Teenagers in need of a financial reality check
The chances are your teenager has mastered the art of spending money, but when it comes to managing money, they’re significantly less savvy and suffer unrealistic expectations.
According to new research from NatWest, 43% of teenagers believe they’ll leave university with less than £10,000 in debt, while 31% do not believe they’ll ever need to borrow at all.
By the age of 21, 71% of 11-19 years old believe they’ll own a car and by the time they turn 25, 59% reckon they’ll have taken their first step on the property ladder and be earning a salary of more than £31,000. Today, the average first time buyer is 33 according to Halifax, while ONS figures show that the average salary of a 22-29 year old is £17,817 a year.
Even though 61% of the young people interviewed said they had concerns about debt, very few had a good understanding of credit and how it works. After being given details of a range of different personal loans, a worrying 76% failed to identify the cheapest offer.
Stephen Moir, Royal Bank of Scotland’s head of community investment, said that while optimism was certainly not a bad thing, teenagers needed to be more realistic and wise up to the financial challenges ahead.
"Ultimately the more exposed young people are to financial issues, and the younger they become aware of them, the more likely they are to become responsible, forward-planning adults who manage their finances confidently and effectively."
The report was the first from NatWest’s Money Sense Panel, which is tracking the financial outlook for 8,500 11-19 year olds over a period of five years. It will examine their understanding of financial issues, like earning, budgeting and debt as well their hopes and aspirations for their finances in the future.
As debt levels grow and the need to take charge of our finances become increasingly important, Moneywise is campaigning for personal finances to be taught to children in school. Sign our petition on the Prime Minister's website.