–submitted by Stan Inhorn
On June 18, Soyeon Shim, new Dean of the School of Human Ecology at UW-Madison, told Downtown Rotarians about her research on influences in creating financial responsibility in young adults. This study was started around the time of the 2008 financial crisis, when Professor Shim was at the University of Arizona. The study is called APLUS (Arizona Pathway to Life Success.)
Shim recognized that many parents worry that their children lack financial literacy, especially when they send them off to college. In a report to a President’s Advisory Panel in 2013, the study found that many students already had large credit card debts. Messages to students to save for the future or for retirement have little impact, whereas emphasis on creating a modest plan for saving has better outcomes.
Her studies found that there are three categories of students in relation to managing personal finances. “Pathfinders” are those who are taught to carry out financial transactions responsibly. “Followers” are those tend to adapt their parents’ style, whereas “Drifters” have no systematic approach to good financial management. Much depends on whether parents and other adults have had meaningful conversations and interactions with their children regarding fiscal management.
In 2013, the study found that in two years after college, only half of college students have permanent jobs. 32% are self-supporting, 51% are still helped by their parents, and 17% are borrowing elsewhere. Dr. Shim’s advice to parents is to be intentional in their interactions with their children and to use adult dialogue. Parents should themselves establish positive financial behavior in order to help students become “Pathfinders”, which in turn results in overall happiness and in becoming successful adults.
(CLICK for a copy of Dean Shim’s powerpoint presentation on June 18.)