Do you know how to balance a checkbook? How about how to determine your credit score or manage a 401(k)?
If you feel like a fish out of water when trying to answer these questions, you're not alone.
A recent study by the Program for International Student Assessment via the Organization for Economic Cooperation and Development reported that American students scored below the worldwide average for basic finance and money-management understanding.
Almost 18 percent of American students were not able to perform basic financial literacy tasks, compared to the 15 percent world average of students who failed to perform.
Financial literacy becomes particularly important for young adults when they enter college and are hit with student loan decisions, taking on debt and spending their own money, often for the first time.
Many universities understand that managing financial aid and personal finances as a college freshman can be overwhelming. So they've put policies in place to guide students.
Rollins College Interim Dean of Enrollment Management Steve Booker says that at Rollins, the Office of Financial Aid helps students stay on track with financial aid payment plans.
"We encourage everyone to put together a four-year plan to determine how much money they need to borrow," Booker says. "When students are roughly three-quarters of the way through [their four years at Rollins], and if they have borrowed a lot, we reach out to them to check in. We want to make sure their aid gets them through all four years."
The University of Central Florida also sees how financial aid and money management are changing and, in many cases, becoming more multifaceted.
"Today's student must navigate complex financial situations," says Alicia Keaton, director of the Office of Student Financial Assistance. "Over the years, what students must understand to be considered financially literate has become more intensive."
In response, UCF created a comprehensive financial literacy program that will be available to students in fall 2015.
The program will include a financial-literacy website that provides students with information on student-loan management, healthy spending habits, saving strategies and financial protection, as well as online tutorials.
The programming won't stop online. UCF's Office of Student Financial Assistance also plans to host financial literacy programming throughout the year for students.
But while the university can create as many programs as they want, they will only be useful if students have the time and desire to take advantage of them.
"One of the biggest challenges to making students more financially literate is developing a program that fits into students' schedules, which are often very hectic and busy," Keaton says. "It is important for financial literacy programs to be accessible and flexible enough to provide students with the opportunity to become financially literate in a manner that is suitable for their lifestyles."
The UCF chapter of the accounting fraternity Beta Alpha Psi (BAP), which works to promote financial literacy, understands the difficulty of reaching students in their fast-paced environment. So during spring semester, BAP created a YouTube channel in hopes of reaching more students.
One video asked a handful of UCF students from varying backgrounds and majors to try to define financial terms in their own words.
UCF student and BAP chapter president Bianca Bermudez said they put their educational materials into a YouTube video to attract and teach more students.
"Most students quite simply don't understand the terminology for finances," Bermudez says. "So we made [the videos] lighthearted and witty, to make the videos more approachable."
Student-based organizations that promote financial literacy are becoming more widespread.
Valencia College also has an organization, Valencia Financial Ambassadors, run by students who work to educate students on managing personal finances.
The organization did not respond to a request for more information about their work, but according to their Facebook page their mission is to "increase financial awareness among the student population through peer-to-peer learning."
As more students become aware of money management initiatives, financial literacy is expected to increase. Keaton sees financial literacy becoming more commonplace for students in the future.
"There is a consensus that a financially literate population is a benefit to the nation," she says. "Hence, financial education programs will become more prevalent in the future [and] hopefully result in a more financially literate population."
Look at your financial needs versus wants
Analyze what you are spending your money on. Compare whether your money is going toward necessities (tuition, insurance, books, rent) or just wants (video games, concerts, takeout, shopping sprees).
Take advantage of campus offerings
If you live on campus and have a meal plan, your food is already paid for, so think twice the next time you want to order a large pizza. Also, look into different forms of entertainment on campus. While it’s not front row at Maroon 5, student concerts, dance and theater performances, and art shows are often free, and therefore easier on your wallet.
Maximize your time each semester
Take as many credit hours as your aid will cover for that semester, not just the minimum hours. The more you stretch out your classes, the longer you will be in school, which leads to increased debt. This applies more if you are paying by semester instead of credit hour, but it is also a good practice to take as many classes as you are financially and mentally able to. The earlier you graduate, the sooner you can start paying off loans.
Do your research when buying textbooks
In addition to checking out the campus bookstore, also look online at discount textbook websites. Many sites, including BookRenter, Chegg and Amazon, sell textbooks at a discounted price. And remember, if possible it’s always cheaper to rent a book rather than buy it.
Apply for scholarships
Free money is good money, so take the time to apply for scholarships. Do your research and once you do, you’ll realize that scholarships are given not just from your university, but also from local and national organizations.
Know your loan repayment options
There are several repayment plans available for federal student loans. The key is to understand which ones are best for you in the short and long term.
The money you borrow will eventually cost you
While it seems great to apply for aid and receive money to help you get by, one day in the near future you’ll feel its effects. There’s no such thing as free money (except for scholarships and kind grandparents on your birthday). Drill into your head that all loans must be repaid, so borrow only what you need.
Tips compiled from advice via Steve Booker of Rollins College and Alicia Keaton of UCF
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