Teenagers are Pinching Pennies

Yesterday’s New York Times had an interesting story about how teenagers are being affected by the economic downturn. While some are extremely concerned about the situation and are trying to help their families come up with solutions to save money, many were offended that they could no longer have as many new clothes, gadgets or restaurant meals as they had previously enjoyed.

Many in the generation of people in their early-20s and younger have not experienced a significant economic downturn in their lifetimes that they remember being affected by. Most of them were too young to remember the problems of the late 1980s, and many were not even born yet. They’ve grown up in the recent boom times and are having difficultly adjusting to a more frugal way of life. Meanwhile, the pressure on teenagers to have name brand clothes and shoes, an iPod, cell phone and video game system probably has never been greater. This has been fed, in part at least, because of the great economic times in which this generation was raised.

While many of the teenagers in the article had a hard time coping with the new limitations on spending, others were eager to help their families and figure out ways to live more frugally. Most of the teens who were allowed to be a part of the family discussions about finances felt better about the situation because they were kept in the know. The most interesting part of the article came when some parents showed their kids the monthly bills and the teenagers were shocked. One even thought the monthly mortgage payment was an annual fee, demonstrating the lack of knowledge most teens have about bills, check writing and life after parents stop footing the bill.

So while teenagers may have to take paycuts on their allowances or pick only one new outfit for school instead of several, this is a great time to instill values of saving in children and teenagers. During bull markets when everyone is flying high people often don’t take the time to teach kids about saving for a rainy day, but one good thing that may come out of the current debacle is that kids today might be more prepared to deal with tomorrow because of the conversations parents are having with them about saving, not overextending credit and living within their means.