When asked what mitochondria are, many high school students will not let a beat go by before they proudly answer, "The powerhouses of the cell!" When asked what a credit score is, however, silence and a perplexed look is often the response.
Many teens acquire knowledge about finances informally, whether by calculating the profit from a lemonade stand or overhearing their parents' conversations while doing taxes. "Most young people more than likely develop their knowledge about finances from their parents. ... These conversations can shape opinions and behaviors of young people at an early age," said Josh Miller, senior vice president, head of household acquisition and checking product management at KeyBank.
Learning informally about finances at home can also lead to problematic spending habits across the generations: "Poor money behaviors actually transferred down to me," said Nichol King, director of community banking and development at JPMorgan Chase. King's lack of financial education at home later inspired her to make teaching financial literacy part of her career.
In a country where
Financial misunderstandings can also stem from social media platforms like Instagram and TikTok, where "finfluencers" post financial lessons and money managing tips. In some cases, these sources are reliable, but it can be difficult for a teenage audience to differentiate well-sourced advice from misinformation, especially when
Although banks such as Bank of America, JPMorgan Chase,
"What many people consider to be normal banking tools are foreign to many teens," Miller said. "Some don't know what a checkbook is or how to balance it. Some don't know how to write a check and how it works. There is an overwhelming sentiment of instant gratification that comes from advances in technology. Technology advancements can make banking simpler and immediate, but it can make it easier to fall into bad habits."
"It just became clear to me that we need to do something in schools to increase the level of financial responsibility in young people even prior to them going to college," said New York State Sen. Leroy Comrie, a sponsor of
"I onboard young interns all the time, and when you talk to them, they do not know how to establish credit, and they do not understand the impacts of owning a credit card. A lot of people don't understand how to budget, how to put together a weekly, a monthly, or an aspirational budget," Comrie said. His bill, which was introduced in March 2021, has been referred to the state Senate's Education Committee for discussion.
Some bankers support this idea, which would give them a more financially savvy customer base.
"In an ideal world, financial literacy and money management would be required teaching in middle school and high school, teaching the basics around banking, credit and taxes," Miller said. "More financial- literate young people would mean lower defaults long term, more budgeting, more saving and a greater overall sense of value of money."
Due to schools' lack of financial literacy curriculums, most students do not come into contact with finances in any significant way until they have a job. Those who have access to interactive and immersive financial education, however, often leave financial literacy programs with the knowledge and confidence needed to manage money wisely. For example, the Student Banking Program at Capital One, founded in 2007, offers high school seniors firsthand experience in banking and money management.
"I think doing those financial literacy sessions really let me figure out the nuances of how a bank works and it gave me the confidence at a young age to make those types of goals for myself," said Shaleena Campbell, a 2015 graduate of the program who is now its project coordinator. "The program was made to teach students in low- and moderate-income areas about financial literacy and the power of taking control of your own finances. ... And so for Capital One, that starts with the youth and providing them with experience in the work force and giving them the basis of financial education," she said, speaking on Mario Armstrong's podcast "
There's disagreement over who is at fault for teens' lack of personal-finance knowledge — parents, legislators, schools or banks. "Banks have a major role to create opportunities for financial literacy," said Comrie. "Some banks have started to do financial literacy programs in schools, but it's not nearly enough. I think that banks also have a responsibility to work with existing customers to inform them of these programs for when their children become of age."
Adults agree, however, that it's not teens' fault.
"A world where teens are financially literate means we have a world with thriving adults who know how to manage their money wisely," Miller said.
