While parents are the main source of education about finances for their kids, a surprising number of teens are turning to social media for financial lessons. According to a recent Wells Fargo & Company survey of parents and teenagers, over half of teens (57%) say they learned about handling finances from their parents. But they are also likely to learn financial lessons from other sources, including school (47%), social media (35%), and online websites and articles (34%). Parents underestimate how much their kids are learning from social media. Only 12% of parents believe their teens use social media for financial education.
“There is a bit of a disconnection between parents’ and kids’ perceptions around financial education,” said Kathleen Malone, financial advisor with Wells Fargo Advisors in Charlotte, North Carolina. “While 61% of parents polled say they’re talking to their kids about finances, only 43% of teens report they have had these conversations. It’s very important for families to discuss money — and for our next generation to understand how to handle their finances.”
The Wells Fargo Parent-Teen Study on investing included 318 teens between the ages of 13 and 17, and 304 parents of teens who are 13 to 17.
Investment knowledge lacking
The survey found common ground between parents and teens in the importance of learning about finances and investing. Almost all teens and parents (93% teens, 92% parents) agree that teens who learn about investing will be better off financially later in life. However, nearly half of the teens (49%) and nearly one in three parents (32%) give themselves a D or F grade in investment knowledge. Teen girls (53%) rated themselves lower in investment knowledge than boys (42%).
“The good news here is that three out of four (75%) teens say they are ready to learn about investing, and nearly nine in ten (87%) parents believe their teenaged children are ready for it, too,” said Malone. “What’s more, I’m thrilled to see the next generation demonstrate such enthusiasm and desire to hone their investing acumen.”
Parents and kids are also in agreement on how well teens handle money. Nearly seven in ten (69%) teenagers believe they are good with money, and their parents (72%) agree. Four out of five (81%) parents believe they are good financial role models for their kids, and 84% of teens agree.
Social media a catalyst
In January, many teenagers took note of the ‘short squeeze’ frenzy, partly driven by a concerted effort on social media.
Almost half (45%) of teens said they were more interested in investing this year because of the GameStop social media situation. More teen boys than teen girls reported increased investing interest due to GameStop (53% vs. 40% teen girls).
When it comes to cryptocurrency, many parents admit that their teens are quite knowledgeable. Half of the parents (50%) said their teen knows more about Bitcoin than they do. And the teens agree. Almost half (45%) of teens feel they know more than their parents about Bitcoin. Teen boys are more likely to say they know more than their parents about Bitcoin (58% teen boys vs. 33% teen girls).
“Social media has a profound influence on our younger generations. Those generations grew up with social media and often trust many of the platforms more than their parents do,” says Mariana Martinez, family dynamics consultant with Wells Fargo’s Wealth & Investment Management group. “It is vital to establish solid and open communication, create a shared purpose, and educate our children so that they are prepared for financial independence.”
The money talk
While three in five (61%) parents say they have had conversations with teens about handling finances, only 32% say they have talked much about investing. Nearly nine in ten parents (89%) wish their parents taught them more about investments growing up. Almost all parents (98%) and teens (95%) think it is important that high schools teach students about the basics of handling finances, including investing.
Beyond talking to their teen about investing, more than a quarter (29%) of parents say they have promoted one or more of the following educational activities to help their teen learn more about investing:
• 17% opened a custodial account and invested on their teen’s behalf
• 13% encouraged their teen to play a simulated stock market game that allows them to learn about the market without investing actual money
• 7% gifted stocks to their teen so they can follow and learn about the market
While more than a quarter of the parents polled say they have done one of these things to help their teen learn about investing, some teens may not be paying attention to the efforts. Only one in five teens (20%) say their parents have engaged with them on any of these activities.
“Financial education is important, and so is a deeper understanding of how Wall Street works,” said Malone. “There are many great resources for families to learn and understand together how to manage their money, and this survey shows our kids are ready to learn more about investing.”