A recent MSN Money article by Liz Pulliam Weston, Why Your Kids Expect to be Rich, tackles this topic. According to Ms. Weston, a recent survey by Charles Schwaab found teenage boys expected to earn an average of $174,000 and teenage girls expected to earn $114,200. These are very high salaries, and are much higher than most people will ever earn in a year!
This is even more unrealistic when you consider the median earnings for American adults. From the article:
- Median earnings of men who worked full time, year round in 2005, the latest year for which Census Bureau statistics are available, was $41,386.
- Women working full time made a median of $31,858.
- Fewer than 5% of the U.S. population makes more than $100,000, according to the bureau. Only one household out of six report a six-figure income, according to the Federal Reserve’s 2004 Survey of Consumer Finances.
The top 3 career choices among the polled teens were in medical, technology, and teaching fields. It is reasonable for some medical and technological professionals to earn six figures, but it is rare for teachers to earn six figures unless they become a tenured professor or go into administration.
Ms. Weston makes several very good observations about the cost of college and amount of student loans, the proliferation of credit card debt among college students, and the failure to take advantage of the time value of money. (The wonders of compound interest!). She even goes so far as to put the blame on the media for glorifying the high life, society for being materialistic, and parents for not setting a good example.
These answers are all partially correct, but I think education, or the lack of financial education, is the biggest factor. Many high schools do not teach financial education in any form. When I was in high school the only thing close to financial education offered was a half semester ‘math’ class that taught home finances, but it pretty much only covered how to balance a checkbook. The class was very low-level and was aimed toward students who needed a math credit to graduate. The people I knew who took the class said it was worthless.
Most teens do not have much knowledge about the true value of money, reasonable salary expectations, how much things cost, how loans work, how investing works, or other similar information that can greatly affect their financial futures. Many of these students go into college and take out very large loans to get a job that will pay them much less than they were expecting.
I think schools should begin teaching students about finances in middle school and should require financial education before students are eligible to graduate high school. But even if schools do require financial education, I believe it should first start at home. The only way to be sure your children know about money is to teach them. I can guarantee all of you that my children will have a good foundation in financial education! 😉