March 7, 2006

Help children learn about money, avoid 'affluenza'

Youth today are spending money--a lot of it. Generation Y people report $211 billion in income and $172 billion in spending, according to a June 2003 online Harris Interactive Youth Pulse survey of 3,432 young people ages eight to 21 years.

The study breaks down Generation Y's spending habits into three categories:

• Pre-teens, ages 8-12, spend $19.1 billion dollars per year ($946 per child)
• Teens, ages 13-19, spend $94.7 billion dollars per year ($3,309 per child)
• Young adults, ages 20-21, reported spending $61.3 billion dollars per year ($7,389 per person)

What are youth spending their dollars on? A global market information firm, TNS, surveyed 660 U.S. children ages 6-14 in late 2003. They spent their money on games (63 percent), clothes (31 percent), and CDs (27 percent).

Gender disparity occurred in the following spending categories: games (76 percent boys vs. 48 percent girls), clothes (21 percent boys vs. 42 percent girls), and CDs (23 percent boys vs. 32 percent girls).

In 2003-2004, Sharon Danes conducted a national evaluation for the National Endowment for Financial Education's High School Financial Planning Program. Danes, family economist with the University of Minnesota Extension Service, developed the following profile of a "typical" student.

In an average week, students reported they saved approximately $28 while they spent $31. Some 35 percent of the students said they received an allowance averaging about $24 per week; 80 percent indicated they received an average of $17 from their parents on an "as needed" basis in an average week.

Almost 44 percent of the students worked a part-time job, with an average weekly take-home pay of $119.

Does all that money mean our youth affected by "affluenza?" Affluenza is the term coined in the 1990s to describe the epidemic of stress, overwork, shopping and debt caused by the continued pursuit of the "American Dream." It is a bloated, sluggish and unfulfilled feeling that results from one's efforts to keep up with friends and neighbors.

The tireless pursuit of material goods to make our lives better has serious consequences in our financial lives. Signs that affluenza is spreading in our society include decreasing personal saving rates, increasing personal debt, increasing personal bankruptcies and greater access of young people to credit.

What can parents do to help their children learn about money and avoid affluenza? First, set a good example. Use a spending plan, be a wise consumer, pay your bills on time and live within your means. Talk with your children about family values regarding spending and saving.

Encourage your children to set goals and to manage their resources to meet those goals. Finally, support financial literacy education within your local school system. Financial management is a life-long skill that can pay huge dividends if learned correctly.

(Sara Croymans is a family resource management educator with the University of Minnesota Extension Service Regional Center, Morris)

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URL: http:// www.extension.umn.edu/extensionnews/2005/affluenza.html  This page was updated Mar. 7, 2006 .
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