The coronavirus pandemic and resulting financial crisis has shown consumers the importance of financial literacy. In fact, lockdowns have provided some with the opportunity to bolster their personal finance knowledge.
However, new findings from Greenlight Financial Technology show that one generation may need some additional assistance: In a national survey of over 1,000 American teenagers, the fintech company found that 74% of teens don't feel confident or knowledgeable about personal finance matters.
But that's not stopping today’s teenagers, as Greenlight also revealed that 73% of respondents want more financial education.
Teens lack understanding of personal finance basics
Recent studies have found that more and more people are prioritizing their finances and overall financial literacy as a direct result of the COVID-19 health crisis. College students, for example, are practicing better credit and financial habits in an effort to keep costs low, while more women are educating themselves and reassessing their financial situations.
Similarly, teens these days also understand the importance of a comprehensive personal finance education. However, they also lack knowledge of basic concepts, with Greenlight reporting that many respondents:
- Have never made a budget (49%)
- Are unable to correctly define what a 401(k) plan is (46%)
- Do not know if they have to pay taxes (41%)
- Cannot correctly identify the difference between debit and credit cards (32%)
Teens using social media to learn about investing, despite lack of trust
Although 86% of respondents reported an interest in investing, the Greenlight survey found that 45% haven't started because they (and their parents) lack the knowledge or confidence to do so.
The survey revealed financial confidence gender gaps as well: 46% of the young women surveyed reported not investing yet because of a lack of confidence, while only 37% of young men expressed they felt held back by low confidence.
Greenlight's findings show that teens still have a long way to go before they become skilled investors. However, these teens are aware of their limited knowledge — and, as a result, they’re turning to social media to help close the information gap.
And despite ranking social media as one of the least trustworthy sources for investing advice, many teens are using these platforms to increase their financial acumen. Almost half (48%) of respondents reported having turned to one or more social media site for such information — in particular:
- YouTube (38%)
- TikTok (33%)
- Instagram (25%)
Methodology: Greenlight gathered its data through a ResearchScape survey of 1,029 US respondents ages 13 to 20 between Feb. 26 and March 2, 2021.