The effect of a financial management intervention on college students' financial behavior was examined. The intervention strategy, a form of expenditure tracking, focused on consciousness-raising and was implemented among 170 undergraduate students. Qualitative analysis of participants' self-reflection papers revealed that awareness of spending behaviors increased universally among participants. Increased awareness of spending behavior, combined with other processes of change from the Transtheoretical Model of behavior change, resulted in a significant proportion of students modifying spending behaviors to more closely conform to personal values. Participants consistently reported the importance of spending management tools.
College graduates' debt levels have increased significantly over the past decade. These higher debt levels have significant societal implications as recent debt burdened college graduates may have less flexibility in the types of jobs they are able to accept. Additionally, decisions about marriage, family, and home purchase may also be effected (Boushey, 2005). Compounding the problem of high debt levels is low financial literacy and poor financial management among some college students (Goetz, Desai, Mimura, & Cude, 2008).
Much of the increase in student debt levels is the result of increased tuition costs over the past decade (Boushey, 2005). However, some of the increase in student debt levels may also result from changing spending patterns. In 1991, 31% of recent graduates reported that they would have borrowed less if they had to do it again; by 2002 this percentage had increased to 54% (Baum & O'Malley, 2003). One implication of the substantial increase from 1991 to 2002 is the idea that students would have allocated their resources (i.e., discretionary expenditures and time) differently during college in order to avoid taking on student loan debt had they been more aware of their spending behavior and the ramifications of that behavior on future debt burdens.
Discretionary spending has a direct impact on student resources. Decreased discretionary spending will result in increased resources available to complete degree requirements, or decreased student loans and associated financial burden following their education. This paper examines how a financial behavior intervention, delivered as a class project, increased awareness of discretionary spending among students and how students' improved awareness of their spending patterns motivated spending behavior changes.
College Students and Financial Practices
Students' spending habits, and subsequent use of debt, are important issues for colleges and universities, particularly when considering the relationship between students' financial wellbeing and their overall wellness and likelihood to stay in school. Given students' low levels of financial literacy when beginning college (Jump$tart Coalition, 2008; Mandell, 2004), they often make poor financial choices and are consequently vulnerable to financial stress (Henry, Weber, & Yarbrough, 2001; Joo, Grable, & Bagwell, 2003). Past research suggests a strong link between students' level of financial stress and their overall wellness. For example, college students reporting depression often attribute their depression to financial difficulties (Furr, Westefeld, McConnell, & Jenkins, 2001) and students' confidence about their finances has been found to be significantly and negatively associated with mental health needs in general (Hyun, Quinn, Madon, & Lustig, 2006).
Students often have greater amounts of credit than is appropriate given their levels of income. This creates greater vulnerability to negative financial situations if they overspend (Chen & Volpe, 1998). When students do overspend--typically with the use of credit cards--and are unable to repay their debts in a timely manner, their credit scores suffer. …