Journal of Personal Finance Volume 24, Issue 1 2025

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Techniques, Strategies and Research for Consumers, Educators and Professional Financial Consultants

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Volume 24 Issue 1,  2025

Financial Independence of Emerging Adult College Students 
Jing Jian Xiao, Ph.D., Professor
Nilton Porto, MBA/Ph.D., Associate Professor
The purposes of this study are to examine financial independence level and motivation of college students and their demand for personal finance topics. With both quantitative and qualitative data collected from online personal finance courses in three semesters in 2022-23 at a northeastern public university, results show that
financial independence level and motivation are closely correlated. First generation college students tend to perceive a higher level of financial independence, while juniors tend to rate higher in financial independence motivation than first year students or sophomores. Students at different levels of financial independence show different responsibilities for spending items while their demands for topics in personal finance courses are similar. Qualitative responses of students on financial independence motivation and helpful personal finance topics provide further insights to better understand college students’ financial independence. The findings have implications for financial educators in designing and delivering effective personal finance courses for young adults at university and other settings.

Deep-Six the 60/40 Rule 
Gary Smith
Many financial advisors recommend a 60/40 stock/bond portfolio allocation. However, the 60/40 rule and similar strategies sacrifice long-run returns in order to reduce short-run risks that should not matter to many investors. A heavier investment in stocks during a lengthy saving period is likely to substantially increase the amount of accumulated wealth available for spending. During the subsequent spending period, too, a 60/40 investment strategy, whether combined with a constant withdrawal rate or a more flexible endowment spending rule, is likely to underperform an investment strategy that is more highly invested—even fully invested—in stocks.

Target Date Funds and the Paradox of Choice 
James M. Kohlmeyer, III
Robert Prati
Douglas K. Schneider
Target date funds (TDFs), also known as life-cycle funds, have become the default investment choice for employee participants accumulating funds in defined contribution retirement plans. By 2023 the assets under management in TDFs had grown to approximately $3.5 trillion and comprised a quarter of all 401(k) plan assets (O’Brien, 2024; Pensions & Investments, 2023b). A contributing factor to TDFs becoming the default choice in many retirement plans was the passing of the Pension Protection Act (PPA) of 2006, which required a “qualified default investment alternative,” which TDFs appear to accommodate. However, many retirement plans also offer participants numerous choices of investment funds to allocate their retirement assets among. So, why do so many pension plan participants choose to invest in TDFs? This paper suggests that selection of TDFs by many pension plan participants is due to TDFs providing a remedy to the “paradox of choice” that participants are confronted with by the bewildering number of funds and allocation and rebalancing decisions they would otherwise be confronted with. Understanding the behavioral appeal of TDFs is important to the field of personal finance.

Masking Personality Traits: The Effect of Automatic Enrollment on Retirement Plan Participation Decisions
Preston D. Cherry, Ph.D, CFP®
Retirement preparedness continues to be elusive for Americans. Individuals expect less funding and lower wage replacement from pensions and social security, and they expect to rely on individual savings mechanisms to fund their retirement and longevity concerns. This environment reinforces the emphasis for higher participation rates in individual savings mechanisms, such as defined contribution (DC) plans and Individual Retirement Accounts (IRAs). Studies show that DC plan design tools, such as automatic enrollment, tend to increase plan participation. However, low participation rates across voluntary DC plan plans and IRAs persist. This paper contributes to the existing literature on retirement savings program participation by investigating whether the Five-Factor Model personality traits could partially explain DC plan participation. The results of this paper show that DC plan designs, such as automatic enrolment, may circumvent personality traits. However, higher levels of conscientiousness and agreeableness associate positively with IRA participation (voluntary individual savings mechanism).

The Impact of COVID-19 on the Savings Attitudes of College Students 
Karen E. Richman, Ph.D.
Joelle Saad-Lessler, Ph.D
Maria Camila Leon Buitrago, MEd
The crisis of individual retirement savings in the United States is well known. Generation Z are the youngest generation entering the workforce. What do they know about retirement savings and security? Do they expect to support others as they age? Do they expect to rely on others in their old age? Where do they expect their own support in retirement to come from? And, has the personal financial fall-out from the COVID-19 pandemic modified their views? These questions were investigated in surveys conducted during and after the pandemic among 370 college students in the US. Analysis of behavioral and attitudinal data reveals common beliefs in individual responsibility for retirement paradoxically coexisting with collectivist attitudes about supporting their parents’ retirement. The pandemic had some measurable impacts on attitudes, including positive effects on students’ thinking about emergency savings. The crisis intensified students’ doubt about the future of Social Security and simultaneously deepened their belief that government should do more to guarantee a dignified retirement for all. The findings highlight the importance of bolstering young adults’ understanding of the Social Security program. Financial education can also help them better understand their expectations of individual savings and family support in retirement planning.

Achieving housing goals: Examining how housing adjustments relate to financial strain 
Ashlyn Rollins-Koons, Ph.D., CFP®
Derek R. Lawson, Ph.D., CFP®
Megan McCoy, Ph.D., LMFT, AFC®, CFT-I™
Yu Zhang, Ph.D., AFC®
Kristin Anders, Ph.D.
This study examines how housing adjustments — specifically residential mobility (i.e., moving to a new residence) and residential adaptation (i.e., renovating one’s dwelling) — are related to a household’s financial strain using the 2022 Survey of Consumer Finance. Three logistic regression models are employed to analyze how housing adjustments relate to financial strain differently for homeowners and non-homeowners. The findings indicate that residential adaptation decreases financial strain in the total sample and for homeowners, whereas residential mobility is associated with increased financial strain for non-homeowners. Other sociodemographic variables including age, race, education, employment status, and health status, are also significantly related to financial strain.

Student Loans, Income, and Financial Well-Being: Evidence from Survey of Household Economic Decisionmaking 
Van Dinh* – Corresponding Author
Douglas Brown
Stuart Heckman, Ph.D., CFP®
The research investigates the relationship between income and student loans to understand their impact on financial well-being. This study analyzed data from 3,952 households from the Survey of Household Economics and Decision-making (SHED) datasets from 2020 to 2023 of Federal Reserve Board, assessing four combinations of student loans and income. Participants were divided into four independent variable groups: high loan/low income, low loan/low income, high loan/high income, and low loan/high income. These independent variables were modeled against two different measures of financial well-being. In both models, we found that higher income was consistently linked to better financial well-being (odd ratios from 1.45 to 4.66), regardless of student loan amounts. Conversely, higher student loans reduced financial well-being within similar income groups. Notably, households with high income and low loans had the best financial well-being outcomes. Even highincome households with high loans showed strong positive financial well-being in both models. Additionally, control variables such as education level, physical health, household size, and marital status significantly influenced financial well-being, showing consistent trends across the two models. This research adds to existing literature by providing a nuanced view of how income and student loans affect financial well-being, encouraging
further investigation in this critical area.

Looking Back to Plan Ahead: A Thematic Analysis of a Decade of Personal Finance Year-in-Review Webinars
Nichole Huff
Barbara O’Neill
Martie Gillen
Kristen Jowers
This study presents a thematic analysis of OneOp Personal Finance Year in Review webinars spanning from 2015 to 2024. Twelve key themes were identified across the content, including banking, credit, economic indicators, government policies and legislation, fraud and scams, housing, income taxes, insurance, retirement planning, saving and investing, shopping and spending, and vehicle purchases. The analysis highlights ongoing trends such as the rise of sports betting, declining birth rates, shifts in traditional life transitions like more young adults living with their parents and older adults staying in the workforce longer, and disparity of incomes that was further exposed during COVID-19 pandemic. Additionally, this study highlights financial anniversaries, acronyms, and buzzwords throughout the decade. A key takeaway from this analysis is that past financial trends provide valuable insights that can inform future financial planning decisions.

Empowering Students Through Financial Literacy: An Evaluation of NGPF’s High School Curriculum 
Danny Jang
Anand R. Marri
This study investigates the effectiveness of an eight-week structured financial literacy program in improving high school students' knowledge retention and conceptual understanding of personal finance. Utilizing the Next Gen Personal Finance (NGPF) curriculum, 24 students in grades 9-11 at Bergen County Technical High School participated in weekly sessions covering budgeting, banking, credit, investing, and risk management. A 25-question pre- and post-assessment, along with a chi-squared analysis, was used to evaluate learning outcomes. Results showed a statistically significant improvement, with the average score rising from 15.79 to 19.73 and the median from 16 to 21. The distribution of scores shifted upward, and students across all performance levels demonstrated growth. These findings provide empirical support for implementing structured, curriculum-driven financial education in high schools, highlighting the program's potential for scalability, equity, and long-term impact.

CE QUIZ

Two units of IARFC CE will be awarded to anyone who achieves a score of 70% or higher per quiz. To receive your CE Credit, please scan and complete the quiz, then return it to the IARFC email at jpfeditor@iarfc.org or fax it to (513) 345-9479. Only one quiz submission per IARFC member is allowed per year.

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