Background: In partnership with the Stavros Center at Florida State University, the DCIIA RRC conducted a pilot study of undergraduate students to decode their financial literacy, behaviors, and perspectives. This study observed the current investing, credit management, and financial planning behaviors of young adults prior to their entrance into the workforce.Findings: This Research Minute reveals a sample of students that defy stereotypes: while they are highly engaged in personal finance and twice as likely to invest when financially literate, they exhibit an influential "labeling effect" that drives them toward stability. Our findings suggest that for today’s students, their engagement with the market is defined by a calculated avoidance of risk rather than chasing trends, such as cryptocurrency and single stock investing.Financial literacy: The surveyed college students demonstrate high levels of financial engagement and literacy. Nearly three-quarters of respondents (72%) possess moderate-to-high financial literacy, with many of those surveyed having taken a dedicated financial literacy class during their studies. Students with high literacy levels are twice as likely to be currently investing and tend to consult four or more information sources, including formal financial literacy classes, family, peer networks, and media sources.Investment behaviors: Actual investment activity scales sharply with increased levels of financial literacy. Over 40% of surveyed students report having invested upwards of $3,000, using their own money, and these ‘active investors’ were five times more likely to utilize high-yield savings accounts compared to their passive counterparts. Half of all investors utilize two or more asset classes and maintain diverse portfolios, typically holding a mix of stocks, mutual funds, cryptocurrencies, and bonds. Their engagement is marked by consistent discipline: 76% check their portfolio performance at least monthly, while 53% do so weekly.Simulation findings: A simulation was performed to gauge whether labels on risk exposure or investment type influenced behavior. When students were only given labels on risk exposure (e.g., very low, moderate, high), our simulation revealed a strong preference towards conservative strategies with 55% of students allocating their predicted investments to lower-risk vehicles, while only 9% chose high-risk options. Interestingly, asset labels significantly influenced behavior. When the specific names of assets were revealed (e.g., "cryptocurrency"), interest in those riskier allocations dropped by nearly 23%, while interest in more stable options like index funds increased by 12%.Bottom Line: These findings show that more research is needed to understand this demographic, including their appetite for risk and their response to specific labeling related to risk. Despite having investment opportunities at their fingertips and many influences guiding their decision-making process, their actual choices suggest a far more complex decision-making process than previously understood.If you are interested in learning more, watch the discussion replay about this study from the 2025 Academic Forum here.