How financially savvy are our teens when it comes to money? Charles Schwab recently released their 2011 Teens & Money Survey Findings and I was quite surprised by the results, especially when comparing them to 2007 results. This annual survey polls more than 1,000 teens 16 to 18 years old and provides insights into their money attitudes, behaviors and expectations.
When it comes to being savvy about money, the line between what teens think and reality is as wide as the Grand Canyon. Most teens surveyed believe they are financially savvy. But when asked about specifics such as establishing good credit, balancing a check book or what a credit score is, the majority of teens were in the dark. In fact there is a notable decline in teen’s knowledge of money management skills between 2007 and 2011, especially around how to balance a checkbook or check the accuracy of a bank statement. Of course a key contributor to this decline could be that far fewer teens have saving or checking accounts than they did in 2007.
On the positive side, the recession has had a significant impact on teens especially around the importance of saving and 73% of teens feel it’s important to have an emergency savings. Teens also reported a shift in their mindset with 64% saying they are more grateful for what they have and listen to this, 56% say they have a greater appreciation for how hard their parents work. Another positive from this recession is it has produced more discussions within the family about money and money management.
80% of teens surveyed, up from 53% in 2007, said learning about money management, including budgeting, saving and investing is one of their top priorities with 82% of the teens saying they primarily learn about money management from their parents. Teens stated they would like their parents to talk with them more about investing, establishing good credit, career aspirations and how to budget their money.
So what does this tell us? Most importantly we need to narrow the financial literacy gap between where teens think they are and where they actually are. On the plus side teens have expressed the desire to learn about money management, which is the most important step in moving forward.
Education begins in the home and it’s never too early to begin. Kids are forming their opinions and behaviors around money at a very early age by watching us parents in how we handle and manage our money. This was the primary reason FamilyMint was developed, to act as the modern replacement for the piggy bank, where kids can learn about money management and goal setting in a safe, interactive environment, while emphasizing the importance of saving, setting and achieving goals.