By: Joe Gillen
Many teens have limited knowledge and experience about managing personal finances, and as a result, a large percentage believe they will be financially-dependent on their parents into adulthood, new research shows.
A joint study conducted by Junior Achievement USA and the Allstate Foundation found that 25 percent of teens think they will be age 25-27 before becoming financially independent from their parents, compared to only 12 percent who gave the same response in 2012. Many parents also agree with this assessment and report that they expect their children to be in their mid-20s by the time they are financially independent. Adults cite the struggling economy, job market and societal norms as the reasons for young adults' lack of financial independence.
"It is interesting to see this shift in teens thinking they will remain financially dependent on parents, while building a better future for themselves," said Rick Franke, Junior Achievement of Southeast Texas president. "From our findings, we can infer that teens expect to live with their parents longer because 27 percent are unsure about their ability to budget and 48 percent express similar feelings about the use of credit cards. Additionally, 40 percent of teens express a lack of confidence in their ability to invest their money. The good news is that resources are available, but now is the time to implement steps to help today's teens secure independent financial futures."
Education and teen bank accounts may help young adults become better prepared
While some parents may have a discussion with teens about the importance of smart money management, community banks and credit unions can do their part by promoting programs that may help teens gain hands-on experience. For example, if teens qualify for rewards checking or savings programs, it's important for local institutions to advertise these products more aggressively, as many people may not know they exist.
Moreover, many financial issues that adults face are the direct result of a lack of education on budgeting, managing credit lines or using the right financial products for their particular needs. As banks and credit unions have a stake in the ability of their customers and members to be responsible patrons, developing financial education programs to help educate teens is crucial. Developing a relationship with this demographic - as well as their parents - can instill trust and loyalty that can help institutions obtain lifelong customers,