Junior Achievement survey: Teen financial confidence drops

USAToday notes: The latest concerns of the 18-and-under set go way beyond pimples and prom dates: Their level of financial confidence has taken a dramatic slide.

Just 56% of kids 14 to 18 think they will be as financially well-off, or better off, than their parents, according to a new survey from Junior Achievement and The Allstate Foundation. That’s a huge plunge from 89% in 2011.

Teens have also extended the time line on how long they expect to need money from a parent or guardian. Eighteen percent say they’ll be financially independent by age 20, vs. 44% who said that a year ago. More think they’ll be independent by ages 25 to 27: 23% in 2012 vs. 12% in 2011.

Junior Achievement, the non-profit group that gives teens hands-on business experience, doesn’t have data on why the confidence decline was so extreme, but the group has some theories.

“It’s the cumulative toll” of years of financial stress, says Junior Achievement USA CEO Jack Kosakowski. “They’ve seen relatives get laid off and perhaps family members lose homes.”

Teens said in-school financial education declined, so that may have hurt confidence levels as well, he says.

Last year, 58% of those surveyed said they learned how to manage money in school or from teachers. In the March 2012 survey, that fell to 24%.

“Kids are getting less of the financial literacy piece,” Kosakowski says.

A separate 2011 survey from Charles Schwab & Co. showed a striking slide in teen money-management know-how.

One in four 18-year-olds said they knew how to manage a credit card in 2011, down from 64% in 2007. Just 43% knew how to balance a checkbook or check the accuracy of a bank statement, a shift from 60% in 2007.

Half had checking accounts and 58% had savings accounts, a drop from 75% and 72%, respectively, in 2007.

Other elements that have hurt teen financial confidence:

•Parents have opened up about financial troubles. Many kids were shielded by parents during the downturn, says Rob Callender, director of insights at youth research firm TRU. Moms and dads would “do without” to avoid taking things away from the kids. As finances dwindled, though, those parents have been forced to level with the kids about their economic reality.

•Parents aren’t teaching kids money lessons. Many parents don’t realize how important it is to teach kids about money — and to have serious talks with teens in the same way they would discuss sex or drugs. “They need to reach out to kids with ideas on money management and careers and workforce readiness,” Kosakowski says. “We call it the new ‘birds and bees discussion’ because parents are so critical in it — not just talking about it, but living it.”

•Teens know how tough it is to get a job. With the 16-to-19-year-old unemployment rate around 25%, job prospects are bleak, says Renée Ward, founder of Teens4Hire.org. There are fewer prospects and more competition for the open slots by college-age job seekers, as well as older workers and retirees who want to boost their nest eggs. “About one in four teens is unemployed these days,” Ward says. “They can’t find work, and that doesn’t bode well for them down the road.”

•Teens are still fearful about the economy. Nearly 95% of teens said their family was affected by the recession — and 80% believed the recession was not over, according to the Charles Schwab survey.

“The reality is that this group is growing up almost like the kids of the Depression,” Ward says. “It’s not surprising that their confidence level would be challenged at this point.”

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