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Half of parents confident about youth's financial skills
WASHINGTON (9/9/09)--About half of parents say their children will leave home knowing how to manage money, according to the results of a Consumer Federation of America (CFA) survey.
During a press briefing Tuesday, CFA presented results of a survey it conducted Aug. 27-31 of 553 representative parents, or guardians, with children under age 18 living at home.
About 53% of parents said they were "very confident" their children would leave home with personal financial skills. Nearly all parents surveyed--98%--said they felt "very" or "somewhat" responsible for teaching their children how to manage money and credit. Roughly 86% said they felt "very" responsible.
However, only 73% said they felt capable of instructing their children how to manage money, CFA said.
Jim Hanson, vice president of the Credit Union National Association's (CUNA) Personal Finance department, said there is a disconnect between the fact that only half of parents surveyed are confident their children will leave home with money skills, yet almsot all parents think it is their responsibility to teach money management skills.
"That's why credit unions stepped to the forefront of financial education so long ago," Hanson told News Now. "Teaching young people about the value of money, how to save, spend and borrow wisely can't start too young."
Phil Heckman, CUNA director of youth programs, agreed.
"Parents have a unique opportunity to influence the lifetime money management habits of their children by intervening early," Heckman said.
For instance, it's easier to guide preschoolers to make good decisions about small amounts of money than it is to correct bad spending habits and saving ignorance of teenagers. "By starting young, parents can learn with their children, and become personal finance experts in the process," he added.
Heckman suggested that credit unions should offer to help parents become good financial role models for their children.
"Parents who might otherwise deny they need money-management help are willing to seek it for their children," he said. "By training them to teach their own kids at home, credit unions can kill two financial literacy birds with one educational stone."
The CFA also released the top 10 myths held by 14- to 21-year olds:
- I don't have to worry about credit at my age;
- Bad credit can't keep me from getting a job;
- All loan companies have the same rates;
- All credit cards are alike;
- The job of financial advertising is to tell the truth;
- It's OK to bounce a few checks;
- It's OK to make minimum payments on a credit card;
- Paying late occasionally can't hurt my credit;
- Fine print isn't important; and
- Young people don't have credit scores.
CFA noted the struggles Rachel Silverman, 25, encountered when she attended music school at New York University. She racked up $130,000 in credit card and student loan debt, and is now struggling to keep her dream alive of being an opera singer, CFA said.
"It was terrible," Silverman told CFA. "I wasn't sure what I was getting into." No one, including her teachers and parents, prepared her how to manage credit and debt, she said.
"I probably wouldn't have been in this situation if I had simply known the basics about credit cards, student loans and interest calculations," Silverman said. "In hindsight, I was like a lamb being led to slaughter."
Also at the press briefing Tuesday, CFA announced the resources available through FoolProofMe.com, a website that offers free online tutorials to high school and college-age individuals about money management.
Will deHoo, 29, who founded FoolProofMe.com, said he recently spoke to a group of 60 seniors at the University of Colorado. One of four students said they knew poor credit could affect their job opportunities, and only three out of 60 knew their credit score. They said they had bounced checks and were borrowing on one credit card to pay another, he said.
Many young individuals had missed out on financial education because the medium in which the education was offered did not engage them, deHoo said.
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