The effort to create a new generation of financially-educated and responsible citizens

Preparing adolescents for a successful and happy adult life has to do with them becoming aware of their potential, building the right skills and knowledge and protecting them from future financial and other mistakes such as over-indebtedness, wrong investment choices, and myopic perception of the globalized professional environment.

In this endeavor, important factors are proper career guidance, quality education and continuous targeting towards a high level of financial literacy for teenagers to know early on topics such as entrepreneurship, savings, investment, lending, insurance and charity. Therefore, teenagers should develop the appropriate skills to understand the everyday changes that affect and shape their future, and to manage the big life decisions properly.

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What Teenagers Should Know

Teenagers should be prepared to acquire the appropriate knowledge and skills to help them properly manage the challenges and opportunities of a rapidly evolving future. They should also be able to understand why people use credit, its sources, the reasons why states, businesses and individuals are borrowing at different rates, and the distinction between “good” and “bad” debt. They should realize the power of compounding and the virtue of patience to achieve their goals. In addition, they should be able to make basic calculations on borrowing, including capital repayments and interest. Teenagers should be aware of the concept of insurance (risk transfer to insurance companies by paying a small amount of money on a regular basis) and recognize its significance.

In more detail, teenagers should be able to:

  • Understand that the price of a product is formulated as a sum of various fixed and variable costs.
  • Keep important documents in paper or digital form.
  • Keep their login information for social networking sites and pages securely.
  • Keep receipts from their purchases, which are useful as guarantees or for return and exchange of products.
  • Understand what electronic banking is.
  • Understand the potential risks of making electronic payments.
  • Understand of the possibilities of using Automatic Download Machines (ATMs).
  • Be aware of the potential risks of excessive use of a debit or credit card.
  • Understand the dangers of the internet.
  • Control their expenses by keeping a record of revenue and expenses while evaluating their transaction history.
  • Understand the positive and negative consequences of their purchases.
  • Understand the difference between the money need to be spent and the money that can be spent.
  • Understand what costs they can avoid.
  • Analyze if they are able to afford a purchase.
  • Learn not to spend more money than what they have.
  • Understand that their social environment affects their choices and vice versa.
  • Recognize and control the impact of advertising, commerce and social influences.
  • Evaluate whether a “special offer” or a discount for a product or service is real.
  • Compare different products (or product versions) in terms of price and quality.
  • Do a market research before buying a product, while making use of ratings online.

Also it is important to:

  • Calculate the actual total cost of a purchase, including costs of future use.
  • Understand the usefulness and purposes of saving.
  • Save money for longer periods.
  • Understand that saving money for some purpose will take a certain amount of time (virtue of patience).
  • Return the money they have borrowed on time.
  • Know what debt is.
  • Understand that there are several ways to borrow money.
  • Know what insurance is and for whom.
  • Be aware that in several cases, there are terms and conditions associated with the purchase or use of a product or service (purchased at a store or online) and that these may have long-term financial consequences.
  • Calculate what financial charges are associated with goods or services that can be offered to them seemingly “free of charge”.
  • Understand the risks of borrowing their money to other people and avoid arguments.
  • Understand the moral and economic consequences of refusing and delaying legal repayments.
  • Understand the different types of taxes and what they are for.

What Teenagers Should Know

At this age, adolescents should be able to distinguish (in addition to the aforementioned), the different sources of income and wealth and their possible interconnection with their future quality of life. They should be able to keep simple personal financial records and define short- and long-term financial goals. Moreover, they should understand the different characteristics of the financial services they can use and be aware of the existence of credit rating agencies for financial products such as shares, bonds, mutual funds, etc. as well as assessing the economies and debts of various states. In addition, they should be aware of the existence of credit ratings of the state in which they reside, as well as their impact on the cost of borrowing for the citizens (country risk). Teenagers should be able to use basic financial information to assess risk and return at local, national and global levels. They should also understand the concept of innovation and entrepreneurship, and in particular the advantages and disadvantages of fundraising and business ventures. Finally, they need to know about insurance policies and understand the key features of such contracts.

In more detail, teenagers should be able to:

  • Know what inflation is and what its consequences on their purchasing power are.
  • Make a realistic assessment of their future income based on their potential occupation.
  • Keep their personal documents (in paper or digital form) without help and on their own initiative.
  • Have their own bank account and check their bank balances.
  • Check whether the transactions they have made are correct.
  • Understand the potential risks when making purchases or payments using debit cards or online banking.
  • Check the security and reliability of the online shops they use.
  • Know the factors that shape the wage levels.
  • Recognize their inclinations, abilities and skills.
  • Sense the challenges of the future, through a proper career orientation and set wisely their professional goals.
  • If employed, learn about labour law legislation that governs this age group.
  • Keep track of their revenue and expenditure.
  • Know their potential assets and debts.
  • Count how much they have to spend and how much they can spend for a given period.
  • Repay their obligations.
  • Set priorities for their spending and set their needs over their wishes.
  • Understand the influence of advertising and their social environment.
  • Learn to control themselves, especially if they tend to spend money easily.
  • Calculate possible fixed and variable costs for its future use, when purchasing a durable product.
  • Read carefully and take into account all terms and conditions, especially the “fine letters”, when comparing and purchasing products,.
  • Shape their own criteria for the purchase of products and services, over time.
  • Set clear, short-, medium- and long-term goals, taking into account their potential limitations.
  • Save money for unpredictable future spending.
  • Understand that they should borrow money only if they are sure they will return the initial capital and interest on the agreed date.
  • Understand and consider alternative ways of borrowing, their similarities and differences.
  • Be aware of the different types of debt.

It is also important to:

  • Know how insurance works and its different types.
  • Be aware that unexpected changes may occur during their life and that these changes may affect their financial situation.
  • Evaluate and review their financial commitments to change or terminate them if necessary.
  • Be aware of the qualitative characteristics of their existing assets and the relationship between risk and return.
  • Be aware that when buying and using financial products and services (savings programs, insurance, loans, etc.) they have to take into account not only the costs and returns, but also the risks, the timeframe of the contract and its terms and conditions.
  • Make choices between savings, insurance and lending, based on their personal situation (financial or other) and their preferences.
  • Be aware of the financial and other consequences of over-borrowing, purchasing in instalments, undertaking debt and possessing a credit card.
  • Recognize the value and need for education, training and skills building.
  • Be aware of the differences between employment and self-employment.
  • Know the institutions that govern the operations of the state and the financial system.
  • Understand the value of volunteering.

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