(KYTX) - School is almost out for middle and high school students. Many of them will have plenty of time on their hands soon. Summer entertainment doesn't come free though.
A recent Charles Schwab poll shows fewer than one third of teens understand how credit card interest works and 4 in 10 can't budget their money. Financial experts say that's a problem, and now is the time teens need to be saving money, not spending it.
"You have to be good with money." says 19-year-old Sierra Phillips.
She's taking her parents' financial advice to heart.
"Keep a savings account. And, keep a little bit in your checking account to take care of yourself."
But most importantly, she says, set a budget, and stick to it.
"I put myself on a budget, weekly. I give myself about $35 to spend each week."
Ken Allen says there are few teens who understand the concept of a budget. He's senior vice president of Austin Bank in Tyler.
"One of the most important things is teaching kids that there is a limit to the amount of money available that they have to spend. Most kids don't really understand this concept. They've never had to."
Allen says sometimes a visual map of where your money goes can help.
"Putting it onto paper and just looking at it can make a difference sometimes. Just seeing, 'oh, I spent $50 this month on food. I had no idea.'"
Those are problems Phillips tries to avoid. She has big plans after college.
"I want to travel the world and help other businesses out, and start my own pretty soon after I graduate."
"And, if your credit has got some of these little mistakes on there from your younger days," says Allen, "it can really impact your ability to function."
That's why Minerva Valle says her teen boys won't be getting plastic for a long time.
"They're probably not going to get a credit card until after they're on their own. I'm not going to introduce any credit cards to them."
"I keep cash and I leave my debit card at home." says Phillips.
Jim Guay with Junior Achievement says teens especially need to learn how to manage their money.
"They're eventually going to be our workers and our teachers and our business owners, lawyers, doctors, everything."
Which is why, he says, they need to start becoming financially literate now.
Allen says it can take a long time for people to recover from poor financial decisions made at a young age. He says ruining your credit can cause problems for up to 10 years.
A recent Capital One 360 poll shows 24% of teens think a debit card is used to borrow cash. And, the International Journal of Business and Social Science reports just 9% of college students pay off their credit cards in full every month.