5 Things Today's Teens Don't Know About Money

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You know your teens can be illogical, unreasonable, and occasionally malodorous, but isn't it at least reasonable to assume they know the basics about money?

Apparently not. Surveys show that teens are failing at financial literacy. And while financial institutions like PricewaterhouseCoopers are investing significant resources in changing that, the problem is persisting.

From those in a position to know best -- personal finance and business education teachers -- here are some of the most gaping holes in teens' money knowledge.

1. Bank account basics

"My students had no idea how to figure out online banking," said Keith Newman, a personal finance teacher at Bodine High School for International Affairs in Philadelphia. Part of the problem, he said, is that there are no high-quality, up-to-date teaching tools to help students learn about bank accounts, so he is hoping to take his students to a bank to open accounts and learn banking nuts and bolts.

2. Budgeting

Students' "parents just hand them money, and they just burn through it," said Newman. His students are far from wealthy, but he says many of their parents are wary of financial institutions and prefer to do everything with cash. "I have students who have fathers who take care of their daughters very well, giving them $15 or $20 every day."

Kim Zocco, a business education teacher at Archbishop Edward A. McCarthy HIgh School in Southwest Ranches, Fla., has many students from families at the other end of the economic spectrum, but says that just creates another problem. "Their parents take care of everything for them. They are oblivious because they can just have and get," she said.

3. The power of compounding

Maggie Wohltmann, a business education teacher at Teaneck High School in New Jersey, likes to explain to her students that they all have the potential to be millionaires someday -- but the odds of reaching that goal increase sharply if they save early. She demonstrates what can happen if someone puts away a reasonable amount every month. Her goal, she said, is "getting across that it's the 22-to-32 age range, before you have the house or the family, that's when it's key to really invest the money."

4. Keeping credit reports clean

Many teens are stunned to learn that financial behavior over an extended period will affect their ability to borrow money or even obtain a credit card. "It's really eye opening," said Wohltmann. "Ten years is a long time to these students."

5. Rainy day savings

Whether teens come from affluent households or more modest ones, the idea of putting money away in case something happens if often novel, teachers say. "Savings shock them," said Newman.
Zocco and Wohltmann drive home the importance of a financial cushion with a role-playing exercise. They pair up their students, have them form "households," and assign them real world jobs. The students have to live within their means and deal with financial setbacks the teachers dole out: Their car may break down, they may suddenly have twins, and so on.
"In the end, they're pretty shocked at what they're left with" after taxes, and "what they need to save," said Zocco.

There is another life lesson as well. The teens see first hand that money issues can be really, really stressful. "The students bicker in their households like couples do -- and these are pretend things," said Wohltmann.

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16 Comments

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Tracie

I will give them a bit of advice...if you can't afford it, you don't need it!!! Wanting and needing are two different things! Do NOT EVER get a credit card!!! I would recommend paying in cash! I don't even have a debit card, I use checks or cash, or I don't buy it!!
With Common Core in our schools, kids will be TOO stupid to even balance a check book, they will all be on food stamps!!!

November 20 2013 at 7:33 PM Report abuse rate up rate down Reply
rdttalbotlaw

The school systems do not teach basic economics anymore. When I was in high school we were taught in an Economic class. My daughter just graduated high school and she did not take a course that teaches them the basics. I taught her last summer before her senior year and before college. I am in the process of teaching our son right now. I went as far as to show them how to old school reconcile a bank account.

If the schools are going to not teach a class anymore on basic economics, then it is our jobs as parents to do so.

November 20 2013 at 5:08 PM Report abuse rate up rate down Reply
zapdog4

Any true 'Expert' on saving/managing money would tell you to learn the 'Rule of 72'. If they dont, then they havent a clue of how to properly lead you in your financial independence. I know it, and that may be why at 50, everything I own (including our home) is paid off.

November 19 2013 at 8:31 AM Report abuse +1 rate up rate down Reply
Artie

Most parents of these kids are just as guilty of not knowing anything when it comes to personal finance...especially when it comes to budgeting, saving and investing. They wake up when they are in their 50's and wonder how on earth are they going to be able to retire on social security alone? However, the school system in this country has, also, failed miserably in providing kids with an education when it comes to personal finance. They teach so much that is useless and never will be required in real life and totally avoid teaching things like personal finance, including, the basics of saving, investing, and budgeting which should be mandatory, especially these days. This is why we largely have a nation of too many financially dependent people who think the government is going to provide for them.

November 13 2013 at 10:51 AM Report abuse +1 rate up rate down Reply
Robert & Lisa

Another example of why we need to give our parents choice in where they send their children to school. Our public schools have failed and are beyond fixing.

November 12 2013 at 7:21 PM Report abuse rate up rate down Reply
1 reply to Robert & Lisa's comment
hccbillandpat

You are so right, and the reason our schools are beyond "fixing" is that we have taken away the power and ability of teachers to actually mold our kids into good people.
Parents are busy 10 hours a day earning a living and dont see what the kids are doing. The teacher is with the kids 8 hours a day and should have the right and ability to bust their little butts if they dont behave..........oh golly...child abuse... NO IT ISNT... Johnny should be held back until he actually learns whata is being taught..Johnny should have his behind walloped if he misbehaves. Kids NEED a strong hand, not an abusive one,l but one that they respect and oh yeah...fear.. If they dont do what is right then there is a price to pay and since the parents arent there to dole out the "payment" the teachers need to be able to. It is so odd tha t the children who grew up and went to school iln the 50's and 60's were able to send a man to the moon, but the kids ltoday dont have enough sense to cross the street without a crossing guard. Clamp down on behavior and insist that they actually learn . And teachers, you need to teach..not be a buddy but a TEACHER,

November 19 2013 at 12:24 PM Report abuse rate up rate down Reply
Hi Gram, Ty&Dill

Who the hell gives thier teenager $15-$20 a day? I can't afford to spend that! Wait till reality slaps them in the face- when they get that 1st paycheck at min. wage. They'll be living off Mommy & Daddy forever.

November 12 2013 at 6:24 AM Report abuse +2 rate up rate down Reply
Robert & Lisa

Another reason to advocate for school choice. Give the money that goes for our children's education to the parents and let them decide which school gets to teach them. With real competition in education, our children will be much better educated and the good teachers will be rewarded and the bad ones can either get better or do something else.

November 12 2013 at 2:32 AM Report abuse rate up rate down Reply
hokanut

The President is one heck of a roll model for our kids with our debt and deficit. As liberal as schools are today, parents better teach kids some conservative spending habits, or expand the kids bedrooms to accomodate their spouses and the grand kids.

November 12 2013 at 12:00 AM Report abuse +2 rate up rate down Reply
andreiib

I just love the moronic writing in this area. Consider this from the article above: "His students are far from wealthy, but says many of their parents are wary of financial institutions and prefer to do everything with cash. "I have students who have fathers who take care of their daughters very well, giving them $15 or $20 every day.""
FAR from wealthy??? That is 600 bucks a month, 7200 a year! And that's just their 'walking around' money! I am betting that they double that with Christmas, birthdays and various rewards.
I dunno about this clown of a writer, but spending that much on just their kids (I can't even spare half that much for a car I urgently need!) is beyond the reach of many Americans. Perhaps this dork needs to hang less around Wall Street and more on Main street.

November 11 2013 at 10:15 PM Report abuse +1 rate up rate down Reply
betty_brock

It's just common sense.

November 11 2013 at 8:14 PM Report abuse +2 rate up rate down Reply
1 reply to betty_brock's comment
hokanut

But you can't buy that and the government will not give it to you for free...so we're screwed

November 11 2013 at 11:47 PM Report abuse rate up rate down Reply