Why teens mistrust banks
Among other suspicions, teenagers think the stock market is rigged to benefit Wall Street bankers.
American teens are not only mistrustful of major financial institutions, they're actually growing resentful, and that could impact both the long-term savings habits and bottom line of U.S. banks and investment firms for a long time to come.
The data come from the University of Arizona's "Take Charge America Institute for Consumer Financial Education and Research," which says it's been working on the financial literacy of America's youth since the institute was founded in 2003. But what it's been finding lately has less to do with literacy and more to do with full-blown resentment against America's financial institutions.
In a study released last week, institute researchers conclude that American teenagers were especially shaken by the financial crisis of 2008 and 2009, and to a large extent still are today. After seeing their parents struggle with layoffs, high debt and mortgage payments that are becoming more and more difficult to meet, teenagers clearly lay the blame at the feet of "banks, credit unions, credit card companies, businesses and investment institutions," says the poll.
"This poll is extremely revealing," says Michael Staten, a professor at the University of Arizona and director of the institute. "In addition to students' lack of knowledge about the building blocks of personal finance, which we have seen for years in these types of surveys, it shows the next generation of American consumers now also actively distrusts many of the pillars of the financial services industry." Post continues after video.
Staten says the study data indicate that younger Americans have largely disregarded the need for understanding how money and finance work, and now that lack of knowledge is really sharpening their ire toward banks and financial services companies. Not knowing how banking and investment firms operate seems to add to the hostility young Americans evidently hold toward the money management industry.
The good news, Staten says, is that teenagers are starting to recognize the importance of learning more about money -- and how it works.
"Despite their strong suspicion of financial institutions, these students responded that they believe education is important to their futures and that financial success can be achieved with the right financial decisions," he adds. "This is a hopeful sign and it tells us that more financial education is needed. It may not yet be too late to defuse this sense of cynicism about all things financial, and to prepare these young consumers for the financial choices they will face in adulthood."
Still, the University of Arizona data show that younger Americans' attitudes toward financial firms doesn't differ too much from those of the rest of the population:
- The majority of students who responded to the survey (60%) believe that credit card companies often entice people into taking on more debt than they can handle.
- More than 70% of students believe that businesses often try to "trick young people" into spending more than they should.
- Only a bit more than 25% of students disagreed with the following statement: "The stock market is rigged mostly to benefit greedy Wall Street bankers."
- Only 15% of students are aware that credit unions are different from banks with respect to their not-for-profit status.
- Fewer than one in five students who responded to the survey (17%) disagreed with the statement, "Banks are mostly interested in getting my money through hidden fees."
Who is at fault?
Clearly, the younger generation holds a serious grudge toward Wall Street in general, and banks and credit card firms in particular. But financial services firms only have themselves to blame, and will have to reach out to tomorrow's consumers to earn their trust and their business.
"This isn't just about bad PR for the financial services industry," says Dan Iannicola Jr., CEO of the Financial Literacy Group, which conducted the study for the University of Arizona. "Adolescents with this level of distrust of financial institutions become adults who don't open bank accounts, invest for retirement, insure against risks or finance important purchases like college educations or homes.
"This type of financial disengagement could push a generation of consumers away from mainstream institutions and toward risky alternative service providers or toward simple inactivity, which has its own perils."
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What a refreshing story! Perhaps these kids aren't as hopeless as we older generations like to chide them about.
A deep seated mistrust of the banks and wall street will serve them well as they grow. Hopefully this generation will purge or spawn an alternative to the corrupt, rigged financial services industry that has spread and contaminated everything like an out of control cancer.
Written by – Miranda Almonte
People or numbers?
Numbers or people?
Use your brain
This is America
Not some game
So just quit playing
Playing with lives to make your big bucks.
As a matter of fact
Take my friends
And take my home
Just give me more reason for my name to be known
Take our checks
And our respect
Some from you has yet to be shown.
Take my grades
And take my fun
We’ll see who’s “making numbers” once all of this is done.
Got me thinking day and night
Don’t be shy!
Fight some more!
We’ll make it through another door
Because you built me up
Then tore me down
And took me out of my favorite town.
Think you’re getting to me?
That’s a joke.
While you’re making me stronger,
You can’t even provide a quote
Quote for who?
Quote for everyone
Everyone you’ve lied to, and taken everything from.
We won’t stop
And we won’t quit
And we sure as hell won’t just take this.
I cheat on a test
I get in trouble.
You cheat your own people
And your pay goes double?
You think it’s okay?
Well I think its bull
Because stomachs were once full
And now they’re hungry.
People once smiling
Now are stumbling.
Foreclosing on homes
Taking what they need to just survive.
You know what you’re doing
And you know it’s not right
But, I mean as long as they’re paying you a decent price?
Is the money worth it?
Worth the pain?
The pain of those who shelter is now rain?Those nice big checks must be nice
But, does it ever cross your mind that you should think
Twice about lying? Signing? Designing?Designing what?
Your short cuts.
Short cuts to make the cutI guess your new money does you a lot of good;
Cute sweaters with hoods.
But you know what’s cuter?
The orange jumpsuit that’ll be on your butt.
Don’t like it?
Awww too bad!
‘Cause that’s where you’re headed
Kind of sad?
Sad that ruining people’s lives
Was better than the price you’d pay on the other side.
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