Exploring the impact of poverty on financial literacy: the role of parental education in college student financial behavior

Many college students experience financial stress, yet financial hardship is often explained as a simple lack of financial knowledge. Recent research suggests that how students are socialized around money may matter just as much as what they know. In this study, I examined whether parental education, specifically first-generation college status, changes the relationship between household income and financial health among undergraduate students at a regional public university in the southeastern United States. Participants included 204 undergraduates recruited through the university research pool. Students reported household income (categorized as < $50,000 or >$50,000), first-generation status, and financial behaviors. Financial literacy was measured using an adapted OECD/INFE Core Questionnaire. Financial health was assessed using an adapted Financial Capability Scale for Young Adults and a composite Hardship Index. Independent-samples t-tests were conducted to compare financial literacy across income groups, and regression analyses tested whether first-generation status moderated the link between income and financial outcomes. Results showed no significant difference in financial literacy between students from lower-income and higher-income households, t(201) = -1.07, p = .287. However, parental education significantly moderated financial behavior. Higher income predicted fewer late fees and stronger financial capability among continuing-generation students, but income was not significantly related to financial behavior among first-generation students (p = .316). First-generation students also reported higher hardship scores regardless of income level. These findings suggest that financial well-being among college students is shaped less by access to information and more by early socialization experiences. Supporting first-generation students may require mentorship and skill-building programs that address financial habits and money beliefs, not just financial facts.