Financial literacy, or the ability to understand and manage one’s financial resources to secure financial well-being, is a vital skill. In fact, research has shown that low financial literacy correlates to lower income levels. Although a number of higher education institutions are beginning to offer financial literacy education, it’s clear that many students are leaving college with large amounts of debt and without adequate knowledge of how to manage their personal finances. Understanding credit and its implications for future life goals is an important piece of financial literacy.
Advice from a senior financial planner
“In conjunction with learning about credit and what creates credit, it’s important for students to learn about credit scores and how this particular score can affect their lives in many other areas, like buying a house or car, for example.”
—Kelly DiGonzini, CFP, MST, senior financial planner at Beacon Pointe Advisors in California
What students should understand about credit:
- What credit means
- How credit cards and loans work
- The importance of credit scores and how they can start building theirs
- The risks and benefits of using credit
Sugato Chakravarty, PhD, professor of Consumer Economics and Management at Purdue University, Indiana.
Kelly DiGonzini, CFP, MST, senior financial planner at Beacon Pointe Advisors, Newport Beach, California.
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