The Journal of Consumer Education, Vol.

2, 1984

2. Consumer Reports (1983), "Disability Income Insurance." come on a reoccurring basis. These behaviors or practices are ad­
(March), pp. 122-126, 154. vantageous for any consumer.
3. Health Insurance Association of America, New Group Disability The economic realities of inflation and uncertainty of the last
Insurance (1977-1982), Washington, D.C., 1982, p. 3. decade have had a specific effect on the costs of attaining a college
4. Health Insurance Association of America, Source Book of Health education. Students and their families are faced with a particular
Insurance Data, 1981-82, Public Relations Division (Washington, price squeeze in terms of the cost of higher education. The Higher
D.C.: Health Insurance Association of America, 1982), p. 10. Education Price Index (developed by D. Kent Halstead for HEW)
reached 203.4 for the fiscal year of 1981 compared to the 1971 base
5. Health Insurance Institute, "What You Should Know About Disa­
year of 100 [6, p. 17). This upward trend in the costs of education is
bility Insurance". Washington, D.C.: Health Insurance Insti­
tute, p. 2. expected to continue for the next several years. The high costs of
education present financial management difficulties for students
6. Lang, Larry R. and Thomas H. Gillespie (1981), Strategy for which will affect their choices of whether or not to attend college and
Personal Finance, (New York: McGraw-Hili Book Company), their ability to finish degree programs. The higher costs of obtaining a
p.562.
college degree also affect the rate of return which students will
7. U.S. Department of Health and Human Services, Social Security receive as a result of their education. Rates of return for college
Administration, "If You Become Disabled," SSA Publication students graduating before 1970 have been estimated between 10
No. 05-10029, May 1982, p. 10. and 12 percent [2, p. 3]. Currently, rates of return have been falling
8. U.S. News and World Report (1983), "Easing A Crackdown on and this presents a further financial difficulty for students.
Disabled" (June 20), p. 13.
A second reason for studying the financial management behavior
REFERENCES FOR CONSUMER EDUCATION TEACHERS of students is simply because a student's managerial skills provide an
experience base for later financial activity. The success of many
"What You Should Know About Disability Insurance", The
students depends upon their abilities to plan and implement their
Consumer Series, Health Insurance Institute, 1850 K Street,
N.W., Washington, D.C. 20006. financial goals. Further, students are not only an important group of
consumers, but their management skills and behaviors are har­
Consumer Reports (1983), "Disability Income Insurance." bingers of future consumer vitality in the marketplace and in the
(March), pp. 122-126, 154. home.
PROBLEM STATEMENT AND PROCEDURES
Financial management behaviors are defined to be planning and
THE DETERMINANTS OF FINANCIAL MANAGEMENT implementing behaviors which relate to the financial resources and
BEHAVIORS AMONG COLLEGE STUDENTS: demands faced by individuals and families. This research further pro­
IMPLICATIONS FOR CONSUMER EDUCATION poses to represent the planning and implementing activities of man­
agement by the following nine behaviors:
Dr. Ramona K. Z. Heck
Cornell University
Planning Behaviors Implementing Behaviors
Financial choices of most consumers are more difficult today 1. setting financial goals 5. considering several alterna­
because of fewer resources, higher costs and greater uncertainty of 2. estimating expenses accur­ tives when making a financial
our economic future [12, p. 81]. Financial management behavior can ately decision
have broad and long-term consequences. Planning and implemen­ 3. estimating income accur­ 6. adjusting to meet financial
ting activities of consumers are direct approaches to managing our ately emergencies
complex financial environment within which financial choices must be 4. planning and budgeting 7. meeting deadlines or bills on
made. Thus, the development of a set of routine financial manage­ one's spending time
ment practices or behaviors should lead to a greater probability of 8. successfully meeting financial
financial success as well as security. Examples of such behaviors in­ goals
clude regular financial goal-setting and estimating expenses and in­ 9. successfully carrying out a
spending plan [11].
12 13
The Journal of Consumer Education, Vol. 2, 1984

According to the Deacon and Firebaugh management behaviors, particularly planning behaviors such as estimating ex­
framework, these financial management behaviors would depend on penses and incomes and planning how to spend one's money. How­
and would be a function of a set of inputs; namely, demands and re­ ever, nonemployed students were also more likely to estimate ex­
sources [4]. penses accurately, meet bills on time, and successfully meet their
The likelihood of a student engaging in any of the previously men­ financial goals. It would seem that employed students engage in
tioned financial management behaviors was represented by a nomin­ more planning behaviors as a result of necessity. On the other hand,
ally-scaled dependent variable which assumed ordered values from 0 nonemployed students seem to be more likely to engage in imple­
to 3. Sample respondents were asked to describe the frequency with menting behaviors.
which they engaged in the nine financial management behaviors. The second major group of variables represent resources as in­
Answers for each behavior could be one of the following: 0 for never, 1 puts. These variables including human and material resources were
for seldom, 2 for sometimes, and 3 for often. Never engaging in a par­ expected to influence the likelihood of engaging in management be­
ticularly behavior would be a type of non management or a manage­ haviors. Females were expected to be more likely to engage in both
ment bypass routine. The probability of engaging in a particular financial planning and implementing behaviors. In general, planning
financial management behavior was explained by examining the ef­ behaviors were less likely among females while implementing
fects of inputs into the management subsystem in the form of behaviors were more likely to occur.
demands and resources of students studied. Demands and
resources included general, student, and financial characteristics of Nonwhites were less likely to estimate income accurately and
the sample members. more likely to plan or budget how to spend their money and more like­
ly to successfully carry out a spending plan. There would seem to be
Data used in this research project were collected during a somewhat positive relationship between financially-disadvantaged
December 1979 via a mailed questionnaire sent to 2,697 randomly­ background and an increased likelihood of engaging in implementing
selected undergraduates enrolled in three institutions of higher edu­ behaviors.
cation in the central New York State area. Questionnaires were
returned by 1,067 undergraduates, representing a rate of return of ap­ The effect of being married was positive if significant. As
proximately 40 percent. The actual sample analyzed in this research hypothesized, the physical independence and the state of being on
study included 877 students due to the accumulative effect of the one's own would seem to foster the probability of engaging in particu­
missing values for the research variables involved in the research lar financial management behaviors. Married students are more likely
model. to engage in planning as well as implementing behaviors.
RESULTS AND DISCUSSION Seniors and students with higher grade point averages were con­
sistently positive and significant across most of the equations. These
The actual sample used to estimate each of the nine equations in­ results would seem to indicate that financial management activities
cluded 877 respondents. Descriptive statistics were computed for are more likely to occur when the manager involved has a higher
each independent variable and for all nine dependent variables. As academic ability and more experience in handling his own affairs.
hypothesized, students who were majoring in the natural sciences
were more likely to engage in one planning behavior of estimating ex­ The material resource of total income increased the likelihood of
penses accurately and one implementing behavior of meeting setting financial goals as was hypothesized. If a student was receiv­
deadlines or bills on time. ing financial aid, he was more likely to estimate his income accurate­
ly.
The number of credit hours enrolled in was consistently positive
and significant across most of the equations. This result would seem If a student was financially dependent on his parents and per­
to indicate that financial management activities were more likely to oc­ ceived his income as inadequate for his needs, he was less likely to
cur when the situation warrants and demands them. The more credit engage in financial management behaviors. A student's financial
hours the student is enrolled in the more pressures he would face with dependence on his parents was significant in discouraging implemen­
less time to manage. ting behaviors such as adjusting to financial emergencies and suc­
cessfully meeting financial goals. The perception of inadequate in­
The final type of demands examined were the employment ac­ come relative to one's needs consistently discouraged both planning
tivities of the students. As hypothesized, the more hours a student and implementing behaviors of students. As hypothesized, one's
works, the more likely he is to engage in financial management perception of income adequacy may result in a sense of lack of con­
14 15
The Journal of Consumer Education, Vol. 2, 1984

trol or a fatalistic outlook. In turn, financial management behaviors 4. Deacon, Ruth E. and Francille M. Firebaugh. Family Resource
seem to be discouraged. Management: Principles and Applications, Boston: Allyn and
Bacon, Inc., 1981.
SUMMARY AND IMPLICATIONS FOR
CONSUMER EDUCATION TEACHERS 5. Ferber, Robert and Lucy Chao Lee. "Husband-wife Influence
in Family Purchasing Behvaior," Journal of Consumer Research
June 1974, 43-50.
In summary, students were more likely to engage in planning
behaviors if they were majors in the natural sciences, enrolled in a 6. Halstead, D. Kent. "Higher Education Prices and Price
larger number of credit hours, employed, married, and seniors. Indexes," Business Officer, 1980, 14(4), 17-20.
Nonemployment status had only a positive effect on estimating ex­ 7. Heck, Ramona K.Z. "A Preliminary Test of a Family Manage­
penses. Students with higher grade point averages and higher total ment Research Model," Journal of Consumer Studies and Home
incomes were also more likely to engage in some of the planning Economics, 1983, 7, for,thcoming.
behaviors. Planning behaviors were less likely for female students 8. Heck, Ramona K.Z. and Robin A. Douthitt. "Research Model­
and students who perceived their incomes to be inadequate for their ling Implications of Conceptual Frameworks in Family Manage­
needs. Nonwhite students were less likely to estimate income accur­ ment," Journal of Consumer Studies and Home Economics,
ately, but more likely to plan a budget. 1982, 6, pp. 265-276.
Implementing behaviors were more likely for students who were 9. McKelvey, Richard D. and William Zavoina. "A Statistical Model
majors in the natural sciences, living in an apartment, nonemployed, for the Analysis of Ordinal Level Dependent Variables,"
females, nonwhite, married, and seniors. Hours of employment had Journal of Mathematical Sociology, 1975, 4, 103-120.
only a positive effect on meeting bills on time. Students with higher 10. Morgan, James N. and Greg J. Duncan. The Economics of
grade point averages and higher total incomes were also more likely Personal Choice, Ann Arbor: The University of Michigan Press,
to engage in some of the implementing behaviors. Implementing 1980.
behaviors were discouraged among students who were financially 11 . Patterns of Living Related to Income Poverty in Disadvantaged
dependent on their parents and who perceived their incomes as Families, North Central Regional Research Publication No.
inadequate for their needs. 217, Special Report 74, Iowa Agriculture and Home Economics
The activity level of financial management behavior is viewed as Experiment Station, Iowa State University, Ames, Iowa, August
some indication of effectiveness or probability of success in a 1974.
student's financial matters. Educational experiences in the area of 12. "Price Data," Monthly Labor Review, 1982, 105(1),80-88.
financial management which would enhance planning behaviors are
needed by students who are females, single, beginning, and part­
CALL FOR ARTICLES
time. Also, students who hold lower grade point averages, have lower
incomes, and have perceived their incomes to be inadequate for their FOR
needs may be assisted by education experiences or services which THE 1985 ILLINOIS JOURNAL
enhance their financial planning behaviors. OF CONSUMER EDUCATION
Articles should fall into one of the following three categories:
REFERENCES A. POSITION PAPER. A discussion of consumer education
1. Amemiya, Takeshi. "Qualitative Response Models," Annals of issues, problems and trends.
Economic and Social Measurement, 1975, 4(3), 363-372. B. RESEARCH SUMMARY. A presentation of recently com­
2. Baxter, Neale. "Payoffs and Payments: the Economics of a pleted research.
College Education," Occupational Outlook Quarterly, Summer,
C.
BOOK REVIEWS. A summary and analysis of textbook and
1977.
general interest books of value to consumer educators.
3. Beard, Doris and Francille M. Firebaugh. "Morphostatic and
For format considerations contact:
Morphogenic Planning Behavior in Families: Development of a
Measurement Instrument," Home Economics Research Journal, Dr. Les R. Dlbay
1978, 6, 192-205. Dept. of Economics and Business
Lake Forest College
16 17 Lake Forest, IL 60045