The years following high school are a time of financial change and stress.[1]

To address this gap, Dr. Serido and colleagues[3]
To study the role of parents in the transition to adulthood, Serido and colleagues first looked at previous research on the topic of financial parenting. Parents are shown to play a large role in financial socialization (the way children learn about finances).[5]
Using their knowledge of explicit and implicit financial socialization, the research team set up a series of surveys to understand the amount and influence of financial parenting for emerging adults. For their study, the researchers sent out the first survey to an incoming group of college freshmen in the U.S. college. The second survey was sent out about two years after the first, towards the end of the students’ undergraduate degrees. The third survey was sent about three years after the second, by which time most participants had finished their undergraduate degree and had begun integrating into the workforce or graduate studies.
Six questions were asked to determine how much explicit teaching participants received from their parents in the last six months. For example, one question asked how often the participant’s parents had explained financial concepts, like credit ratings. To determine how much implicit teaching the participants had received in the last six months, the surveys included questions about how often the participant’s parents performed healthy financial practices, such as tracking monthly expenses or spending within a budget. Lastly, the researchers used six more questions to determine how often the participants themselves engaged in healthy financial practices. For example, one question asked, on a scale of 1 to 5, how often the participant paid off their credit card in full.

Results from the study revealed that, as expected, the frequency of explicit and implicit financial teaching decreased over time. In addition, students who received more financial teaching (both implicit and explicit) fared better than those who did not. Unexpectedly, some participants showed a decrease in healthy financial practices between the first two surveys, but rebounded by the third survey (to their original level). Perhaps college is a time where young adults struggle the most to manage finances, but through this struggle are able to develop healthier habits.
Takeaways:
- Become aware of financial habits you’ve learned from your parents. If any seem that they are incomplete or not helping you reach positive financial goals, such as only having seen your parents use credit cards but not seen them pay them off regularly, speak to your parents or a financial advisor about these habits.
- Stay consistent. It was found that, on average, all college students’ financial habits became worse during their time in college and then picked back up again in the years after college, but only to their original levels. It might be easy to become comfortable with student loan debt, succumb to bad habits from peer pressure (too many late-night food runs or spending too much on experiences with friends that don’t fit into the budget), or to simply become lethargic about keeping up good habits. Don’t fall into these bad habits! It takes time and effort to recoup those habits.
- Don’t be discouraged, seek resources. Don’t be surprised when some financial resources (such as scholarships or student loans) go away after graduation, even if you haven’t landed a job yet. Plan ahead, find new resources and mentors, and build better habits.
- Embrace an increase in financial responsibility. Even if your parents give you financial assistance, you can make the choice to set aside and save money that you would otherwise spend on things you want but don’t really need. Owning your own financial growth will allow you to develop healthy financial practices, even if they’re not immediately expected of you.
References:
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