Alert, alert! According to a new Charles Schwab survey examining teens’ attitudes, behaviors and concerns about money, only one in three believes their parents are concerned with making sure they are learning the basics of smart money management.
Ninety-three percent of teens agree it’s important to know how to live within your means and to have good money habits to be successful in life. Seventy-six percent define success as “to not have to rely on others for money.” This generation knows it needs to be wise with money … it just doesn’t know how.
Here is a breakdown from the survey of exactly what teens do and don’t know about money:
- 57 percent know how to shop for the best deal when making a purchase.
- 51 percent know how to write a check.
- 47 percent know how to use a debit card.
- 45 percent know how to use a credit card.
- 41 percent know how to budget money.
- 34 percent know how to balance a checkbook or check accuracy of a bank statement.
- 31 percent know how to establish good credit.
- 29 percent know how to pay for college.
- 26 percent know how credit card interest and fees work.
- 24 percent know whether a check-cashing service/store is good to use.
- 23 percent know what a credit score is.
- 22 percent know how to invest money to make it grow.
- 14 percent know how income taxes work.
- 13 percent know what a 401(k) plan is.
While it appears that teens have much to learn, 63 percent say they are knowledgeable about money management, including budgeting, saving and investing, and 62 percent believe they’re prepared to deal with the adult financial world after high school. I don’t think so!
Almost three in 10 teens are in debt, even though only 8 percent own their own credit card. Twelve percent use parents’ credit cards, and 9 percent use parents’ debit cards. Only a fourth of teens own a debit card. A tragedy!
Among those indebted, the average owed is $293. If given a choice, almost one in three teens would prefer to use plastic instead of cash (last year, only 18 percent responded that way). Fifty-one percent agree it’s easier to buy things with a credit card than cash.
Some happy news: 84 percent of teens have some money saved. Younger teens report they are mostly saving for the short term, while older teens are more likely to be saving for the long term.
Two thirds of teens report they would rather learn the basics of money management through experience rather than in a classroom, so quiz them on what they know and put them to work! Buy them some basic stocks for a birthday and let them watch it grow. When your credit card statement arrives, have them sit down and look at it with you. Inform them about the concept of building credit and help them look up their credit report. Teach them how to go over a bank statement. Even if your teen doesn’t know it at the time, you will be doing them a gargantuan favor.