Just 2% of college students believe being in debt is "unusual"
Thursday, 02 February 2012 11:22
New research shows that many teenagers lack basic personal finance skills and knowledge.
The research, conducted by Chartered Insurance Institute (CII) shows that 71 per cent of students aged 16-18 were unclear on what the term “APR” means.
The research highlights the concern that students who are about to go to university and are making big financial decisions that will impact their lives for many years to come are making the decisions without sufficient knowledge of money and personal finance basics.
The research found out that 39 per cent of students have not had any kind of financial teaching at school and of those that did the teaching was often simplistic with many simple money management terms not explored.
19 per cent of students had a store card which shows students are able to obtain credit. However, the term APR – which stands for Annual Percentage Rate – and shows the annualized rate of interest payable on debts was not understood by most students.
Other terms that students were unclear on included “debit”, of which 24 per cent did not know the correct meaning, despite 95 per cent of students having a debit card. The survey revealed that students had a relaxed attitude towards debt which shows how normalised the concept of debt has become. Jst two per cent considered debt to be “unusual”.
Just 16 per cent of students had learnt about insurance at school, only 20 per cent were taught about pensions and just a quarter covered mortgages. All of these financial concepts will be important in everyday life and form part of the disciplines of successfully managing household finances.
David Thomson, CII commented: "Our research showed that even those teens who are learning some form of financial education could use additional support as many basic financial concepts seemed out of their grasp. It's crucial for this age group to have a good understanding of personal finance as many of them will set off for university and have to budget for themselves for the first time.
"There is a clear role for experts within the financial education space who may be able to provide additional time, resources and expertise such as the Discover Fortunes game that otherwise teachers might not have access to."
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