Document Type


Date of Original Version



This study examines the impact of the recent financial crisis on co-occurring patterns of change in financial strain and financial coping behaviors of college students (N=748) using two-timed, longitudinal data collected prior to the 2008 financial crisis and again one year later. Using a stress and coping framework, we found that different measures of perceived change in financial strain acted as antecedents of change in types of financial coping behaviors. We discuss the importance of these findings in developing the financial decision-making skills that young adults need in an era of increasing responsibility for their financial future.

Coming of age in any generation brings with it the goal of being financially self-sufficient. Yet today’s college students are transitioning to adulthood following the worst recession since the Great Depression (Wheelock, 2010)—a time of job losses, decreasing employer-provided benefits, less access to credit—and uncertain funding for social support programs. The students of this generation, and those to come, must bear more individual responsibility for securing their financial future. Financial strain, defined as financial demands that tax one’s ability to manage those demands (Lazarus, 1999), is a source of stress among college students (Staats, Cossmar, & Kaffenberger, 2007). The financial strain of credit-card debt has been associated with reduced physical and mental health (Eisenberg, Gollust, Golberstein, & Hefner, 2007) as well as students’ inability to complete their education (Hyun, Quinn, Madon, & Lustig, 2006). On the other hand, responsible financial behaviors have been associated with positive life outcomes (Serido, Shim, Mishra, & Tang, 2010; Shim, Xiao, Barber & Lyons, 2009).

Concern about the financial behaviors of college students, particularly behaviors regarding credit card use (Lyons, 2004), predates the credit crisis and has prompted research into the formation of young adults’ financial behaviors. For instance, in a sample of 420 undergraduate students from six states, Jorgensen and Savla (2010) found that perceived parental influence had a significant positive effect on students’ financial behaviors, mediated through positive financial attitudes. A separate study of more than 2,000 first-year students at a public university (Shim, Barber, Card, Xiao, & Serido, 2010), found evidence that, in addition to parents’ financial socialization, high school work experience and financial education classes also contributed to more responsible financial behaviors among college students. Because financial behaviors practiced in college may form the basis for financial behaviors practiced in life (Varcoe, Peterson, Swanson, & Johns, 2010).), it is important to understand how college experiences affect young adults’ financial behaviors. This may be particularly relevant in the aftermath of the 2008 financial crisis, as uncertain job prospects, mounting college loan debt, and personal responsibility for securing future financial security may force today’s young adults to alter their financial behaviors to adapt to a changing environment (McEwen, 1998). Behavior changes made under stress, however, are not always adaptive (Janis, 1993). For example, to lower current expenses, a student may drop classes or take a semester off, and thus fail to graduate in four years or risk dropping out of college altogether. In the present study, we examine the relation between college students’ changing financial demands and changes in their financial behaviors to cope with those demands. To our knowledge, ours is the first study to examine co-occurring patterns of change in financial strain and financial behaviors over time.

This study adopts a stress and coping framework (Lazarus, 1999; Lazarus & Folkman, 1984) to consider financial adaptation among college students—that is, how college students change their financial behaviors to cope with changes in financial strain. To examine financial adaptation, the study relies on two-timed longitudinal data collected from college students (N = 748) in the spring of 2008 (prior to the economic crisis) and again one year later. Financial strain is assessed by both changes in objective financial demands (e.g., debt) and changes in perceived financial strain (e.g., financial stress and impact of recession); change in three types of financial coping behaviors is assessed: reactive financial coping (e.g., cutting expenses), preventive financial coping (e.g., managing money), and proactive financial coping (e.g., saving).