While the rest of the country reins in the spending, a new study has found that four out of five teens expect to live beyond their means when they become adults.
Nearly half (44%) of the 15 to 17 year olds interviewed by wealth managers AXA plan to get a credit card when they turn 18. A further 18% are considering taking out a bank loan, and 17% expect to be overdrawn.
Worryingly, the study also found that a significant 70% of teens are unable to stick to a basic budget for just one week.
Overspending an issue
In a bid to discover the financial acuity of today’s youth, Axa set up a group experiment whereby the parent and child roles were reversed, leaving the teens in control of a weekly household budget, set at £248.40.
Only a minority of the participants managed to stay within the limits, with the group overspending by an average of 16%. One teen missed the mark by a staggering 240%, blowing nearly £600 in seven days.
The majority of teens also failed to keep some money aside in case of emergency, as 65% failed to come to terms with a surprise demand for extra cash from parents.
Ill equipped to cope with finances
"These studies emphasise what a huge challenge budgeting can be when you're still relatively new to managing money and making regular financial decisions,” says AXA Financial Task Force member Professor Nick Chater.
“Many teenagers are on the cusp of leaving home for university or to get a job and while some will naturally approach money with diligence, our study suggests that they simply may not be able to cope with budgeting effectively.”
"This may explain why so many children are already considering getting overdrafts and credit cards. These things are seen as the norm so that teenagers think they're only doing what is typical in expecting to get into debt sooner rather than later.
