The recession is now being felt even in the youngest demographic of consumers. Teen spending is on the decline, according to the just-released 2011 Teens & Money Survey from Charles Schwab & Co.
Once big spenders feel the pinch
Traditionally, teens ignore economic trends and spend impulsively no matter the pinch on the purse strings at home. However, teen spending is down 14 percent this spring. The impact is significant. As a group, teens spend an average of $125 billion in the U.S. each year.
No budge on home entertainment
Teen spending has dropped in nearly all the markets which they traditionally impact the most: apparel, beauty products and entertainment activities like restaurants, concerts and movies. The only place teens seemed unwilling to cut corners is in home entertainment. Music, DVD and video games rose from 7 percent to 8 percent of teen spending.
A greater awareness
According to the Schwab study, 90 percent of teenagers surveyed said they were affected by the recession. Schwab concludes that they have a heightened awareness of financial issues than they did four years ago. Most said they were more appreciative of the things they have and are less likely to spend impulsively.
The ‘Recession Generation’
Carrie Schwab-Pomerantz, senior vice president of Schwab Community Services, said: “It seems clear that the great recession has changed the mindset of teens. It has given these ‘Recession Generation’ youth(s) a deeper appreciation for what they have and how hard their parents work. This may be the silver lining to the economic downturn.”
Financial education begins at home
“To help quench their thirst for material goods, teens appear to have opened up to the idea that learning about money management is a potential solution to the problem,” said Bryan Sommer, founder of Kids Money Management.
The majority of the teens surveyed cited their parents as their main educators on money matters. Eighty-two percent of surveyed teens say their parents have taught them the basics of financial management. And 77 percent go so far as to call their parents great financial role models.
Unemployment a factor
Unemployment accounts for some of this trend in teen spending. The teen unemployment rate, at 22 percent, is the lowest it has been in 10 years.