[jeffrey]

A Smart Savings survey by Ameriquest Mortgage Company (conducted by Luntz, Maslansky Strategic Research) has found that most students believe they will have a higher quality of life than their parents event though many lack a basic understanding of the minimum wage, average income and the price of a home. While the majority of high school and college students have high aspirations for their futures, they face two fundamental challenges they must overcome in order to achieve the lives that they desire: 1) young adults are currently receiving either insufficient or incorrect financial knowledge from their parents, and 2) they lack a firm understanding of potential income and costs.




The average student expects to retire at 59, 20% believe their first starting salary will exceed $50,000 and most believe that they will own a home in their lifetime according to the survey. Even with these beliefs, the students don't necessarily have a strong basis for any of these expectations. For example, while 94% of students believe it is at least somewhat likely they will own a home in the next 20 years, more than 80% underestimate the average cost of a single-family home.

Part of the problem arises from a lack of financial literacy being passed on from parents to their children. Parents - even those who are making the effort - don't seem to be doing enough to pass on fundamental financial responsibility. While 60% of parents believe that they are their child's primary source of financial advice, only 38% of students agree.

The survey also found that lower-income kids have a a much greater challenge to gain financial savvy than their wealthier counterparts. In fact, the research suggests that there is a serious divide between economic classes when it comes to understanding the importance of saving and investing. This is despite the fact that low-income parents are working harder than their wealthier counterparts to educate their kids about saving money with 28% of lower-income parents talking to their kids every day about saving versus only 17% of upper income parents.

The survey found that most low-income parents are not prepared to offer sound financial advice about more complex matters like investing. While 53% of upper income parents believe they are very informed about money matters, only 30% of lower income parents felt the same way. Low income parents were less accurate in their answers than their wealthier counterparts when asked a series of basic financial questions about things like housing prices and Social Security.

"It is clear that financial insecurity and economic adversity are a vicious cycle that is being passed down from one generation to the next," said Frank Luntz, who designed the study as part of an ongoing examination of financial knowledge, beliefs and expectations. "We are going to see a growing lower class simply because they don't have a command of the facts or behavior that leads to economic security. Good financial education is the only solution."

The survey also found a gap between the financial aspirations of girls and their male peers, suggesting that girls do not dream as loftily as boys when it comes to financial independence. 25% of young women surveyed believe that their starting salary will be $40,000 a year, while 33% of their male counterparts expect to make at least that much. 24% of young women also said they believe that it's at least "somewhat" important to marry someone wealthier than themselves in order to achieve financial stability.

Part of the problem is that only certain aspects of financial responsibility are being discussed by parents. 77% of parents talk to their kids frequently about things like "delaying gratification" by saving money now so that they can enjoy something better at a later date, but only 30% of families talk about keeping a budget or how to use a checking account. When it comes to investing, the lack of communication is even worse. Less than 10% of parents discuss the differences between stocks, bonds, and mutual funds with their kids.

When parents do discuss a range of financial matters with their kids, the children catch onto the importance of the financial matters. When students were asked a series of financial questions ranging from "What is the average personal annual income in the U.S.?" to "What is the current minimum wage?" the kids whose parents had discussed budgeting and debt, or had encouraged them to get a job, were able to answer the questions more accurately.

1,203 people were polled in the survey with 603 being high school or college students and 600 the parents of high school- and college-age children.