor saving habits are non-business majors,o-campus students, and those receiving nancial aid.Again, students with negative attitudes and less nancialknowledge are less likely to save money. ã Not surprisingly, our study shows that parents areimportant role models in encouraging responsiblenancial behavior. Parental support and advice are key, asare having parents who are married, more highly educatedand who own a home. ã Te support o college peers is also important, inuencingstudents to develop good nancial behaviors. ã In addition to its own rewards, responsible nancialbehavior leads to a better lie. Perorming desirablenancial behaviors is associated with greater nancialsatisaction, better physical and mental health, andhigher grades.Tese ndings have important implications or nancialproessionals, educators, campus administrators, andpolicymakers concerned about the well-being o collegestudents. Promoting positive nancial habits, accordingto this report, is likely to improve the overall well-beingo college students, in addition to helping them meet theiracademic goals. Credit management and savings coursesmay be needed or undergraduates, especially upper-divisionstudents (who have worse nancial behaviors than theirlower-division counterparts). iming is critical becauseseniors will soon be entering the job market and acing thenancial decisions o independent living.Because it is a key component o students’ nancialdevelopment, parental involvement should be supportedand encouraged. In addition, peer education should beostered, with colleges creating opportunities or students tolearn rom each other (especially in the areas o credit andsavings). Special attention should be paid to nancially at-risk students who are apt to engage in risky credit behaviors, withprograms designed specically or them. ExECuTIvE SummARy  4 Tere can be little doubt that credit cardsare an essential component o today’sconsumer liestyles in that they provideboth utilitarian (e.g., convenience andpurchasing power) and hedonic (e.g.,lie status, liestyles) benets. However,i misused or abused, they can also havedevastating eects on consumers’ overallwell-being (Bernthal, Crockett, & Rose, 2005). One groupthat may be particularly vulnerable to the potential pitalls o credit use is college students. Reports indicate that 76 percento college students have at least one credit card, and 43 percenthave reported holding our or more credit cards (Nellie Mae,2005).Te negative consequences o irresponsible nancial behavior,especially or young adults who are nancially at risk, canimpede academic success and threaten mental and physicalhealth (Lyons, 2007a, 2007b). Economic psychology studies,in general, show that higher nancial stress is associatedwith higher levels o psychological and physical distress(MacFadyen, MacFadyen, & Prince, 1996; Lyons & Yilmazer,2005). In the long run, adverse nancial outcomes can alsonegatively aect interpersonal and amilial relationships, andhence, an individual’s success in lie (Fisher & Lyons, 2006).Yet, we still know very little about the process by which youngadults acquire nancial skills and literacy during the criticaltransitional period o emerging adulthood, and how these skills,(or lack thereo) inuence well-being more generally, both inthe short- and long-term. >Prpse f te Std Te purpose o this study was to understand the nancialbehaviors o undergraduate UA students. More specically, weare interested in studying our categories o nancial behaviors:cash management, credit management, savings, and risky credit use. We want to examine actors that inuence thoseour nancial behaviors, as well as whether or not perormingpositive nancial behaviors matters in various aspects o students’ quality o lie including nancial satisaction, physicaland mental health, academic satisaction and perormance, andlie satisaction in general.Tis report is organized as ollows. We rst review previousstudies on the nancial behaviors o college students andpresent a conceptual ramework. Ten the objectives,methodology, and ndings o the study are presented. Finally,we summarize major ndings and discuss their implications ornancial proessionals, educators, campus administrators, andpolicymakers interested in this age group. >Preis Stdies n Financial beairs fCllee Stdents As the use o credit cards has prolierated on college campuses(U. S. General Accountability Oce, 2001; Manning 2000;Nellie Mae, 2005; Education Resources Institute & Te Instituteor Higher Education Policy, 1998), researchers in disciplinessuch as economics, sociology, psychology and higher educationadministration have become increasingly interested in thenancial conduct o college students. Some researchers haveocused on college students’ attitudes about, and behavior with,money in general (Danes & Hira, 1987, Fan & Xiao, 1998;Markovich & DeVaney, 1997, Masuo, Malroutu, Hanashiro,& Kim, 2004; Rindeisch, Burroughs, & Denton, 1997; Lyons,Neelakantan, & Scherp, 2007). Others have specically ocusedon the ways students use credit cards and the attitudes they have toward them (Armstrong & Craven, 1993; Xiao, Noring,& Anderson, 1995, 1997; Education Resources Institute andthe Institute or Higher Education Policy, 1998; Hayhoe, Leach,& urner, 1999; Hayhoe, Leach, urner, Bruin, & Lawrence,2000; Joo, Grable, & Bagwell, 2001; U. S. General Accountability Oce, 2001; Hayhoe, 2002; Lyons, 2004, 2007a; Staten andBarron, 2002; Baum and O’Malley, 2003). In particular, earlierstudies ocused on actors that inuence credit card selection(Kara, Kaynak, & Kucukemirouglu, 1994) and relationshipsbetween student characteristics and the tripartite (aective,cognitive and behavioral) components o their attitudes (Xiao etal., 1995, 1997).A ew researchers have also attempted to develop a causalmodel that can predict a college student’s attitudes andbehavioral tendencies when acquiring a new credit card(Kidwell & urrisi, 2000) and also describe the role thatmoney attitudes and credit card use plays in the developmento compulsive buying (Roberts, 1998; Roberts & Jones, 2001).Also, a group o researchers (Pinto, Parente, & Palmer, 2001a;2001b) conducted a study to determine whether schoolsolicitation policies or student academic perormance causeddierences in the ways students used credit cards. Tey oundno evidence o any dierences.With the recent increase in the number o reports regardingcollege students’ misuse or overuse o credit cards, researchershave begun to investigate the personal actors associated withcredit card use, specically the number o credit cards, onaverage, that a student possesses, as well as the extent to whichthe average student typically carries a credit card balance(Hayhoe et al., 1999; Hayhoe, et al., 2000; Hayhoe, 2002,Hayhoe, Leach, & Allen, 2005). Also studied is how dierentpromotional mechanisms used by credit card rms inuencestudents’ account balance and delinquency status (Staten &  INTRoDuCTIoN Y   18-5    -        (P & L, 1995),     (A, 000). I  U.S.,  0       .A ’           . I  z   -          . I      , —,  ,        —             ,           
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