Many people think that financial management is a thing of the rich people, undergraduate as a group with no independent source of income that does not need to learn and master personal finance. This is wrong viewpoint; financial management is a lifelong for everyone. In anyone’s life, it is including a single period, family formation period, family growth period, children education period, family maturity period and retirement period. The college is an important stage in the life and it belongs to a single period. The characterized of this stage is low income or no income and high expense. And this stage is the first stage for management of personal finance; if undergraduate does not know how to manage his or her personal finance would incur lots of problems. According to the survey, only a very small number of college students are understanding of financial management concepts, but the vast majority student has lack financial sense and lack of real action on manage their personal finance. It would be incurring some severe hidden dangers in their future life.
Personal finance has the most important influence on people’s life, but the majority of people cannot learn personal finance in their school except some finance student. It means the most people would be a financially illiterate that they do not how to manage their personal finance. A survey shows these financially illiterates do not understand personal finance always from their university that they did not learn the relevant knowledge of personal finance.
Personal finance is a process of managing of personal asset and capital. It is defined on the basis of data collection of personal income, asset and liabilities then through the analysis of the risk affordability and preferences of individuals to combine with the target to use such as savings, insurance, securities, foreign exchange, collection, housing investment and other means to manage asset and liabilities in order to achieve maximum capital appreciation of the individual
Undergraduate as a special consumer groups in the current economic life, in particular, they are playing an important role in the improvement of the consumption structure. Consumption status and financial status of college students can support a reflection of the current life status and value orientation of undergraduate. Therefore, understanding factor that affect on the personal finance of undergraduate and give them suitable financial advice in order help them manage their personal finance.
An analysis had display lots of university student do not have a good learning and knowledge of personal financial fundamentals. (Bakken, 1967; CFAJAMEX, 1991; HSR, 1993; Langrehr, 1979; NAEP, 1979). Otherwise, in a recent report include 1509 students from 63 schools has displayed more students has a poor ability to make decisions when they are leaving school. (Mandell 1997)
If the undergraduate does not know how to manage their personal finance it would be incurring those problems:
Irrational consumption structure. The daily consumption of college students should have the cost of living and learning costs.
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