Your Teen's First Recession: Learning To Cut Back
Your Teenâs First Recession: Learning To Cut Back
DES MOINES, IOWA (AP) â Teenagers have never been known for their restraint, but perhaps these times are different. Tuned in to worries of a deepening recession, many teens say that they have been smart shoppers and lowered their expectations for receiving gifts this holiday season.
Research by the Buzz Marketing Group, a youth market research company based in Voorhees, NJ, indicates many teens plan to cut back this year. Whatâs more, they are telling their parents it is OK to do the same.
âTheyâre making cuts or asking parents for less, saying just get me the big-ticket items and not all the ancillary items,â said Buzz chief executive Tina Wells.
Younger children aged 7â12, who are less likely to be focused on poor economic news, still have high-priced items on their wish list. This would include favorites such as video game consoles and games like the popular Guitar Hero, Hannah Montana- and Barbie-branded items and laptop computers, Ms Wells said.
These overriding concerns come at a time when many teens are making their first efforts at managing their own money. A high school sophomore in Rock Island, Ill., Mackenzie Heriford, 16, said she has saved a monthly allowance from her parents to spend on Christmas.
Though her family has talked about cutting back because of the economy, Ms Heriford expects to spend more than $100 on gifts and may spend more than last year. Even so, she said her friends also are talking about how the recession affects them.
âA lot of people have been talking about [money] lately because of how bad itâs been getting,â she said. âI know my parents have been a lot more conservative with their money.â
Teenagers wield considerable economic power. All told, the nationâs 26 million teens spend about $80 billion a year, according to Maryland-based market researcher Packaged Facts. Their parents spend another $110 billion for their clothing, food, and entertainment, the company said.
Teens typically get their money from part-time and seasonal jobs, parents and other family members.
While teens may talk about economic problems, many are not sure what to do because it is the first recession they have experienced. In Newtown, the community bank is pitching in by opening a branch at the high school.
Newtown Savings Bankâs school-based branch is only open a few hours a week, but it helps faculty as well as students keep an eye on several basic banking functions like checking and savings.
On the flip side, retailers chalking up one of the worst holiday shopping season ever, are working on strategies to get teens back in their stores to spend whatever they have this year. J.C. Penney, for example, planned to have a complete line of new spring clothing for juniors and young men available on the sales floor by December 26.
The National Consumers League says the spending clout teenagers carry in a family is significant. However, teen-oriented retailers have recently reported falling sales, reflecting recent surveys showing teens are more frugal this year, said Executive Director Sally Greenberg .
Earlier in December American Eagle Outfitters Inc (AEO) reported same store sales slid 11 percent in November, Abercrombie & Fitch Co. (ANF) same-store sales were down 28 percent, and Aeropostale Inc (ARO) reported same-store sales down 5 percent.
Junior Achievement â a Colorado Springs, Colo.-based organization that focuses on educating students about financial literacy â says its most recent survey of 500 teenagers shows 57 percent said they would spend the same or less for Christmas in 2008, while 41 percent planned on spending more.
Jack Kosakowski, president of Junior Achievement USA, said the results may reflect the need for more education about the economy and spending.
âIn fairness, these kids are younger teens and have never faced this before,â he said. For that matter, it iâs the worst recession many adults have faced.
Mr Kosakowski said the current economic situation shows how many adults lack enough information to fully understand finances.
He strikes a cautionary note about what is in store for todayâs teens: âWhen you look at the subprime loans small business people took out or college educated people took when they refinanced their homes, it shows clearly that our financial education system has failed these kids who are now adults.â
Newtown Bee Associate Editor John Voket contributed to this story.