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Youth Culture Window

Spending Habits of Young People
What – If Anything – Are They
Learning From Us?

An article from David R. Smith at TheSource4YM.com
4/9/2010


Once upon a time, parents of college kids only had to fear sex, drugs, and rock n roll. Now there’s another bad guy: debt.

And this one can hang around about as long as an STD.

Finance Lessons with Luke Skywalker
I started thinking about kids and money two weeks ago…in the toy aisle of Wal*Mart. The weekend before, I had let my 4 year old son Josiah watch Return of the Jedi, aka, Episode 6 – the best one no matter what you say – and he just had to have a lightsaber. Well, since he’d been a good boy at pre-school and was doing his chores at home, I thought a lightsaber (as a reward) was in good order.

Of course, while I was eying the $16 one, he was magnetized to the $40 one that was dual-bladed, spring-loaded, battery-powered, and sound effect-enabled. The only thing missing was Yoda to personally train my son.

So, which one would it be?

I tenderly explained to Josiah that since we had just come from his favorite pizza joint, Giordano’s, and were going to get ice cream in a few moments, we needed to buy the more modest lightsaber. He didn’t like the sound of that, but finally relented to my ultimatum of “the $16 one or nothing at all.”

It was a simple lesson, and one that more and more parents are finding themselves teaching to their children.

For instance, during the first quarter of 2010, American Express began asking some questions about family finances and discovered some interesting facts about their cardholders. A full 71% of parents with children aged 6-16 claim their kids understand that the country is in a recession. The survey also revealed that 91% of those same parents are committed to instilling lessons of financial responsibility in their children this year.

And what are some of those teaching points?

  • Understanding debt and its impact on saving/spending (30%)

  • Teaching the value of a dollar through systems like an allowance (25%)

  • The basics of money, how it’s earned and how it’s used in everyday life (21%)

Good for these parents…especially since there are so many money traps awaiting our kids these days.

I Owe You…A Lot!
The average debt load currently carried by young people is staggering. Unfortunately, many kids who chase their dream through college discover that there’s a (deferred) nightmare waiting on them after graduation. The Project on Student Debt offers this interesting and interactive map that shows the average amount of debt and percentage of students who have it, by state.

In their report, The Project claim, “Nationwide, average debt for graduating seniors with loans rose from $18,650 in 2004 to $23,200 in 2008, or about six percent per year.”

But that’s just school/tuition loans. What about credit cards?

Sadly, it appears as though tuition debt and credit card debt go hand-in-hand. According to an article in USA Today, the average college student now has $3,173 in credit card debt (up $1,000 since the number was last studied in 2004).

You may be wondering why there’s such an increase in debt. Granted, we’ve all heard the awful stories of kids who’ve sold their text books to be able to eat, and have put their monthly rent on a credit card to avoid being homeless, but unfortunately, the problem is often related to the overall sense of entitlement and instant self-gratification this generation suffers from.

This 14 minute long documentary, that was released the week of the global economic trauma of late 2008, clearly and accurately shows the mindset of too many members of Gen Y. (Note how they seem to need to convince themselves of their rightness.) For many kids, debt just seems like an unavoidable aspect of life.

But the dangers of debt are no longer confined to the real world.

Recently, Stephen Colbert of Comedy Central’s The Colbert Report, ranted about a new website, www.Kwedit.com, which allows kids to “Play now. Pay later.” in reference to online activities. Colbert satirically lamented that, “It’s a website that hooks little kids on borrowing credit.” As he puts it, Kwedit’s website teaches kids “to spend money they don’t have on things that don’t exist.” Here’s the hilarious, if unfair, video, that Colbert delivers in his typical deadpan fashion.

Spending money comes so naturally, while saving it is a task most find too difficult to even attempt. There are so many opportunities to spend cold hard cash in the real world, and now through so many different online games and virtual worlds too, that a shortage of funds at the end of the month is becoming the norm for many.

And that’s when times get tough.

Turning Sense Into Dollars
Bank of America has a solution for all these money woes. Soon, the biggest bank in the country will simply eliminate overdrafts by restricting their customers’ spending (on debit cards) when they don’t have the necessary funds in their accounts.

The Federal Reserve – which governs banks – has new rules going into effect this summer that mandate banks must first get their customers’ permission before charging them an overdraft fee. Since Bank of America knows it will be virtually impossible to contact their millions of clients, who at any given time could be standing in front of a cash register spending money they don’t have, they’ve simply decided to restrict their customers from spending more money than they have.

Sounds simple enough. But while it may prevent some reckless spending, it will almost certainly create a few emergencies, as well. Surely, there’s a way to teach young people how to manage their money so they totally avoid this automatic cutoff valve. Right?

In the parent seminar I teach, I implore parents to grab the steering wheel with both hands when it comes to two areas of their kids’ lives: sex and money. How kids handle both of these areas can make or break their future. With that in mind, there are several steps we can take to make sure our kids have all the information and tools necessary to make solid financial decisions.

Start having the money talks (yes, plural) now. My 4 year old understood our simple money talk; so will your 12 year old. The sooner you start talking, the more conversations you can have before they’re out on their own. And don’t just tell them “what” to do, tell them “why” to do it, as well. Saving money makes little sense to kids who have grown up in an “on demand, instant gratification, get-it-now-and-pay-for-it-later” world. Most teenagers have little or no concept of interest rates, budgets, or financial planning. When you do have those talks, make sure that a portion of them are focused on how you’ve properly managed your money in the past, as well as a few examples of poor financial decisions, too.

Teach on the direct relationship between our love of God versus our love of money. Jesus said that two masters cannot be served simultaneously, one would be loved and the other would be neglected. Even though many Christians misquote the Bible and think money is evil, that’s not what the Apostle Paul said. In 1 Timothy 6:10, he wisely warns that, “The love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.” It’s the unbridled pursuit of money, at the expense of our relationship with God, that’s evil. Let’s make sure that our kids understand that a relationship with God is the most crucial aspect of life.

Give them incremental freedom to teach them self-management. Before the “friendly and helpful” bank comes along and gives our kids a line of credit that can’t be paid off in two lifetimes – or restricts their spending altogether – make sure your teenagers can manage small amounts of money. That will necessitate lessons on managing not just money, but materialism, as well. Here’s a FUN EVENT that youth groups can use to teach on the subject, and here’s an awesome MOVIE CLIP DISCUSSION that can be used in smaller settings, even one-on-one if you want.

Let’s all agree on one thing: kids will learn spending habits from us. It’s an absolute certainty. They won’t just see the purchases, but the motives behind them, as well. Let’s make sure that the lessons we’re teaching are healthy ones that can guide them for the rest of their lives.


David R. Smith David R. Smith is a 15-year youth ministry veteran who helps youth workers and parents through his writing, training, and speaking. David specializes in sharing the gospel, and equipping others do the same. He co-authored his first book this year, Ministry By Teenagers. David provides free resources to anyone who works with teenagers on his website, DavidRSmith.org. David resides with his wife and son in Tampa, Florida.


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