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Teenagers are prepared to adopt credit cards, loans and overdrafts when they turn 18 despite failing to understand basic budgeting tasks, according to a study by the Axa financial taskforce.

The taskforce consists of independent psychologists, economists and industry experts, and found in its nationwide probe into the financial habits of 15 to 17 year olds that 70 per cent failed a week-long budgeting experiment. The experiment involved taking 20 children from Middle Britain backgrounds and giving them control of a household budget for one week.

As a whole, the group overspent their budgets by 16 per cent, with a minority successfully managing to spend within the £248.40 they were handed at the beginning of the week. One child spent over double his allocated budget, forking out some £597.73 in just seven days.

Steve Folkard, head of pensions and saving policy for Axa, urged the government to base financial capability teaching within GCSE Maths around practical budgeting skills, "rather than being based on theory." He said: "We will be recommending that this is a key part of the syllabus."

Nick Chater, a member of the Axa financial taskforce, said: "These studies emphasise what a huge challenge budgeting can be when you are still relatively new to managing money and making regular financial decisions. 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."

He believes that this could explain why 44 per cent of 15 to 17 year olds are planning to take out a credit card when they become an adult; 18 per cent are thinking of taking out a bank loan and a further 17 per cent expect to be overdrawn in adulthood.

Mr Chater said: "These things are seen as the norm so that teenagers think they are only doing what is typical in expecting to get into debt sooner rather than later. Some teenagers also have spendthrift financial habits because they are used to getting what they want, when they want it. More than half said their parents give them more money if they run out."

Francesca Atter, a 16-year old student from Swansea who took part in the study, said: "Managing the budget was more difficult than I had expected. I will probably live at home forever following this experience. I do not think I could cope if I left home now."