Guest Post by Mardee Alvaro
For the past two years, 16-year-old Emily has proudly watched her bank account grow as she stashes away babysitting earnings, birthday money, and even unspent cash from her weekly allowance. Emily is saving for a used car, which she hopes to be able to buy by her 18th birthday.
Jonathan is a 17-year-old avid music buff. The paychecks he brings home from the hardware store where he works are quickly spent on concert tickets, music video games, and online music purchases. He often borrows from his friends to cover his concert costs, and repays them with his next paycheck.
Classic examples of the gender difference when it comes to teen spending? Not likely.
For every Emily, you can find a Brittany, who is lured to the mall in search of the perfect pair of shoes, and comes home with three tops, two pairs of earrings, and a dress she just couldn't resist. ("They were sooooo cute!!!"). For Brittany, shopping is a hobby, and nothing matches the thrill of a new purchase.
Likewise, for every Jonathan, you might find a Trevor, who tracks his earnings on Quicken, and spends only on planned, well-researched purchases.
Science has proven that the female and male brains do not function in exactly the same ways. However, stereotyping is risky business. Not all teenage girls are cautious, level-headed planners, nor are all teenage boys reckless, impulsive risk-takers - particularly when it comes to spending habits.
Perhaps a more accurate assumption is that the personality traits commonly associated with gender stereotypes influence teen spending behaviors.
So what rules teen brains?
Impulsivity is perhaps one of the most common personality traits that affect how teens spend money. In the example above, Brittany did not take the time to weigh the value of her purchases. Did she really need all three tops, or would have two tops been enough to spruce up her wardrobe? Will she have the occasion to wear that "irresistible" dress, or does it look like three similar dresses hanging in her closet (with price tags still attached)?
Susceptibility to peer influence is perhaps never stronger than in the teen years, when what friends think, do, and - especially - say, can take on gospel importance. If all the popular kids are wearing SuperCool brand jeans, then SuperCool jeans become very alluring, whether affordable or not.
Rebellion - or even a strong push for independence - is another teen attribute that often affects spending choices. Control, which closely parallels the ability to make one's own choices, also comes into play when it comes to teen spending. "I earned it; I can spend it however I choose." While money may not buy happiness (the jury is still deliberating), we do know that increased discretionary spending translates into greater number of choices - a teen with more money to spend simply has more options than a peer with less money in his or her wallet. Tightly holding onto money can achieve the same sense of control.
Sometimes spending can be an "outlet" for non-characteristic behavior - i.e., a usually deliberate teen might find impulsive spending to be very freeing.
But let's face it: teens often get a bad rap for, well, for simply being teenagers. And while many teens fall prey to unwise spending habits, many other teens are quite prudent in their spending practices.
Teens who see money for what it is - a commodity - not an emotional or social tool, tend to handle fiscal issues with a great deal of responsibility. These teens use money wisely to buy the things they want and can afford. Perhaps even more importantly, they develop a sense of competence.
While your teen's spending habits are likely being influenced more by personality traits ("nature") than gender, don't discount the "nurture" part of the equation. Modeling healthy attitudes toward money and prudent spending practices can help steer your teenager towards a path of intelligent financial choices - through the teen years and beyond!
A better understanding of the factors that drive your teen's spending habits can help you "coach" your child more effectively, particularly if you see red flags.
1. Pick your battles.Recognize the connection between your teen's sense of independence and spending choices. Is it worth debating whether your daughter's splurge on a new pair of boots was a wise purchase - even if you know you could have found them for her online for less?
2. Reflect first - react second.If you notice impulsive or reckless spending, take a moment to think of what might be driving this lack of restraint. You might want to choose a neutral (not-in-the-heat-of-the-moment) time to discuss strategies to resist peer pressure if you think the need to "fit in" is influencing unwise spending. Or, perhaps giving your teen more freedom in other areas will lessen his or her own need to rebel in order to feel recognized as an (almost) adult.
3. Share your experiences.Teens appear uninterested in their parent's experiences, but don't kid yourself: sometimes they really do listen and learn from our mistakes and triumphs. If you come home from the store with an awesome new camera, share your experience ... how you decided it was time for a new camera, how you found the best deal, how excited you are to take pictures at your teen's next soccer game.
4. Praise where praise is warranted. If your daughter comes home with a great new sports watch that she had been admiring for months, but waited to buy it until it went on sale, let her know that you admire her patience. Parental approval holds more weight than more teens care to admit, and positive reinforcement can be a powerful motivator for future behaviors.
5. Show an interest in your teen's purchases -and learn from them. The latest technology might be unfamiliar territory for you, but your son might introduce you to the "latest and greatest" MP3 player that you might really enjoy. Teens can be really good at finding great new products, restaurants, stores and reputable online retailers that offer terrific discounts!
6. Use money lessons, not money messages.When discussing your teen's spending habits, refrain from using words or tone that might make evoke feelings of shame or incompetence. (See "Straight Talk with Kids about Money".)
Bottom line: Gender may influence where teens choose to spend their money, but how teens spend it is more likely a function of individual personality traits. The teenage brain is a work in progress, dynamic and ever-changing. Parents: stay tuned, and be on constant alert for the next big sale at the mall!
Mardee Alvaro is the Managing Editor of a financial website