Teens and Money

For the past three years, Charles Schwab & Co.'s Teens & Money survey has tracked the way American teenagers spend and save money, as well as their attitudes about money. Jean talks with Carrie Schwab-Pomerantz about this year's survey and what parents can do to help their kids get a head start on their personal finances.

Carrie says teens today are knowledgeable about money, but most are overly confident about their financial futures. The survey, which showed that only 37 percent of teens surveyed hold a job, also showed that many teens expect to make six-figure salaries as adults. "I think it is wonderful to see such optimism, but I think also they need a reality check," Carrie says.

As for credit card use, Carrie says many older teens have their own cards, while others may use their parents. "They do understand that they are big spenders and big users of credit cards, so they are using adult behavior, but if you dig down deeper they don't really know the specifics," she says.

Teaching kids to be responsible with money and to have the feeling of ownership over their money is something that Carrie says will benefit kids later on in life. "I think it is really important to start kids young and start with giving them an allowance at 5 or 6 years old," Carrie says. "That is when they really start to experience money and place value on it."

Parents can explain interest rates, debt and credit scores to kids as they get older, so by the time your child goes to college, they can make good financial decisions. "Unfortunately there are a huge percentage of college kids who are already in credit card debt," Carrie says. "You tack that onto their college loans and there is no going back."

Money tips for parents of teens:

• Encourage summer jobs.
• Open a credit card account and let your teen use it, then help them understand and pay the bill.
• Teach your child about investing, diversification and equity.
• Help your child to understand "wants" versus "needs."
• Be a good role model by using your money wisely.