Capital One Survey Finds Nearly Half of Graduating High School
Seniors Lack Confidence in Ability to Manage Personal Finances

Students who have received financial education through the classroom and at home are significantly more confident in personal finance skills, knowledge

MCLEAN, Va., Jun 17, 2010 (BUSINESS WIRE) --This high school graduation season, millions of young adults from around the country will celebrate their achievements and prepare to begin the next chapter in their lives. For many, setting out into the "real world" also means taking on new financial responsibilities. Capital One Financial Corporation (NYSE: COF) recently surveyed high school seniors to see how prepared they are to manage finances on their own. The survey shows that while many students are uncertain about their ability to manage their banking and personal finances, those who have had financial education -- both in the classroom and through conversations at home -- are significantly more confident about their personal finance skills and knowledge.

One troubling statistic shows that nearly half (45 percent) of all high school seniors polled say they are unsure or unprepared to manage their own banking and personal finances. However, of the students surveyed who have taken a personal finance class (30 percent of the sample), 75 percent said they feel prepared to manage their finances. In addition, two thirds (66 percent) of students who have taken a personal finance class rate themselves as "highly" or "very" knowledgeable about personal finance, compared to only 30 percent of students with no financial education course who show the same level of confidence in their skills.

Parents' efforts to teach their kids about money also have a significant impact. One out of five (20 percent) students polled say they talk to their parents about money management and personal finance issues "frequently," while 45 percent say they sometimes ask questions and one-third (34 percent) report that they talk to their parents about money never or only when necessary. Of the students who report frequent conversations with their parents about money, 71 percent rate themselves as "highly" or "very" knowledgeable about personal finance and 81 percent feel prepared to manage their own finances and banking.

"Our survey clearly shows the value of financial education in helping young adults build confidence in their ability to manage money on their own," said Shelley Solheim, Director of Financial Education at Capital One. "Most students report that their parents are their primary resource for information about personal finance. Capital One encourages parents to take advantage of opportunities to talk to their teens about money management. Our study shows that these conversations help young adults develop good financial habits, which are building blocks to economic success and self-sufficiency."

Having a job is another key way students reported developing their personal finance skills. Of those who have had a job before, 72 percent think that their job experience has prepared them for their financial future in some way. More than half of high school seniors surveyed (61 percent) said they have a job lined up for the summer.

Establishing good personal finance habits

Real world experience managing money also prepares young adults for the financial responsibilities and independence they will face upon graduation. Eighty-one percent of the high school seniors surveyed report that they have a bank account and most are saving for their future. Almost half (44 percent) of students polled report that they put money aside in savings at least monthly. Most of those with checking accounts (69 percent) balance their checkbooks at least once each month, and 70 percent report that they check their bank account balances at least monthly for activity and errors. Only one-third (34 percent) of seniors, however, currently use a budget to manage expenses and savings.

The survey findings suggest that financial education may help young adults establish important money management habits. About two-thirds (65 percent) of students who report talking to their parents about money "frequently" say they balance their checkbook every month compared with 43 percent of the overall sample. Half (52 percent) of students reporting frequent conversations with their parents about money currently use a budget while only one-third (34 percent) of high school seniors overall use a budget.

To help parents and young adults effectively talk about financial choices, challenges and dreams, Capital One has partnered with Search Institute to create Bank It, a free multimedia financial literacy program available online at www.bankit.com. The program is designed to help parents and teens work together to learn practical skills for making positive money choices and avoiding common mistakes.

In addition, Capital One offers graduating seniors the following ten tips for a healthy financial future:

1.

Establish financial goals. As a first step to financial freedom, consider and establish your own financial goals. Short-term goals could include setting aside money to cover everyday expenses or saving toward a vacation with friends. Long-term financial goals might include planning to repay student loans or saving to buy a new car.

2.

Develop a realistic budget that you can stick to. After graduation, many seniors may be responsible for a number of bills and personal expenses for the first time. Once you've established financial goals, create a budget of expenses you expect to incur. Gather recent receipts and be sure not to forget bills or things that may be automatically deducted from your bank account. Then determine your expected income. Determining your expenses and your income will show any gaps and will allow you to allocate your money properly, ensuring you are in control of your income and on track to meet your financial goals.

3.

Prepare for the unexpected. When creating a budget, be sure to set aside money for emergency situations or unexpected expenses.

4.

Set savings goals that help you follow your dreams. While it might be challenging to put aside money in savings, this is an important habit to establish, as savings will help fund your financial goals. One of the easiest ways to make sure you're saving regularly is to have money automatically transferred to savings every month or with every paycheck. It may also be helpful to talk to your friends and family about saving and support one another's savings goals.

5.

Keep track of your money. Monitor your expenses, receipts and bills. Use a record-keeping method that works for you (budgeting software is often helpful, but a simple spreadsheet or even a pen and paper work, too).

6.

Think about how you spend your money. Before you make a purchase, consider your needs vs. wants. Try to avoid impulse buys and take notice of how others affect your spending.

7.

Live within your means. If you can't afford something, don't buy it. It may sound simple but, in practice, it can be a challenge. Many people spend more than they earn and find themselves with too much unnecessary debt.

8.

Simply pay attention. Thoroughly read all bills, contracts and fine print. This is one of the most important keys to financial responsibility. It's important to know your interest rates on all credit cards and loans. You should also check your bills closely for mistakes each month and report any incorrect charges immediately.

9.

Pay on time. Paying your bills on time is the most important step toward establishing a good credit history. If you anticipate that you will be late on a payment, contact your lender in advance to make them aware of your situation and see if there is any room for negotiation.

10.

Watch out for identity theft. Monitor your bank and credit card statements for any incorrect charges and make sure to check your credit report at least once a year. Consumers are eligible for one free credit report every year from each of the three major credit reporting agencies. Individuals can request their free credit report online at www.annualcreditreport.com or by calling 1-877-322-8228. Consumers should also be sure to correct any mistakes on their credit report right away.

Survey Methodology

The findings reported in this release are from an online panel survey conducted by the opinion research firm, Braun Research of Princeton, New Jersey. The survey was sponsored by Capital One Financial in McLean, Va. Braun Research completed 502 interviews with High School Graduating Seniors throughout the United States. The interviews were conducted between May 20, 2010 and May 26, 2010. The margin of error for this study is ± 4.38 percentage points at the 95% confidence level. Sampling for this study was supplied by invited panelists. No statistical weighting was accomplished as all samples were drawn at random and designed to fall proportionally to the population of High School students in the United States by Census region.

About Capital One

Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A. and Capital One Bank (USA), N. A., had $117.8 billion in deposits and $200.7 billion in total managed assets outstanding as of March 31, 2010. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One, N.A. has approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia, and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

SOURCE: Capital One Financial Corporation 

Capital One Financial Corporation
Shelley Solheim, 917-589-6203
Shelley.solheim@capitalone.com