Recently, a survey by the Program for International Student Assessment released a 2012 survey that measured the academic abilities of 15-year-old students from across the world. The survey covered reading, mathematics, science literacy and financial literacy. The findings were somewhat surprising for many Americans and showed a greater need for financial literacy to be taught in classrooms throughout the country.
Where American teens stand
The PISA survey revealed that American teens fall somewhere in the middle when they were answering financial-related questions. The place where teens were the most prepared in financial literacy was Shanghai, China. Of the American students who participated in the study, 18 percent were unable to perform basic financial literacy tests. This was below the 15.3 percent average of countries involved with the Organization Economic Cooperation and Development. Only 9.4 percent of Americans tested among the top performers for financial literacy, close to the OECD average of 9.7 percent. In total, American students tested below average for seven education systems, which indicates the necessity for parents to teach their teens about finances.
The importance of financial literacy
In a time when the cost of higher education continues to rise, it is more important than ever that students have the tools they need to reach important financial benchmarks and manage their money properly. When students leave the nest, they should understand how to make a budget, what to look out for with credit card offers and the best way to take control of their funds.
What parents can do
Many high schools don’t teach financial literacy, which means the only exposure to money management that many teens have is at home or their personal experience with a part-time job or allowance. The best thing for parents to do is to have a discussion about money management with their teens to give them an idea of how debit works, the dangers of misusing credit cards and how to make a budget. These are all important pieces of knowledge that can make a difference when a student is out on their own and has to make important financial decisions, and help them form a strong financial future.
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