College students aren’t planning for their financial futures… but they should be.
by Lauren Landau
All college students – young women especially and even those fortunate enough to have all expenses (including spending money) covered by Mom and Dad – should be attentive to their financial future, and not just because of mounting student loan debt. That’s why sorority Sigma Delta Tau partners with JWI to bring the nonprofit’s Life$avings® financial literacy workshops to SDT chapters across the country.
“Our women are learning that with money of their own they will enjoy freedom and personal safety throughout their lives,” says Tami Ackerman, SDT’s national vice president of philanthropy and programming. “On the campuses where we have taken the program, our women have stated that they never knew how to take control of their finances and now feel like they’re in a better place to start managing their money early on, to be able to save for their future.”
Life$avings® is one of those programs, and Deborah Rosenbloom – JWI’s vice president of programs and new initiatives – travels around the country to bring the series to women of all ages. When she teaches the workshop to college students, many are surprised that she emphasizes saving and investing for retirement even though to a 19- or 20-year-old that can seem eons away.
Juniors and seniors in college worry about the immediate future, especially about landing a job after graduation, as well they should. But Rosenbloom urges them to also imagine themselves 45 years into the future, when their working days are winding down and opportunities to earn a paycheck are diminishing. That, she says, is what they should worry about. Some young people she talks to argue that they can’t yet afford to save for their retirement. Her response is that they can’t afford not to.
During one workshop, a young woman texted her live-in boyfriend to ask about his credit score, only to get the unnerving response, “we have to talk.”
“We’re living 10 or 15 years longer than men, so if a woman is married to a guy, she’s most likely going to outlive him or get a divorce. That’s the trajectory,” Rosenbloom says, noting that whatever their marital status, women workers also face the gender wage gap.
“Be good to your future self,” Rosenbloom tells them. “Start planning now.”
As “America’s Millennial Money Expert,” The College Investor founder Robert Farrington has made it his mission to help young adults escape student loan debt and start building wealth for the future. In an email, he tells JW magazine that it’s incredibly important for college students to be financially literate. The number one reason, he says, is mathematical.
“The earlier you start saving and investing, the more time you allow your money to grow, and as such, the more money and wealth you’ll have in the future,” he says. “If you start investing at 22 versus 30, and invest the same amount of money, you could have hundreds of thousands more at 65. It’s powerful.”
Emily Jacobs is a sophomore at the University of Maryland. She works most summers and saves about half of what she earns, but retirement is a distant thought. “It’s hard to plan so far in advance, because all I’m really thinking about is the next two years of college and how much I have to spend this summer and during the semester and when I go abroad,” she says.
That’s pretty typical for college students, most of whom aren’t making a regular income yet. “A lot of the work with college students is really planting the seeds,” Rosenbloom says. Life$avings® gets them to understand why knowing their credit score, talking about money with their partner, budgeting, investing for retirement, and saving for life’s inevitable bumps are all important, especially for women.
Like many of the college students Rosenbloom speaks with, Jacobs doesn’t know her credit score. “All I know about my credit, since I don’t have a credit card, is that my parents just bought me a car and they put my name on it, which is going to establish my credit for the future,” she says.
In addition to knowing their own credit score, women should also know their partner’s. Rosenbloom says broaching that topic can be intimidating for young women, but is a necessary conversation to have. She recalls how during one workshop, a young woman texted her live-in boyfriend to ask him about his credit score, only to get the unnerving response, “We have to talk.”
While credit scores can change, people generally don’t. “People have ‘money styles,’ so if a person is a compulsive spender, or gambler, that’s probably not going to change,” Rosenbloom says. “Women need to be aware of their partner’s money style. You need to know what you’re getting yourself into, because that’s going to have an impact on your own well-being.”
DailyWorth is the leading financial media company for professional women over the age of 30. Founder and CEO (and former JWI Woman to Watch) Amanda Steinberg says college-age women aren’t the company’s market, but she has seen what can happen down the line if they fall into certain financial traps. At 22, it’s easy to imagine a vast, open future. But like money, time is not limitless.
Steinberg says many young women want to see the world, dress the part for that first job, and impress future boyfriends. These luxuries are exciting, look great on Instagram, and may feel more important to young women than their long-term finances. That is no coincidence. Steinberg says young women often hear messages in the media and from their own families that emphasize getting a good job or finding a husband.
“These things are often positioned as more important than finance. Many women are told that money isn’t necessarily their responsibility,” Steinberg says. “So young women may think that they should prioritize things regardless of expense because someone else is going to take care of them, that their parents will bail them out or one day they’ll get married.”
She says that lack of accountability is something that our society teaches women. That’s a problem, as is splurging now and leaving one’s future self with the bill.
“I would say make sure that you don’t get so far into debt that you don’t understand what it really means to get out of it,” Steinberg says. “Things can really snowball on you.”
Steinberg also recommends starting a savings habit. “While a lot of us are taught to live below our means and not to spend money that we don’t have, that’s very different from actually building savings,” she says. “It’s one thing not to go into debt; it’s another thing to actually learn how to build savings, which is a muscle and a habit and one that will serve you so well for the rest of your life.”
Not all young people are clueless about finance. University of Virginia junior Alyssa Imam has two part-time jobs and saves her money. She says she thinks about her career and financial future often, a habit she attributes to her family. Her dad, a former certified public accountant, taught his daughters to be mindful of their finances. Imam remembers shopping with her mother and being asked to check the price tag and weigh how often she’d wear an item.
“I also thought a lot about money because I grew up in developing countries and there’s a really stark contrast between where we were financially and the vast majority of the people,” she says. Imam says her cousins in Bangladesh are more money conscious, especially those who will have arranged marriages.
The thought of relying on a man for money doesn’t appeal to Imam, who values her independence. “My friends seem to think it will all work itself out, but I’m focused on saving now and getting a high-paying job so I won’t ever feel like I need someone else to supplement my income,” she says. “I want to feel like I could get divorced or walk away from something and still have the same lifestyle.”
She’s not an anomaly. “There are a lot of college students who are very savvy with their money, can budget, and know how to save,” Farrington says. “There's another group that are interested in investing. But there is a larger group that have gone along with what everyone has told them and haven’t really looked at their own situation.”
What he means is that a number of college students take out loans, get a credit card, and enroll in a checking account, all because someone tells them to. “They make it all work, but they’re effectively treading financial water,” he says.
University of Virginia junior Amy Singer falls into that category. The 20-year-old saved the money she made as a camp counselor, but she’s fuzzy on the details of where it went. “Honestly, my dad helps me figure out what to do with it and pretty much does it for me,” she says. “If something were to happen tomorrow, I would not know how to deal with it all myself, and I really should.”
For those who would like to learn how to plan for and navigate their financial futures, Life$avings® fills a serious void. “I didn’t even know that anyone taught financial literacy to people our age,” Singer says, but adds that she’d welcome the training on her own campus. “I took an Intro to Commerce class and learned about different ways to save and invest, but I didn’t even know that financial literacy was an option.”
Many campuses across the country have embraced this option. This fall, JWI will bring Life$avings® to the University of Kansas, Kent State, and the University of Michigan.