Most Teens Expect to Be Wealthy, But Have Little Knowledge to Make It Happen

I recently received an email from Charles Schwab (the company, not the person) about a new survey they just completed. It's on teens and their attitudes about money. Here's the part that I found most interesting:

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, and the average national wage stands at approximately $40,000.

Welcome to the world of money, teenagers of America. You're right in line with everyone else -- you think you'll make more than you really will, you think you'll spend less than you really do, and you think you won't rack up tons of debt, which you will do. It's the American way of thinking -- home most of us got introduced to personal finance! ;-)

And, yes, today's teenagers also believe they know how to handle money. Also from the study:

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).

Really? A gap between what they think they can do and what they actually have knowledge on? Shocking!!!!

My best tips to them: check out The 10 Best Money Moves You Can Make. Click through all the links and read the posts until you totally understand them. Then, it's time for you to start your real financial education. Read as many books on the subject as you can (or regularly visit money websites if books are too old-school for you) and talk to successful money managers you know to learn from them. After you do these things, then you're ready to face the world with enough knowledge to at least survive financially. From there, keep learning (both from websites, books, and others as well as from your own experience.) Sure, you'll make some mistakes, but if you have a solid knowledge of basic financial principles, you shouldn't get into financial disasters.

Comments

[zen]

High school students? I know college students with the same misconceptions (especially salary after graduating!)

[Jo]

I'm shocked...as someone who works with teenagers, I am astonished that there is such a gap in their thinking and their knowledge!! Okay, I'm just kidding. I think the greatest trend that is starting to happen is financial courses in high school and college, I just wish they made them mandatory. I think the best way we can combat the trend of increasing debt in our society is to teach everyone about money early. Especially in high school and college to teach what real world finances look like, and how to budget, invest, save, and tithe. I wasn't niave as some when I entered the real world after college, but it was a huge shock and I would have really liked and appreciated a class that told and taught me what it was like.

[adc]

I'll bet the level of knowledge these teenagers have is not much different than the average Joe and Jane.