How Teens are Ruling Retail

And Why Parents Desperately Need to Take it Back

Photo Credit Dave Morris

Parents of teens know that the age gap between 13 and 19 comes with its own list of awkward and challenging parenting tasks. Broken hearts, learning who they are, and deciding on their future is almost too much for most kids to handle. You take on a complicated whirlwind of heart-to-hearts, tough love, and letting them sink or swim.

An often overlooked lesson in the teen years, though, is how to responsibly handle their money. Selling to teens is like shooting fish in a barrel for many retail stores, who market specifically toward the demographic. If your kid doesn’t know how to manage themselves, they could be in for some scary financial blows down the road.

Schools are categorically failing to teach fiscal responsibility to teens, and retail stores are loving it!

In 2012, ING Direct and Capital One conducted a study among high school graduates. In their findings, they discovered that 87% of teens surveyed admitted they didn’t know anything about managing money. Those that did understand money admitted that they had learned from their parents.

Teens today lack basic understanding about finances. The majority of teens surveyed in the study also said they had no idea what the difference between a debit card or a credit card was and others said they believed they could borrow money from their checking accounts simply by writing checks and depositing the money at a later date.

When asked about bills and budgeting, many teens stated that they had never been asked to participate in any budgeting project, even mock budgets, and that they would probably hire accountants to help them when they moved out of their parents’ homes.

To make matters worse, some of these kids are being handed credit cards. While the 2009 CARD Act was meant to prevent teens from predatory credit card offers, Sallie Mae conducted a study in 2013 which stated that as many as 15% of kids had credit cards in their wallets with balances averaging $600 or more. Most of these credit cards come from retail store accounts.

Teens are making more money than ever before.

When most adults think of their first job as a teenager, they think of the local fast food place, the checker aisle at the grocery store, or another minimum wage gig. Teens today are tech savvy, making them a valuable asset for companies looking to hire part-time tech savvy people.

Most adults can’t make it on less than a full-time job, but teens are willing to work a minimum number of hours for a higher wage. Some teens are making as much as $20 an hour on their part-time hustles, meaning they have more money to play with.

While $20 an hour at ten hours a week doesn’t pan out to much, teens are known for having eyes bigger than their stomachs, so to speak, when it comes to overspending. Retail stores know this. They host confusing sales, pitch membership plans, and even offer oversold employee “perks” to the same teens they employ.

To give you an idea of how teens are currently overspending, MarketingVOX and the Rand Youth Poll have estimated that, as a whole, American teens are making about $91 billion annually, but spending close to $259 billion.

Instagram influences teen shopping decisions.

Instagram is the preferred social media network for teens with 95% of teens online and engaged with others, according to Pew Research. Teens openly admitted to the poll that the advertisements they see on social media, the “brag posts” from friends and connections about recent purchases, and the desire to make brag posts of their own influence their shopping.

For example, a teen might know that they can’t really afford a $300 pair of shoes, but the desire to show a selfie of themselves wearing the shoes to their friends on Instagram will drive the sale home anyway. Retail chains have caught onto this, subliminally featuring selfies in their advertising and encouraging celebrities to take selfies with their products.

More parents are going into debt than ever to keep their kids out of trouble.

As mentioned above, teens are spending almost three times what they earn. Part of that is being run onto retail charge cards, but the rest is coming from Mom and Dad.

Many parents have admitted to Sallie Mae research that they have gone into debt to pay for things like cars, college tuition, and even electronic devices for their kids. Most parents also admitted that they simply don’t have time to teach their kids fiscal responsibility.

If not corrected, this generation is at risk of serious financial trouble in the future.

The price tag for a college education continues to rise and most teens and their parents are being forced into debt to foot the bill. The problem with not teaching fiscal responsibility or saving ahead for school is that, when teens get turned out into the world on their own, they are left in an environment of sink or swim- and most of them are sinking.

More teens are quitting college and moving home to clean up their credit than in generations past. H & R Block’s yearly survey of teens has found that most of them are worried about getting in over their heads with student loans.

If you’re the parent of a teen, the job is yours to educate them about the importance of their financial futures. While most of them will pretend they don’t want the lesson, fiscal learning should be treated with as much importance as learning to eat with silverware, use the toilet, drive a car, or tie their own shoes. Their lives depend on these skills and schools are simply not equipped anymore to handle teaching them.

Mom and Dad, they’re counting on you. Their future and your retirement depends on what you do today.