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Even though teens may think they know it all, new research has found that money matters are one area where teens are most assuredly lacking knowledge. Proof of that fact comes from the 17 percent of teens between the ages of 12 and 17 who said they knew how to manage their money and the 24 percent of teen respondents who said they did not know the difference between debit and credit cards.
Among teens for whom budgeting was a concern, learning how to save and how to budget were their biggest priorities. However, part of the reason for the lack of teen knowledge on money matters comes because their parents are not doing a good job teaching them about money.
To the end, more parents were willing to talk about drugs and alcohol than they were about money. More than 10 percent of teens said that no one at home helps then manage their money. That number grows to 15 percent among older teens between the age of 15 and 17. Thirty-one percent of parents say they are good financial role models and 21 percent say they are fair or poor role models financially.
"A parent's role in setting a financial example for their children is critical," said Jim Kelly, head of direct bank, ING Direct Bank, which sponsored the survey along with Capital One. "Yet many parents feel unprepared to set an example."
Despite that lack of guidance, teens are getting jobs to start learning about money on their own. Half of teen girls had jobs for outside income while 38 percent of boys held jobs. Overall, 30 percent of both teen boys and girls received money from performing household chores, which the survey said can prove to be a valuable financial lesson for teens. According to Capital One and ING Direct, parents can also teach their children about saving by following these steps.
- Turn errands into money lessons: "Couponing is all the rage right now, so use the weekly trip to the grocery store as a practical way of explaining spending and saving. Make a game out of finding the most affordable cereal or competing for a bigger savings at the register than the last trip to the store," the study said.
- Keep it simple: "Don't overcomplicate the conversation with technical jargon or turn it into an economics lecture," the study said. "Talk about saving for rainy day items such as a trip to the movies or a new video game – make it relevant and it will resonate even more."
- Practice what you preach: "Whether you're a savings savant or cash-strapped mom or dad, have candid talks about your financial successes and missteps," the study said. "Make it a priority as a family to be more mindful of spending less than what is earned and celebrate how money is grown over time."