How much do American teens really know about money?

Ideally, by the time our kids leave high school they have all the life skills they need for adulthood, including financial literacy. We know that’s not the case.

But how much do American teens really know about money and some of the big topics that adults grapple with, often for a lifetime, such as budgeting, debt, and retirement?

A new study set out to find out and discovered that more than four in ten of the teenagers who took part said they were uncertain about their financial future with more than 7% already saying they are pessimistic about their outlook.

The MissionSquare Research Institute report also found that 42% of respondents (all aged 13-18) said they are “terrified” of not having enough money for their future needs and goals, although two thirds admit that they don’t tend to save for the future when they receive money, while 23% save for their education, and 13% invest.

"There is so much for teens to absorb when learning about finances and planning for their future, they often struggle to envision what lies ahead," said Andre Robinson, president and CEO of MissionSquare Retirement. "By offering engaging programs that boost their financial knowledge and decision-making skills, literacy courses will help inspire them to build a strong foundation of lifelong financial resilience and success."

However, the respondents’ three most appealing investment strategies are savings accounts, a side hustle, and keeping cash at home.

Most teens were not thinking about saving for retirement with most saying that it’s something that can wait until they are older, 80% have not clue about FICO scores, and 43% believe that an interest rate of 18% is manageable and can be paid off over time.

Gaps in teens’ financial literacy are understandable given than less than half of respondents have taken a financial literacy or personal finance class in high school, although this is an improvement from less than one third who said this in a similar poll a year ago.

But the report reveals that even those that do, while feeling it was helpful, are likely to have some gaps in their financial knowledge.

"More states are adopting financial literacy requirements, but this research would indicate that not all of the courses offered are having the desired impact on student knowledge," said Tim Greinert, president of Junior Achievement USA. "It's important that financial literacy courses use evidence-based approaches to positively affect knowledge, attitudes, and behavior, and go beyond simple online courses that may or may not promote those learning outcomes."

The report includes data from the Junior Achievement and MissionSquare Foundation Fintech Survey, conducted by Wakefield Research, and was co-authored. Y Zhikun Liu, PhD, CFP, vice-president, head of MissionSquare Research Institute at MissionSquare Retirement, and Yu Zhang, PhD, assistant professor of the Department of Personal Financial Planning at Kansas State University, High school is not the only way that kids should learn about money of course and the research also found that coming from a family with two or three children was associated with a greater likelihood of achieving financial independence than coming from single-child households, as was coming from a rural area compared to a city and coming from a household where the income was $150K or more.

"Concerns are rising over uncertainty U.S. teens feel about their financial independence," said Liu. "With many teens unsure of their ability to achieve financial independence, policymakers, educators, and community leaders should consider and continue prioritizing targeted financial education programs to enhance teen’s financial independence and confidence. This study underscores the critical role of financial education in empowering teens to make informed economic decisions. It also reveals the significance of comprehensive strategies in cultivating teenagers’ preparedness for financial independence.”