By: Daryl Tolliver
A large number of financial institutions focus primarily on extending products that offer them immediate and large returns, such as small business banking products, retail banking, mortgages and investment accounts. However, high school students are future bank and credit union customers, and new research shows that if this demographic does not receive more financial education, they may not be equipped to make smart financial decisions in the future.
A new survey conducted by education technology firm EverFi, Inc., found that most high school-aged students - those between 13 and 18 - lack basic knowledge and confidence in financial decision making. More than half of respondents said they don't know how to establish good credit, while more than a third of students mistakenly think a score of 300 is a positive credit rating. Another 41 percent of students said they believe they will receive all paid taxes back after filing a federal income tax return or don't believe they must pay taxes at all.
"Many high school students have little, if any, personal experience in managing their own finances, yet they are just moments away from entering adulthood, opening lines of credit and making financial decisions that will impact their individual futures and our entire global economy," said Tom Davidson, CEO of EverFi. "This cyclical nature of sending students into the 'real world' without sufficient financial education is leaving the next generation unprepared for the challenges they'll face as adults.
Teens seek financial intervention
While the study paints a grim picture for the future, the research also shows that many teens recognize the importance of a solid financial understanding, and prefer that parents and other entities step in to provide more education on these topics. However, only 26 percent of parents said they feel equipped to provide financial instruction to their children.
The results of the study shed light on the opportunity banks and credit unions have to establish financial education programs geared toward teens and reach out to a broader demographic. In the years following the recession, many parents are recognizing the importance of instilling their children with financial literacy, and many are opening teen-oriented bank accounts to do so. Many credit unions and community banks are already ahead of the fold, and frequently visit schools ranging from K-12 grades to provide hands-on training to students. This not only helps shape an educated and informed generation, but also helps local institutions build stronger relationships with community members.