Financial Advice for Teens, From Teens (and Most Teens Really Need It)

Teen financial advice
Teen financial advice

Talk about teen angst. Just in case you thought worries about money were solely the domain of adults, you can go ahead and put that assumption to rest.

Last year, Charles Schwab conducted a study asking teens about their perspective on money and the importance of properly managing it. Here are some of the results:

  • 93% of teens said their family was affected by the recession.

  • 75% said learning more about money management is a top priority for them.

  • 59% think that they will do better financially than their parents.

Even more interestingly, 77% considered themselves financially savvy, yet only 31% reported knowing how credit card interest and fees work -- or even what a credit score is.

Good Luck Out There, Kiddos! You'll Need It

While the recession has encouraged parents to talk about the importance of money management with their kids, those conversations aren't adequate preparation for the real world.

Most teens are still entering life after high school without the knowledge necessary to properly manage their finances. It's no wonder: In 2011, only 20 states required that personal finance be taught to students in some form -- and not even necessarily through a dedicated personal finance class.

The results of the most recent National Financial Capability Challenge aren't any more encouraging.

The Challenge tests teens' financial knowledge about everything from earning and saving money to taxes and insurance. The national average for 2012 was only 69% -- barely passing on most grading scales.

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A Little Knowledge Can Be a Big Advantage

We caught up with three students who did exceptionally well on the Challenge and asked them where they got their money smarts.

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These three students all had important resources to thank for their financial know-how: parents who taught them the importance of money management at a young age and continued through their lives, and the opportunity to take a personal finance class at their high school in Mansfield, Mass.

Max Kinney, 17, and Chris Nugent, 18, both received perfect scores on the National Financial Capability Challenge, and Carlos Gomez, 18, was awarded a scholarship for also being a top scorer.

We asked them to share their top money management tips for fellow teens, and here's the advice they gave:

1. Find a way to save, no matter how small. Max says he first started saving when he was 7 because he wanted a video game console. The savings habit stuck, and he's continued saving since then, dedicating the past few years to saving for college. "Teenagers may not have a regular paycheck," he says, "but they do receive money from gifts and odd jobs. They need to always save some of that money every time they get some."

No surprise, all three of the financial teen gurus cited savings as something that should be a top priority for their peers. Whether it's a little or a lot, putting money in a fee-free savings account that offers interest is a smart way to grow your money.

2. Stay away from credit cards. Carlos wants to give his peers a heads-up about the dark side of using credit cards: "Be careful of credit cards, because they are a good thing if you know how to use them wisely, but they can lead you into a spending spree, and into debt."

%Gallery-149818%The danger of debt is something that Chris learned about at an early age: "In middle school I read an article which stated that if a young couple spent $5,000 on a credit card and if that couple only paid the minimum payment each month, it would take over 30 years and over $30,000 to pay off that balance."

3. Budget. Chris advises his fellow teens to become more aware of how much they spend and on what: "Only through tracking expenses and budgeting will you fully be able to understand where your money is going," he says. The only way to figure out how to save more is to see exactly where your money goes, he says.