Teaching teens about money
Some 75% of teens lack knowledge of personal finance basics. Parental guidance plays a big role in filling those gaps. Community programs can help too.
Most teens have no trouble shopping and spending money, but they're less capable at money management.
"Most teens don't know how to save money," agrees Houston teen Livi Walshak.
"Right now a lot of kids start wanting stuff, like the latest games," says Kirk Louie, another Houston teen. "They should learn to manage their own money."
A 2008 survey by the Jumpstart Coalition found that three-fourths of teens failed basic financial concepts. Yet there are some exceptions.
Sean Paul Zamar is a 14-year-old who mows the lawn for extra money, and he's already investing. "I thought that investing in stocks would be a good idea because hopefully if stocks go up and later on if I absolutely have nowhere else to go, at least I have money in those stocks With the help of my dad, he allowed me to invest some of his money and some of my money."
Research suggests parental guidance plays a large role in shaping attitudes toward fiscal responsibility in young adults.
Yet a Schwab study on teens and money found only 49 percent of parents surveyed taught their children the basics.
Sherry Walshak started early with her kids. "What I teach my daughters about money is that there are really two sides of it: there's what you make and what you spend," she says. "What they make is, they each get a monthly allowance that's tied to chores. If they don't do their chores I deduct the value of that chore from their allowance, so they know there is effort involved in making money.
"The other side is how you spend it," explains Walshak. "Value is very important.'"
The Schwab study also found 60 percent of teens identified money management as a top priority, so they do want to learn more.
Many states do not require financial literacy classes to graduate. Some nonprofits are stepping up to the plate, such as Financial Mentors of America, which created a special program for teens called the Game of Real Life.
"It teaches teens personal financial literacy," says Paula Coggins, an instructor with Financial Mentors of America. "It's about self-sufficiency. So we encourage students to look into bank accounts, understand what a bank account is and why most times, it's advantageous to have a bank account, versus living cash-to-cash."
A recent Fidelity study found 70 percent of the college class of 2013 graduated with debt. The program helps kids better understand their choices before they take on debt for school or other purchases.
"Budgeting with my real expenses gave me an idea of how I was spending money and where it was going," says Kim Pham, a Game of Life mentor.
"What I learned was how to buy a home or apartment, which one is better and for what reasons," says Rodrigo Martinez, another mentor. "Another thing is how to buy a car and what different ways I can purchase a car and for what reasons. Also, how to pay for college, how to manage my time and my money once I was in school."
Those are the kinds of lessons educators hope more kids learn, while they're young.