Adam Trone and Dr. James Brau

My interest in financial literacy and my decision to pursue an ORCA grant in this subject began in the fall of 2007. Many remember the upheaval that devastated financial markets beginning at this time. This upheaval is not just a memory because similar economic and financial conditions continue to this day. As a casual observer of this crisis as shown on the news, I began to think. I began to think about my own finances, saving for retirement, taxes, and the job market. These thoughts never became a serious bother but I was mildly concerned. I began to realize that I seriously lacked basic financial knowledge. I had no desire to become an expert, but I did see the importance of having a basic and practical knowledge of personal finance. As I began to research and learn, I realized how little I knew. This made me wonder how much other university students knew about finance. Was I the only one who seriously lacked vital knowledge about finances or was I part of a larger trend?

My advisor and I began to research this issue. The goal of our research was to answer the following question: How much do university students really know about finance? While not everyone studies the subject or wants to become an expert in finance, there is a basic amount of knowledge that everyone can benefit from. The current financial climate only increases this benefit. To determine how much students really knew about finance, we administered a survey to a sample of university students. In total, we administered a 71 question survey to 572 students. Of the 71 questions, 31 were demographic and 40 were to determine financial literacy. In choosing the 40 questions on finance we were careful to ask important questions that had a practical application to all. In terms of our sample population we tried to draw from the widest array of student demographics as possible. We surveyed 335 students taking Business Management 300 on the first day of class. This is the introductory class for students pursuing a Minor in Business. Students in this class, therefore, come from a wide array of major study areas while at the same time are brand new in their Business Minor and are therefore uninfluenced by what they would learn by the time of completion. Additionally, we surveyed 237 students in Business Management 301. This is the introductory class for students pursuing a Business Major. Overall, the results of our research are striking to say the least. The respondent’s average score on our survey was 45.9 percent. Such a score is well below what is considered a passing grade in any class, well below what can be considered sound financial literacy, and far less than what the average person needs to know to successfully manage their personal finances.

A basic knowledge of personal finance is valuable to everyone. One conclusion can be clearly drawn from the results of our research and that is as follows: The average university student is greatly lacking in their financial literacy. While not everyone needs to be an expert in finance or even pursue a minor in business, everyone could benefit from a small amount of instruction in finance.