Findings Reveal Opportunities for Parents to Help Their Teens Master the
Basics of 21st Century Money Management
SAN FRANCISCO, March 27 /PRNewswire-FirstCall/ -- Optimistic teens may
need a reality check about the world of personal finance awaiting them,
according to the findings of Teens & Money, an annual survey released today
by Charles Schwab & Co., Inc. Most teens believe they will achieve
considerable success in the adult financial world, yet may not realize what
it will take to achieve it based on self-reported knowledge and behavior.
Highly motivated by money, eight in 10 teens ages 13-18 agree that
"it's important to me to have a lot of money in my life," and nearly
three-quarters (73 percent) believe they'll be earning "plenty of money"
when they're out on their own. In fact, American teens confidently predict
a future in which, based on the career that interests them most, they will
be earning an average annual salary of $145,500 (boys expect $173,000 vs.
girls, $114,200). The reality: Only five percent of the U.S. population
currently earns a six-figure income(i), and the average national wage
stands at approximately $40,000(ii).
Not surprisingly, teens look forward to financial independence. Most
(88 percent) want and expect (86 percent) their parents to stop supporting
them before age 25. Yet in a recent Newsweek poll, almost half of all
college students graduating in 2006 said they were moving back into their
parents' home after graduation(iii).
"It's great that teens are optimistic about their futures, but the
reality is that these kids will face financial choices and decisions that
are far more pressing and complex than anything their parents or
grandparents ever encountered," said Carrie Schwab Pomerantz, chief
strategist of consumer education at Charles Schwab & Co., Inc. "The best
single piece of news from this year's survey is that teens not only want
the keys to the world of adult finance, they are actually looking to their
parents for driving lessons."
What Teens Don't Know
Nearly two thirds (62 percent) of American teens ages 13-18 believe
they are prepared to deal with the adult financial world after high school,
and a similar majority (63 percent) say they are knowledgeable about money
management, including budgeting, saving and investing. Yet when probed on
the specifics of their financial knowledge, they reveal gaps that do not
correspond with their confidence. For example, fewer than half consider
themselves knowledgeable about how to budget money (41 percent), how to pay
bills (34 percent), how credit card interest and fees work (26 percent) or
whether a check cashing service is good to use (24 percent). Not
surprisingly, even fewer teens know how income taxes work (14 percent) or
what a 401(k) plan is (13 percent).
"These findings point to a huge opportunity for parents and
grandparents," said Schwab Pomerantz. "It's not only the basics of
budgeting and borrowing that are important; it's also helping teens
understand that investing in an employer-sponsored retirement plan as soon
as they get the opportunity could make a life-changing financial impact
over time."
Teens Spreading Their Adult Financial Wings
Today's teens are active spenders, savers and borrowers. They spend an
average of $19 in a typical week, with the majority (59 percent) making
purchases online. Most teens (84 percent) also have some money saved, with
average savings of $1,043. However, teens are more likely to have a cell
phone (74 percent) than a savings account (60 percent).
Although 88 percent of American teens "don't like the way it feels to
owe someone money," almost a third (29 percent) have incurred debt (close
to $300, on average). More than half (51 percent) believe that "it is
easier to buy things with a credit card than cash" and, given the choice,
more than a quarter (29 percent) would actually prefer using a credit card,
a 61 percent increase in this stated preference over last year. This
statistic is particularly alarming in light of the fact that revolving
credit in the U.S. (mainly credit card debt) has been steadily climbing
over the past 20 years, more than quintupling from $141 billion at the end
of 1986 to approximately $879 billion at the end of 2006(iv). This
translates into an average of $4,100 in credit card debt for every American
over the age of 18(v).
More than three-quarters (79 percent) of teens surveyed agreed that
money matters are different today than when their parents were teenagers.
Teens Want to Learn, and Look to Their Parents
The good news is that teens want to learn more about personal finance.
Nearly nine in 10 say they want to learn how to make their money grow (89
percent). Two-thirds (65 percent) believe learning about money management
is "interesting," and 60 percent say that learning about money management
is one of their top priorities. Almost two-thirds (64 percent) say they
would rather learn through experience than in a classroom.
Unfortunately, however, teens aren't getting the financial coaching
they need. Fewer than one in three (30 percent) believe their
parents/guardians are concerned about making sure they are learning the
basics of smart money management, and only about one in four (28 percent)
report "My parents/guardians have taught me about money by giving me a lot
of experience budgeting, spending and saving it." A minority (24 percent)
say their parents/guardians have taught them how to use a credit card
responsibly. And, in spite of teens' interest in the topic, only one in
five (20 percent) report "my parents/guardians have taught me how to invest
money wisely to make it grow."
"You can't read these survey results year after year and not be
compelled to become part of the solution," said Schwab Pomerantz. "Since
2004, we've promoted financial literacy for teens through Charles Schwab
Foundation's work with Boys & Girls Clubs of America and the program Money
Matters: Make It Count(SM). In the next few weeks, Schwab will be launching
a new Web site with tools for parents and other concerned adults who would
like to help teens learn the most important life skills about money."
About the Teens & Money Survey
The Teens & Money survey was conducted by StrategyOne, an applied
research consulting firm, on behalf of Schwab and Boys & Girls Clubs of
America. The nationally-representative online survey polled 1,000 American
teens between the ages of 13-18 to better understand their views, behavior
and knowledge of spending, saving, borrowing, and earning money. The
survey, which has a margin of error of plus or minus 3.1 at the 95 percent
confidence level, was conducted using the field services of Harris
Interactive.
About Charles Schwab
The Charles Schwab Corporation (Nasdaq: SCHW) is a leading provider of
financial services, with more than 300 offices and 6.8 million client
brokerage accounts, 584,000 corporate retirement plan participants, 150,000
banking accounts, and $1.3 trillion in client assets. Through its operating
subsidiaries, the company provides a full range of securities brokerage,
banking, money management and financial advisory services to individual
investors and independent investment advisors. Its broker-dealer
subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org),
and affiliates offer a complete range of investment services and products
including an extensive selection of mutual funds; financial planning and
investment advice; retirement plan and equity compensation plan services;
referrals to independent fee-based investment advisors; and custodial,
operational and trading support for independent, fee-based investment
advisors through its Schwab Institutional division. The Charles Schwab
Bank, N.A. (member FDIC) provides banking and mortgage services and
products. CyberTrader(R), Inc. (member SIPC, http://www.sipc.org) is an
electronic trading technology and brokerage firm providing services to
highly active, online traders. More information is available at
http://www.schwab.com.
Funded by the Charles Schwab Corporation, Charles Schwab Foundation is
committed to giving back to the community by supporting employee-selected
causes and fostering financial literacy through funding, involvement and
expertise. (0307-5638)
About Boys & Girls Clubs of America
Boys & Girls Clubs of America (http://www.bgca.org) comprises a national
network of some 4,000 neighborhood-based facilities annually serving more
than 4.6 million young people, in all 50 states and on U.S. military bases
worldwide. Known as "The Positive Place for Kids," the Clubs provide
guidance-oriented character development programs on a daily basis for
children 6-18 years old, conducted by a full-time professional staff. Key
Boys & Girls Club programs emphasize leadership development, education and
career exploration, financial literacy, health and life skills, the arts,
sports, fitness and recreation, and family outreach. National headquarters
are located in Atlanta.
Additional survey details are available at
http://www.aboutschwab.com/teensurvey2007.pdf .
(i) U.S. Census Bureau, 2005
(ii) U.S. Bureau of Labor Statistics, 2005
(iii) Newsweek Boomer Files, "The Long Goodbye," by Ramin Setoodeh,
May 22, 2006
(iv) Federal Reserve Board consumer credit data
(v) U.S. Census Bureau data on the total population of the U.S. 18 years
old and older, 2005
SOURCE Charles Schwab
 back to top
Related links:
http://www.schwab.com/
CONTACT:
Sarah Bulgatz of Charles Schwab,
+1-415-636-5940, sarah.bulgatz@schwab.com; or Marcy J. Walsh of
CRT/tanaka, +1-310-659-5380, mwalsh@crt-tanaka.com
|
