With the incredible financial boom of today's economy, it comes as little surprise that teenagers are spending money at record levels -- they can claim fame to being part of the richest generation of teens in American history. We live in a consumer-driven society, saturated with goods, high-tech toys, and incredible gadgets, so it comes as no surprise that teens want a chunk of it. Now, more than ever, they are expressing their wants, and many are getting what they ask for.
Well, at least teens are contributing to the economy. More and more are now getting jobs and, in addition to their salaries, are receiving hefty allowances from their economy-profiting parents. In fact, it is estimated that teens will spend close to 155 billion dollars this year. That's an increase of more than fifty percent in five years. Hot on the trail of these passionate purchasers are marketing trackers. With the average seventeen year old spending over 100 dollars each week, marketers have found a new focus. For many marketing people, their job is almost as fun as being a teen.
Grant MacDonald and his firm, North Castle Partners, make their living by delving into the teen mind, processing the information, and delivering new, teen-centric marketing strategies to their clients. "We really like teenagers, obviously, from a business point of view, because it's a growing segment of the marketplace, and there's a lot of attention being paid to that market for major brands out there."
How exactly are teens with cash translated into products? North Castle conducts regular focus groups with eight to ten teens. The all-too-eager teens get paid just to show up, talk about their daily lives, and voice their opinions. They're asked questions like "What's it like to be a teenager; what's hot; what's not; and what makes you buy one product over another?" The information is used by the agency to refine and target their marketing ideas to be more attractive to the average teen.
While most parents see through the hype of teen-focused ads and recognize that products are usually not as "cool" as they look, kids easily fall victim to marketing strategies. Still, an important part of growing up is learning how to manage money, spend wisely, and separate needs from wants.
This week, Betsey Karetnick, host of THAT MONEY SHOW, spoke with Mary Mohler, managing editor of PARENTING magazine and mother of three teens, who has great suggestions for anyone trying to teach their kids about money:
- According to Mary Mohler, there's nothing wrong with giving your children an allowance and teaching them to manage their own money. But Mohler stressed the importance of setting goals with children, helping them budget their money, and teaching them to give to charity.
- Children learn more from our examples than from our words. So, if we set good examples of responsible money management, our kids are likely to develop those same skills. Mohler suggests that children should be completely responsible for their allowance and, if they spend it all at once, parents should not bail them out. Remember, the reason for giving kids an allowance is not to reward them, but to teach them about responsible money management. For the same reason, the allowance should be separate from household duties and chores. Chores are what your child does as a family member. If they don't do their share, Mohler says, there are other ways to discipline them.
- After-school jobs are a wonderful way to prepare teens for the real world. But knowing what to do with paychecks can present challenges to young people. Mohler recommends keeping kids' spending in check and ensuring that some sort of savings plan is started. Depending on the amount of income, parents should ensure that children deposit a good portion into a passbook savings account or similar financial instrument, and also that kids give a small portion to the charity of their choice. Donating part of the allowance or salary to charity is a very important step. It teaches children to be generous.
- On a final, but very important note, Mohler suggests that parents include their children in the family finances. While you don't have to tell them how much you earn, find a way to teach them about household bills, budgeting, and saving for the future. One good suggestion is to let them help you pay the bills each month and balance the checkbook.