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February 17, 2012:
Does your teen need a
financial reality check?
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Is your teenager ready to manage his/her own money? If your child is like most American teens, the answer is a bit concerning. A recent study by the Institute of Consumer Financial Education revealed that most U.S. teens are vastly uneducated when it comes to personal finance.
WHAT ARE THE FACTS?
Key results of that study offer a huge wake-up call for all parents:
- The vast majority of teens predict they will be free of any parental monetary support by age 25 and nearly all expect to earn six-figure salaries;
- Less than half know how to budget their money;
- Alarmingly, only 34% know how to pay bills;
- A mere 26 % understand how credit cards and interest work.
Here’s some encouraging news: That same study found that when teens get financial education their behavior improves immediately—and the knowledge is retained.
Of course, it’s healthy to have an optimistic outlook toward ones financial future, yet it is extremely important for today's youth to have realistic goals and are prepared for to make the financial decisions necessary to guide their own lives.
Topics related to personal money management and understanding the basics of finance are not considered core curriculum in most school districts across the county—there simply isn’t enough time and resources available for teachers to cover the subject. However, there are specific districts, schools and classrooms that do find a way to teach this topic but it falls into the category of “optional.”
That’s why, it’s crucial parents play an active role teaching their children basic financial skills!
HOW TO GET STARTED
As they begin earning money outside the home, whether babysitting, mowing lawns or getting a first real job, help your teens understand saving and planning for their future.
- Lead by example. It might not always seem like it, but kids really do pay attention to what you say and do. Be responsible with your money, and they will likely follow your lead.
- Encourage attainable goals. Take note of the small, everyday accomplishments that help shape your teen's reality. Reward your teen for paying debts on time, saving money for important purchases and balancing her checkbook. These simple accomplishments reinforce the importance of good credit and building savings.
- Be honest. Just because you are a role model does not mean you are infallible. Share your financial mistakes and consequences with your children. Being honest with your teen lends credibility to the lesson you are sharing.
We have a lot more information on how to teach your children—of all ages—about money in our Knowledge Center right here on our web site.
» VIEW ALL FINANCIAL FRIDAY SEGMENTS
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