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May 26, 2011

  • News:  Changing Teen Attitudes Towards Finances 

    A recent survey indicates that young adults know less about managing finances than they did nearly four years ago. According to the 2011 Teens and Money Survey, fewer young adults believe they have knowledge on how credit cards work while more are socking money away in savings. Charles Schwab conducted the survey which showed that 32 percent of the 18 year old respondents had a good idea on how credit card fees and interest rates work which was down from 43 percent in 2007. Slightly more, 39 percent, said they know how to properly manage a credit card account, a dramatic decrease from 64 percent in a 2007 survey.

    While teens are having more difficulty learning how to manage credit card accounts, they have taken a greater interest in saving. In the survey, 77 percent of the young respondents call themselves a "super saver." The average respondent said they have approximately $1,000 in savings and three quarters of them say the money will be used to pay for college. Carrie Schwab-Pomerantz, Senior Vice President of Schwab Community Services said the implications of the study are that teens may have been given a wake-up call from the 2007 recession and the credit card crisis. She also noted that on a positive note, 75 percent of the respondents have made learning more about managing finances a priority.

    Watching their parents struggle throughout the recession may have contributed to the new attitude. The survey found that 56 percent of the teen respondents indicated an increased appreciation for their parents' hard work and 64 percent are thankful for what they have. Talking to your teen may have a strong correlation to how well they manage their financial business because 75 percent of these teens said they had discussions with their parents. Credit card reform enacted in 2009 may have strongly contributed to teens increased saving habits. The law prohibits financial institutions from issuing cards to any individual under the age of 21 unless they can prove the ability to pay back debt or have an approved co-signer.

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