Tracking Kids' Sense of $ecurity: Ages 12 to 18

Selling to Kids, Oct 13, 1999

Deep Pockets and Deposits

The "nag factor" is alive, well and continuing to turn up in research. Lack of funds is no reason to forgo the purchase of a coveted pair of jeans. That's according to half of the 560 high-school respondents to the 1999 Youth and Money Survey by the American Savings Education Council (ASEC).

Fourteen percent of the respondents 16 and over said they'd be very likely to get them anyway and 36% said "somewhat likely." How? Forty-six of them would ask their parents for the money, as opposed to waiting until they have more cash of their own (19%) or borrowing it (15%).

Teens are looking for value. The study, along with two others, gauge teens' money knowledge, attitudes and habits. Fifty-one percent said they often shop around before buying and 39% said they do sometimes. But after they spend, they're less likely to track it for future budgeting purposes. Only 18% do often, 42% do sometimes, and 40% said "rarely" or "never." Taken together, those findings suggest teens are more interested in short-term than long-term spending goals.

Teens may not know better. They have a "false sense of confidence and security" about managing money, says Don Blandin, ASEC president. That sense could be linked to the finding that 94% of the respondents said they're more likely to go to their parents for financial advice than any other source.

That's too bad. Financial specialists we talked to agree that parents can be unreliable sources who need almost as much education as their kids. Teens said they also turn to another relative (72% of the votes), a financial pro (73%), written material from financial companies (70%), a teacher or periodicals and books (62% each), computer software (56%), over the Internet (51%) and otherwise influential friends (only 42%).

With all those resources to draw on, 66% of the respondents said they think they understand financial matters like saving, investing, credit and budgeting fairly well. Another 13% went so far as "very well." What's more, 19% rated their money-management skills very good, 36% called them good, and 39% average.

Blandin also sees false confidence in the findings about personal finance courses. When offered that elective, 63% of teens said they didn't take it. For most of them, training was offered in high school with the most course-takers in the 11th grade (29%), 10th and 12th (26%) or 9th (15%), with only 5% receiving training earlier. That's not soon enough, says Blandin, who recommends interactive lessons by informed parents and teachers when kids are as young as 5, 6 or 7.

Either those teens who were likely to sign up for a course were already good with money or the courses had limited effectiveness. Only 42% who took one said they changed how they worked with money. But more course-takers say they understand financial matters well (88% versus 81%), that they do a very good job of managing their money (23% versus 17%) and that they track money they spend, according to a written statement from Blandin.

But course takers are no more likely to think it's important to save money regularly, to save or budget income or compare prices than those who didn't take courses, the statement continues, and concludes: Courses need reinforcement by those influential parents.

On the Job and In the Money

Kids may know their way around parents' wallets, but they're also working for their money. During the school year, 25% of respondents work between 10 and 20 hours a week, 20% work between 20 and 35, and 11% work between 5 and 10. In a year, 46% earn less than $2,500, and 21% earn up to $5,000. Eleven percent said they earn between $5,000 and $10,000!

Kids are working even younger: A just-released study by Phoenix Home Life Mutual Insurance Co. with Yankelovich Partners showed that 24% of 393 7th to 9th graders and 60% of the 10th to 12th graders surveyed hold part-time jobs. "Perhaps we underestimate the extent to which kids are exposed to the working world," says Walter Zultowski, Ph.D, SVP of marketing and market research at Phoenix.

In ASEC's study, 12% don't work at a paid job at all but, along with some of the workers, get money at the "parent bank." Forty-one percent of teens get a regular allowance. Of those, 75% have to earn it, with allowances tied to good grades or chores.

Easy Come...

Where does the money go? According to ASEC's study, more teens - 82% - spend their own cash for entertainment, such as CDs, videogames or going out than for anything else. At least half of them also save it "no matter what," and 42% save some. Parents also weigh in here, requiring 48% of kids to save. Most teens (69%) put their money in the bank. Most of the rest - 30% - keep it at home, which means it's likely to be more accessible for mad money.

Overall, more Phoenix respondents see themselves as spenders rather than savers, with the younger ones (65%) saying so more than their elders (54%). And the number of self-named spenders has increased from 47% in last year's survey, says Zultowski.