Worried about America’s financial future? Perhaps you should be.
At least, that’s what the latest research suggests. According to a survey of teens across the globe, American adolescents are just about average when it comes to financial literacy.
The survey, published last month by the Program for International Student Assessment (PISA), asked nearly 30,000 15-year-olds in 18 countries to answer questions about financial topics like bank statements, loans and insurance. Results showed that Americans lagged behind their peers in countries like China, Estonia, Australia and Poland.
In fact, as many as 18% of American adolescents had difficulty with the most basic financial issues. Only the top 10% of those surveyed were able to tackle more complicated concepts, like income-tax brackets and bank account calculations.
So what were the biggest differences between money-savvy and money-clueless youngsters? As it turns out, teens with advanced reading and math skills demonstrated a better understanding of financial issues.
Unsurprisingly, teens who had their own bank accounts or access to a debit card were more financially literate (though some of these differences disappeared once socioeconomic factors were taken into account.) Teens also got a boost if they participated in the family business or had their own job.
While there’s no quick fix for America’s financial literacy problems, one potential solution is for parents to be more pro-active when it comes to teaching their kids about money. The idea is to get kids comfortable talking about dollars and cents from an early age.
Ted Beck, C.E.O and president of the National Endowment for Financial Education, told U.S. News & World Report that family discussions about money can come off as confrontational because we often avoid talking about it altogether. But Mom and Dad can use everyday activities, like shopping, as an opportunity to teach their kids about budgeting and other financial issues. While visiting the bank, parents can explain that it took hours of hard work to earn the money they’re currently withdrawing.
Stumped as to where to start with your family? Check out our guide to talking about everything from giving to charity to using a pre-paid credit card.