Postle, a working mother who lives in Hilliard, Ohio, a middle-class suburb of Columbus.
This year her husband’s 401(k) savings are evaporating. Medical bills are nipping at the couple’s heels. Gas prices are still taking a toll. Mrs. Postle recently decided that although she and her husband had always sacrificed their own luxuries for Zach, 13, and Kaitlyn, 15, the teenagers would now have to cut back as well.
“I tried to tell Kaitlyn, ‘We’ll get the Hollister jeans at a thrift store,’ ” Mrs. Postle recalled. “She got angry and said: ‘That’s gross! Other people wore them!’
Indulged. Entitled. Those labels have become hot-glued to middle-class and affluent teenagers born after the last major economic downturn, in the late 1980s. They were raised in comparatively flush times by parents who believed that keeping children happy, stimulated and successful, no matter the cost, was an unassailable virtue.
But as the economy totters, many families have no choice but to cut back, which may lead to a shift in their thinking about money and permissiveness. (somehow they'll live) Last week a semiannual survey of 7,000 15- to 18-year-olds by Piper Jaffray, an investment bank and research firm, showed that annual discretionary spending by teenagers, whose money comes from allowance, gifts and part-time jobs, had dropped 27 percent to $2,600, from its spring 2006 peak of $3,560.
“Parents are suddenly saying ‘no’ and their kids are saying, ‘What do you mean?’ (hah) These are difficult conversations. Panicked, stressed parents are struggling to explain and impose restraints, just when teenagers are expecting more spending money, not less. Many adolescents respond with anger at what they see as a bait-and-switch world, fear for their families and confusion about budgeting.
“It is an unbelievable shock to affluent families that their lifestyles are gone for good,” Dr. Manning said, “and their children are ill prepared for it.”
American teenagers, many of whom have weak quantitative skills, are generally naïve about finance. (why do we not have Finance 101 in high school? As a requirement? Surely more important than home economics? I mean if someone understood getting a $300K mortgage with a $42K salary had implications maybe they would of policed themselves?)
One recent morning, students in an economics seminar at Elisabeth Irwin High School, a private school in Manhattan, displayed an emerging grasp of the financial meltdown. But when discussing their personal finances, many just seemed bewildered. And while many had debit and credit cards, some were hard pressed to explain the difference. “I don’t understand why I got charged for an overdraft,” one junior said. One girl admitted to having once run up $5,000 on her credit card. Lesson learned! Now she rarely uses the card. “ I make my mom buy it!” she said.
They all felt the pressure and the desire to acquire: their knowledge of brands and prices was encyclopedic. (now this, they are subject matter experts - balancing a checkbook? Not so much) “The stuff it takes for them to be perceived as middle class is extraordinary,” said Tom Murphy, who teaches the high school’s “Economics and Society” seminar. “Laptops, Xboxes, iPods, phones — and it’s nonnegotiable.”
After class, one girl said: “We are so being bribed. I’m bad at math but if I get an A, my father will give me a designer bag.”
“The kids are going to be confused. They’ve never known not having what they want. And the parents are going to have to tolerate their kids’ anger.”
“I used to ask for things and my parents would say, ‘We can’t do that,’ ” she said in a phone interview. “So I would throw a tantrum and get an attitude. They used to give in a lot. But that doesn’t work now.”
This is going to be one serious cultural shift.
