As a result of the recent global recession, many adults have made more serious attempts to reduce debt on their credit card accounts and get spending under control. This behavior also seems to have rubbed off on teens.
Fewer youngpeople now say they're knowledgeable about how credit cards work and how to manage these accounts, and a greater number have made saving a priority, according to the 2011 Teens and Money Survey from financial consultancy firm Charles Schwab. For example, just 32 percent of 18-year olds say they know how fees and interest rates on credit card accounts work, down from 43 percent in 2007, prior to the beginning of the recession. In addition, 39 percent say they are knowledgeable about how to manage a credit card, down sharply from the 64 percent who responded the same way four years ago.
Further, 77 percent of teens now consider themselves to be "super savers," the report said. On average, most teens have almost $1,000 saved up, and 76 percent say they've done so in an effort to help pay for college.
"It could be that the effects of the recession have given these young people a reality check – making them realize they aren’t as knowledgeable about financial tools and products as they may have once thought," said Carrie Schwab-Pomerantz, senior vice president of Schwab Community Services. "But the good news is that three out of four teens say that learning about money management is one of their top priorities, which is an improvement since 2007."
This sea change in kids' attitudes may be largely attributed to seeing their parents struggle financially during the recession, the report said. In all, 56 percent said they have a greater appreciation for their parents' work, and 64 percent are more grateful for what they have. In addition, about 75 percent of teens said their parents talked to them about their financial situation in the past 12 months.
The survey also found that most teens aren't optimistic about the economy, with 80 percent believing the recession is still going on, and 45 percent saying it will continue into 2012, the report said.
Federal laws now also prohibit teens from acquiring credit cards without either having an adult co-signer or providing evidence that they are able to afford the accounts on their own.