The process of raising children has an inevitable cycle. They are born, and ultimately they move out to be on their own. The end has its negatives for parents (the empty nest syndrome) but also its positives (more freedom and reduced expenses).
Preparing the child for independence is the responsibility of parents. An important part of that preparation involves the imparting of financial knowledge. Are parents performing this task well? A few years ago, the brokerage firm, Charles Schwab, in cooperation with the Boys and Girls Clubs of America conducted a survey to find out.
According to the survey, almost all teens (93 percent) believe it’s important to know how to live within your means and good money habits are necessary for a successful life; so far, so good. Most teens feel that parents should stop supporting them by the age of 25; that’s roughly four years after college graduation. How many parents are planning on this?
The survey did indicate a lack of practical financial knowledge. While 51 percent of respondents said they knew how to shop for the best bargains (of course); use debit cards (47 percent); use credit cards (45 percent); and how to budget (41 percent), only one-third knew how pay bills, 26 percent knew how credit card interest and fees work, 23 percent knew what a credit score was, 22 percent knew how to invest money for growth and 14 percent knew how income taxes worked.
The most disturbing finding, however, was the high level of optimism and confidence the teens had about their financial future. Almost 90 percent stated “I know I will succeed in life.” Almost 75 percent of the teens believed they would be earning “plenty of money.” More than half thought they would be earning more than their parents. The predicted average annual earnings for boys was $173,000; for girls $114,000, income levels exceeding 85 percent of U.S. households where median household income is $50,000.
Even the recent recession and current slow recovery can’t seem to dampen teenage optimism. Such income fantasies continue unabated in more recent surveys. Maybe that’s part of growing up in America these days. We coddle the kids, tell them how special they are and hope reality doesn’t hit too soon or too hard.