Financially active teens are on the increase, and they are largely unaware of the implications of their adult spending habits, according to the latest annual 'Teens and Money' survey published in the US by the Charles Schwab Foundation.
Teens are becoming increasingly active as financial consumers and have strong fundamental values about money - they are also in need education about money management to temper their ventures into the world of credit and debt.
While those aged 13-18 clearly know how to spend money, they seem to be far less aware of the consequences of their actions. For example, the majority of teens say they are knowledgeable about how to write a cheque (61%) and use a debit card (54%), while only 41% know how to balance their cheque book. And while two-thirds of teens (66%) say they know how to shop for the best deals, only 48% understand how to budget their money.
Spending too fast?
According to the survey, many teens are already starting to accumulate debt, with nearly one-third of those surveyed (31%) already owing money to either a person or a company.
On average, teens owe US$230, with older teens (aged 16-18) owing significantly more than younger teens (13-15) - averaging US$351 and US$84 respectively. One in seven (14%) of those aged 13-18 say they already are more than US$1,000 in debt, and this percentage rises to 22% for those aged 16-18.
Nearly half (46%) of all teens who owe money admit being concerned about paying it back. Part of the problem may be that 34% of survey respondents said they get money from a debit or credit card - either in their own or their parent's name. In fact, 18% said that, if given the choice, they would rather make purchases with a credit card than with cash.
"We were surprised to find so many teens engaged in adult spending habits, some of which are clearly not in their best interest," commented Carrie Schwab Pomerantz, president for the Charles Schwab Foundation. "If we want to stem the tide of excessive consumer debt, we need to do a much better job of teaching children money management basics at an early age." The survey also found that teens actually want to learn more about money management, with nearly three-quarters (74%) agreeing that it should be a required course in school.
The Teens & Money online survey polled 1,013 American teens (aged 13-18), and was conducted by applied research consulting firm StrategyOne on behalf of Schwab and Boys & Girls Clubs of America.