Schwab and Boys & Girls Clubs of America Survey Shows Teens on Urgent Need of Personal Finance Education
April 20 2005 - 9:00AM
PR Newswire (US)
Schwab and Boys & Girls Clubs of America Survey Shows Teens on
Urgent Need of Personal Finance Education Majority of Teens, Ages
13-18, Agree that Money Management Should Be a High School
Requirement SAN FRANCISCO, April 20 /PRNewswire-FirstCall/ -- While
youth are commonly looked to as the beacon of the future, today's
youth may be destined to repeat the previous generation's missteps
in money management unless they get help, according to a recent
survey* by the Charles Schwab Foundation and Boys & Girls Clubs
of America (BGCA). Teens' uncertain grasp of basic financial
concepts underscores a dramatic need for more personal finance
education -- not just during April, which is National Financial
Literacy Month -- but year-round. Commissioned by the Charles
Schwab Foundation, the study probed teen definitions of financial
literacy, their understanding of important concepts in money
management, and their beliefs about who should bear responsibility
for teaching them money management. According to Carrie Schwab
Pomerantz, president of the Charles Schwab Foundation and the
daughter of company founder and CEO Charles R. Schwab, "These
findings are a call-to-action for parents, government and the
private sector to do more to help today's teens become financially
savvy adults who can help reverse the course of poor saving and
debt management habits in the U.S." For instance, only 17 percent
of survey respondents said they were very or extremely
knowledgeable about how to manage debt, a finding that's notable in
light of the fact that the nation's bankruptcy and household debt
levels have climbed to all-time highs. Further: -- Fewer than a
third (28 percent) are extremely or very knowledgeable about
creating a budget; -- Only a little more than a third (36 percent)
are extremely or very knowledgeable about how to open a savings
account; -- And only 10 percent understand the power of
compounding, one of the most fundamental concepts in investing.
When asked to define the term financial literacy in their own
words, the majority of respondents (79 percent) could not. Several
answers to this open- ended question, in fact, further underscore
the urgency for more financial education: -- "I think it is a month
when a person would read and buy books." -- "I feel it means money
for learning to read." -- "I think it's advanced English." The
survey is an outgrowth of the Money Matters: Make It Count program,
launched last year by Schwab and BGCA, to promote financial
literacy among teens. The program aims to reach 36,000 young
people, primarily from disadvantaged circumstances, during the next
two years. "As our world becomes increasingly complex, we need to
do a better job of teaching the next generation the basics of
personal finance so that they are prepared to handle the pressures
that await them," said Schwab Pomerantz. "It's disturbing that the
areas teens seem least knowledgeable about are managing debt and
creating a budget. These topics are the cornerstone of the Money
Matters program, which we designed to teach good financial habits
at a young age and help teens make wise financial decisions as they
move into adulthood." The survey polled a national sample of teens
as well as a separate sample of teen members of Boys & Girls
Clubs across the country**. The Boys & Girls Clubs sample
included teens who had completed the Money Matters program, as well
as those who had not, and shows that the program is working. "We
are very encouraged by the fact that teens who have experienced
Money Matters demonstrate a firmer understanding of money
management," said Judy J. Pickens, senior vice president of program
services, BGCA. "The survey findings reinforce our belief that with
the right guidance, teens can get a great head start toward a more
financially sound future." Comparison of National Teen Sample with
Money Matters Teen Sample -- Approximately one-third (31 percent)
of Money Matters teens say they are extremely or very knowledgeable
about how to manage debt versus 17 percent of the national teen
sample. -- Twenty-eight percent of the national teen sample say
they are very or extremely knowledgeable about how to create a
budget versus 40 percent of Money Matters teens. -- Thirty-six
percent of the national teen sample claim to be extremely or very
knowledge about how to open a savings account compared to 50
percent of the Money Matters teens. -- Only 25 percent of Money
Matters teens say they are not very or not at all knowledgeable
about how to balance a checkbook versus 35 percent of the national
teen sample. Personal Finance in the Home and School More than
two-thirds (67 percent) of teens believe their parents or guardians
should be most responsible for teaching them about money and how to
manage it. But while most teens rely on their parents as their
primary source of financial guidance, 13 percent also look to their
teachers for coaching on money management. Eighty percent of teens
ages 13-18 believe the basics of money management should be a
requirement in high school. Yet despite this overwhelming interest
from teens in personal finance education, only seven states --
Alabama, Georgia, Idaho, Illinois, Kentucky, New York and Utah --
currently mandate that students take a course on personal finance
in order to graduate high school***. "We find it alarming that only
33 percent of teens surveyed said they had received any money
management education in school, particularly in light of research
from Stanford University nearly a decade ago that showed that
requiring high school students to take a personal finance course
leads them to save more later in life," said Schwab Pomerantz, "And
while the federal government is beginning to address the problem
with the establishment of the Financial Literacy and Education
Commission, we believe organizations like ours can also play an
integral part in preparing the next generation for the financial
challenges they may face later in life." Teens, for one, seem to
think that Schwab and Boys & Girls Clubs of America are on the
right track. Nearly half of teens surveyed (46 percent) feel a
class or workshop in or out of school would best help students
learn the most about money management. Thirty-six percent of teens
indicate a conversation about money with their parents or guardians
would be most beneficial. He's Hired! Donald Trump Tops Teens' List
of Financially Literate People in America; Alan Greenspan is at the
Bottom Donald Trump need not worry about hearing those two words
contestants on "The Apprentice" have come to fear. The majority of
teens (41 percent) are more inclined to tell Mr. Trump "you're
hired" after declaring him the most financially literate person in
America. Oprah Winfrey, with 25 percent of the votes, ranked
second. Only nine percent of teens selected Federal Reserve Board
Chairman Alan Greenspan as the most financially literate person in
America. In fact, when asked to identify Alan Greenspan, noteworthy
responses included: "I think he's some dude in D.C.," "he owns
something big," and "he is a man with a lot of money." Of note, 21
percent of teens who had participated in the Money Matters program
answered this question correctly versus seven percent in the
national teen sample. About The Charles Schwab Foundation Funded by
The Charles Schwab Corporation (NYSE:SCH) Nasdaq, the Charles
Schwab Foundation is committed to giving back to the community by
supporting employee-selected causes and fostering financial
literacy through funding, involvement and expertise. The Charles
Schwab Corporation, through its operating subsidiaries, provides
securities brokerage and financial services to individual investors
and the independent investment advisors who work with them. With
over 7 million individual investor accounts and more than $1
trillion in client assets, The Charles Schwab Corporation is one of
the nation's largest financial services firms. Its subsidiary
Charles Schwab & Co., Inc. (member SIPC) provides a complete
range of investment services and products, including an extensive
selection of mutual funds; financial planning and investment
advice; retirement plans; referrals to independent fee-based
investment advisors; and custodial, operational and trading support
for independent fee- based investment advisors through its Schwab
Institutional division. Its subsidiary Charles Schwab Bank (member
FDIC) provides banking and mortgage services and products. The
corporation's other operating subsidiaries include U.S. Trust
Corporation (member FDIC) and CyberTrader(R), Inc. (member SIPC).
These companies' Web sites can be reached at
http://www.schwab.com/, http://www.schwabbank.com/,
http://www.ustrust.com/, and http://www.cybertrader.com/.
(0405-7371) Brokerage products: Not FDIC insured. No Bank
Guarantee. May Lose Value. About Boys & Girls Clubs of America
Boys & Girls Clubs of America (http://www.bgca.org/) comprises
a national network of some 3,400 neighborhood-based facilities
annually serving some 4 million young people, primarily from
disadvantaged circumstances. Known as "The Positive Place for
Kids," the Clubs provide guidance- oriented character development
programs on a daily basis for children and teens, 6-18 years old,
conducted by a full-time professional staff. Key Boys & Girls
Club programs emphasize character and leadership development,
education and career enhancement, health and life skills, the arts,
sports, fitness and recreation. * The survey was conducted by
Leflein Associates, Inc. using Computer Assisted Telephone
Interviewing 3/9/05 through 3/13/05. Telephone interviews were
completed among a national listed sample of 500 teens age 13 to 18,
250 males and 250 females. Quotas were used by region to represent
the actual distribution of the 24 million teens that are residing
in the U.S. as reported by the U.S. census. In addition, half the
sample consisted of 13-15 year olds and half were 16-18 years of
age. This study has a margin or error of plus or minus 4% at the
95% confidence level; while the margin of error for subgroups is
higher. ** Boys & Girls Clubs of America's teen survey was
conducted online from March 8-18, 2005. The survey was completed by
1,389 Boys & Girls Club members ages 13-18, including 280 teen
members who had participated in the Money Matters program. *** 2004
survey by the private National Council on Economic Education
DATASOURCE: Charles Schwab CONTACT: Stephanie Kannel of PT&Co.,
+1-212-229-0500, ext. 281, or ; or Sarah Bulgatz of Charles Schwab,
+1-415-636-5940, or ; or Lindsey Edmondson of Boys & Girls
Clubs of America, +1-404-487-5868, or Web site:
http://www.schwab.com/
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