It’s important for parents and adults to recognize that financial problems can be a source for teen angst amongst many young people in the US. Charles Schwab recently conducted a study that surveyed teens about their view on money and managing finances. According to the Charles Schwab interviews, about 93 percent of the teens indicated that their families’ finances were impacted by the recession.
Around 75 percent of the interviewed teens said that learning about money management is a top priority in their lives. Approximately 59 percent of the teens that were interviewed think they will have greater financial success than their parents. Around 77 percent of the teens consider themselves financially savvy, while a mere 31 percent proved to be knowledgeable about credit scores, credit card fees or interest.
The recession has compelled more families to have candid discussions about financial management. However, these discussions are rarely effective enough to truly prepare teens for the hard choices they will need to make as young independent adults. It’s common for students to finish high school and enter the real world without the necessary skills to properly manage personal finances. As of 2011, merely 20 states in the US require schools to provide students with some education about personal finance.
The National Financial Capability Challenge found that the national testing average for subjects centered on savings, earnings, taxes and insurance was only around 69 percent, barely passing on most grading scales. Students that did the best on this financial assessment attributed their success to their parents and finance classes at their local high school. Parents that teach children about financial management at a young age and continue with the lessons throughout the upbringing will put children in a much better position to succeed in the future.
Some of the teens that received perfect scores on the National Financial Capability Challenge provided some of their own tips for successful financial management. One of the most important tips is to save as much as possible, no matter how small the amount. Making saving a habit can help teenagers prepare for future expenses or help affording the tuition for the college of their choice. Teens that are in the habit of saving money every time that they get some are in a much easier position to effectively manage their finances throughout the future. Teens should also consider investing in a fee-free savings account.
Avoiding credit cards was another important tip from the top scoring teens. These teens recognized that credit cards can be very helpful when used correctly, but they can also be equally detrimental if abused. The teens also indicated that budgeting and monitoring expenses is another important step in developing reliable financial management skills and habits.