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The typical teen believes it is important to live within one’s means and to have good money habits. But the typical teen also lacks basic financial knowledge and has unrealistic expectations about their earnings potential as adults.
The average teen looks forward to an annual salary of $145,000 once they hit the workforce. Boys, who expect to earn $173,000 per year, have higher expectations than girls, who expect to earn $114,200. Those findings come from a survey of 1,000 teens by Harris Interactive Inc., a Rochester research firm, for Charles Schwab & Co., a major broker based in San Francisco.
About half of teens say they have financial savvy when it comes to shopping, writing checks, and flashing a debit or credit card. But when it comes to more grown-up financial situations they are generally lacking in know-how, the survey found. They ranked their financial knowledge low when it came to knowing how to pay for college, how credit card interest and income taxes work, or what a 401k plan is. Yet they have a willingness to take responsibility and learn about money, the survey found.
Saving is a habit for 84% of the teens surveyed, and they have an average of $1,044 in savings, the survey found. Half of those who have savings said it was set aside for a long-term goal, such as paying for college or a car. They also don’t like debt: 88% said they don’t like owing money to someone.
Teens indicated they want to learn more about money: 89% said they want to learn how to make their money grow, while 65% believe learning about money is “interesting.” The top reasons they cited for wanting to learn about money were “to stay out of debt,” “to be able to pay my bills,” and “to not have to rely on others for money.” The majority of teens want to learn about money from their parents. Yet only one in five said their parents had “taught me how to invest money wisely to make it grow.”