Young adults are unaware of finance basics

Students could be playing Russian roulette with their finances by taking out store cards without even understanding the meaning of APR.

New research by the Chartered Insurance Institute has revealed that teens and young adults are unaware of the basics when it comes to their finances.

It found that 39 per cent of people had no finance training at school but those that did said it did not include basic money management.

Of the 16 to 18-year-olds polled, 19 per cent have a store card already, with 17 per cent opening the account themselves.

However, despite having access to easy credit, 71 per cent do not know what APR means.

Perhaps more worryingly, 33 per cent are unsure of the meaning of the term "credit" and a quarter of young people do not know what "debit" means.

Furthermore, 51 per cent think that debt is something "everyone goes through at some point", with only two per cent considering it to be "unusual".

"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," said David Thomson of CII.

"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."

However, Phil Perry, director at Ark Financial Planning, said that young people have the tools to make them more financially savvy than any other generation.

He explained that the rise of online comparison sites mean that people with a familiarity of the internet can easily find out if they are getting a good deal on financial products.

It is also likely that the current climate has forced people to become more financially aware as they can no longer afford to have a laissez faire attitude to their money.

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2012-02-02 17:08:27 © Moneyextra.com