As economists, elected officials and the American public ponder how to strengthen the U.S. economy by rebalancing the nation's spending and consumption with savings and investment, an alarming majority of U.S. teens say they lack the knowledge to understand and effectively reconcile the two, according to the eleventh annual "Teens and Personal Finance Survey" conducted by Junior Achievement (JA) and The Allstate Foundation.
Nearly half of the 1,000 U.S. teens surveyed (45 percent) say they are unsure about how to effectively invest their money, and nearly a quarter of teens (22 percent) said they do not budget their money.
Among teens who do not manage their money, the survey found that 42 percent aren't interested in money management, 37 percent don't know how to manage their finances and 32 percent think budgeting is for adults so it doesn't matter how they spend their money. These data points underscore the need to teach the financial skills necessary to empower teens to demonstrate fiscal fitness.
While many teens predict being as well-off as or better off than their parents (86 percent), teens' lack of basic money management skills may stand in the way. The survey found that 54 percent of teens say they are unsure about how to effectively use credit, yet 74 percent think they should get a credit card by age 21. This striking lack of knowledge coupled with a sense of financial entitlement could exacerbate future national financial woes.
"Teens are admitting that they don't have knowledge of some of the basic money management skills around investing, budgeting and using credit. Despite the alarming numbers, teens overwhelmingly have high hopes for future financial stability," said Joseph A. Peri, president of Junior Achievement of New York. "The poll shows we need to do a better job of ensuring our youth are financially literate. JA offers a broad range of age-appropriate financial literacy curricula, from kindergarten through grade 12."
"This volatile chapter in the nation's economy is bringing teens and parents together in agreement about at least one topic: there is a huge need in this country for financial literacy education," said Vicky Dinges, assistant vice president, public social responsibility at Allstate. "America looks to financial institutions like Allstate to help the next generation learn the skills needed to meet their financial challenges and we take that responsibility seriously. Teaming up with Junior Achievement aligns us with the wants and needs of an entire nation and that feels good."
Fortunately, many teens do recognize the need to learn to manage their money early on, with 83 percent responding that the best time to learn money management skills is during grades K-12. Junior Achievement programs help teens to not only recognize what lessons and skills they need to learn at an early age, but they also teach teens how to become fiscally fit. Junior Achievement and The Allstate Foundation have partnered to create Junior Achievement, $ave USA, a financial literacy initiative comprised of free, downloadable money management exercises for parents and their children to do together-and free, downloadable classroom lessons for students at the elementary, middle, and high school levels.
For an executive summary of the survey results, click here.