More than half (58%) of British teenagers admit they have no idea about money matters and are in the dark over how to save their cash, according to a new report.
Digital wealth manager Moneyfarm quizzed 2000 of the nation’s teens on their knowledge of money, and discovered they believe, on average, that an average starting salary after university will be as much as £236k. They are certainly in for a rude awakening when they leave school.
Almost one in ten (7%) imagined that the average cost of a house in the UK is as little as £30k, and when asked what a pension was, 8% thought it was their trust fund, which their parents would leave to them.
A staggering 61% are even left baffled by the difference between a debit card and a credit card, according to the poll.
And while teens were pretty close on the average cost of a house (they estimated £350,000 versus the actual £267,000 they were remarkably off when it came to a Sunday lunch roast in a pub, which they guessed cost an average of £200 per person.
One in ten (10%) thought the Chancellor of the Exchequer, Rachel Reeves is a TV presenter; with a further 6% adamant she is a Hollywood actress. One in twenty (5%) are convinced she is a pop star or a social media influencer.
Clearly, they were not glued to the TV for the Spring Statement.
The teens were also probed on their knowledge of financial terms. One in six (13%) think an ISA is the money you earn on your savings rather than a tax-free savings account. 2% even thought an ISA was a town in Sweden.
Incredibly, one in five (20%) had no idea what the term “inheritance” meant, while 28% are unaware what “national insurance” is yet.
The survey also found that one in six (14%) teenagers don’t have any savings, either in an account or on a pre-paid debit card, as a third (35%) admit that any money they do receive is spent immediately, with boys spending the majority of their money on gaming (71%) and girls on clothing (74%).
The other most popular items teens splash their cash on are going out (49%), takeaways (34%), skin care (34%), cosmetics (32%) and music (24%).
When quizzed hypothetically on what they would do if given £10,000 at 18 years old, 33% of teens said they would spend it on holiday, and 24% said they would splurge it on clothes.
A further 24% sensibly said they would use it to fund university, whilst 21% declared they would put it towards a house deposit, and 15% would invest it in stocks and shares.
Chris Rudden, Head of Investment Consultants at Digital Wealth Manager, said: “Financial literacy is a crucial life skill which needs to be prioritised. It is important that we address these gaps in their understanding to ensure that today’s children are well-prepared for the financial realities of adulthood.
“There is time for them to learn and develop these essential skills, and it is our priority to provide them with the necessary tools and knowledge around personal finance and money management that will empower them to make informed decisions and help build a secure future.”
Despite 82% of parents saying they consciously try to teach their children about money and finance and one in three (32%) teens said they would love to know more while 36% still admit they don’t feel confident about managing their money in the future.
