This article in the Boston Globe comments on a recent survey of teens regarding financial matters:
American teens believe, based on the career that interests them the most, that when they get older they will be earning an average annual salary of $145,500. Interestingly, boys expect to earn an average $173,000 a year and girls $114,200, according to the findings of Teens & Money, an annual survey released last month by Charles Schwab & Co. and the Boys & Girls Clubs of America.
Nearly two-thirds of teens surveyed by Schwab said they were prepared to deal with personal finance issues once they graduated from high school. The majority said they were knowledgeable about money management, including budgeting, saving, and investing. But fewer than half of the teens surveyed knew how to budget. Others didn’t know how to pay bills, how credit card interest and fees work, or whether a check cashing service is good to use (it’s not).
I assume that the teens are stating what they’ll earn in today’s dollars. If not, they could be on target. If inflation gets roaring (thanks to our irresponsible national fiscal policy) they might actually, on average, make $250,000 per year, which might be the cost of a can of chili in the year 2020.
Seriously, though, I have to wonder how those teens get those average numbers. The only people I know who make that kind of money are people willing to work grueling 60-hour weeks in a profession that pays especially well.
Scary. But I've certainly seen it in practice among newly independent college students, many of whom run through their savings in a hurry, with no knowledge of how to make their cash last and how to choose between needs and wants.
I'd like to blame the public school system, at least in part, which requires algebra, trigonometry, precalculus, and calculus of anyone who can take it, but totally ignores business and finance classes, especially in poorer communities that have sparse courseloads. Finance doesn't appear on standardized tests, after all- just in real life, which school doesn't really seem to care about.
Also, I blame this weird mentality that make us all feel rude for ever, ever discussing financial matters- even with one's family. I knew nothing about money for years because I couldn't get a straight answer about how things like credit reports work from anyone, not even close family members. Many young people have to learn everything they know about money the hard way.
They get those numbers because income is considered a hush-hush subject in our society. If we make a lot, we don't want people to be jealous. If we make a little, we feel ashamed. This is so taboo that most of us don't even discuss our yearly incomes with our children. Judging by your post, that doesn't seem to be a very good idea, does it?
What ever happened to classes in Home Economics? 35 years ago, the class by that name in my school system had been watered down to a basic cooking course. Now, more than ever, all middle school kids could use a good semester course in the actual economics of running a home.
Cover the costs of economic decisions (Want a car? Okay, work out the annual cost of insurance, maintenance, fuel, principle and interest! How much does that come to by the time the car is paid for? How much do you have to earn to pay that after taxes?)
Start with basic budgeting, and hopefully get through concepts like future value of money. Learn the difference between assets and equity, between cash and savings, between debt and investment.
Teach the math, and let the machines do the arithmetic.