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Talk about a trickle-down economy. As grown-ups cash in on the '90s boom, kids are profiting as well. Their allowances are soaring, and so is their interest in all things monetary.

When Jay Zagorsky embarked on a study of how much allowance today's youngsters get from their parents, he had a hunch it was a lot more than the typical buck-a-week of his generation. One clue loomed just down the street at the local high school in his Boston neighborhood: a parking lot filled with shimmering Volvos and BMWs, all driven by students, even though the school and neighborhood were designed so students could walk to school.

But even Zagorsky, a research scientist for Ohio State University's Center for Human Resource Research, was taken aback at the results of his allowance study, which he coauthored with Jennifer Hering.

Data gleaned from the latest National Longitudinal Survey of Youth 1997 confirm Zagorsky's suspicions that many of today's youngsters are living the lush life. The U.S. Department of Labor-sponsored survey of 8,984 youngsters aged 12 to 16 as of December, 1996, indicates that the median amount of allowance and cash kids get from parents and guardians is $50 a week. And about 40 percent of all American youngsters in that age bracket - some 10 million - receive an allowance and regular handouts from their parents. Translation: About $1 billion a week, according to NLSY '97 data, to spend on everything from snacks to clothes to cars. Since most teens have few bills or financial obligations, most if not all of that billion-a-week is discretionary income. Marketers and retailers hoping for strong holiday sales numbers may want to bear that in mind.

"Retailers are becoming increasingly competitive for [teen] business, and one key to understanding this group of big spenders is to find out where the money comes from," says Zagorsky, who adds he was shocked by the $50-a-week figure. "I have a fourth-grader and a fifth-grader and I don't give them anywhere near that much."

It should be noted that for purposes of the study, "allowance" was broadly defined: it included a weekly sum, usually linked to chores, and also cash handouts for trips to the movies or ice skating and such. Zagorsky cautions that the amounts were self-reported by the teens, which means that they may be slightly elevated, perhaps to impress the interviewers. However, the overall findings do appear to be in line with similar studies. Zagorsky found that overall, teens in the Pacific and Mountain regions are slightly more likely to get an allowance and handouts than teens in the South and South Atlantic. Teens in the East North Central region receive the most (a median of $75 a week), compared to teens in the East South Central ($30 a week) and South Atlantic ($38).

Not surprisingly, the amount teens get from their parents or guardians rises as household income increases. The median allowances for teens who live in households with annual incomes in the $30,000-to-$40,000 range is $21 a week, whereas for teens in households with $100,000-plus annual incomes, it's $175 a week.

That's why Southern kids are getting the least, Zagorsky says. The South claims the lowest median household income of any region in the United States, as well as the largest number of people with household incomes of $5,000 or less - 7 million. By comparison, there are only about 3 million households in the Northeast with incomes that low. "There are pockets of the South that tend to be rich, especially around the Atlanta area. But then there is Mississippi and the Delta. Places like Arkansas and Alabama pull [median incomes] down, too."

The high median allowances in the East North Central region, on the other hand, can be attributed to the fact that there are a large number of sizable Midwestern cities that don't have huge pockets of poverty, places like Cleveland and Cincinnati, that are much more homogeneous than, say, Los Angeles or New York, Zagorsky explains. "So the income gap just isn't that large."

Religious affiliation appears to have little effect on the percentage of teens who get allowance; it's about half, regardless of faith. There are, however, some notable differences in the amounts received. Muslim teens, for instance, get $23 per week, while their Protestant and Mormon counterparts get more than twice that - $55.

It's also worth pointing out, Zagorsky says, that nearly two-thirds of those teens who get allowance get it weekly. So they have a steady source of cash on hand. "There's a huge amount of disposable income here," he says. "If you compare the ratio of disposable income to income...adults sometimes have very little. These teens have relatively low debt. They shouldn't be ignored."

Zagorsky's findings only add to the eye-catching dossier of demographics and studies that continue to show that today's generation of youngsters is bigger, richer, more consumer-oriented, and probably more sophisticated about money matters than any of their predecessors. There are some 31 million 12-to-19-year-olds in the United States. By 2010, there will be 34 million, eclipsing the previous high of 33 million at the peak of the baby boom.

In 1998, teenagers spent $141 billion of their own money and their parents' money, according the new Teenage Marketing and Lifestyle Study by Teenage Research Unlimited (TRU). That's a 16 percent increase over the previous year. The projected teen expenditures for 1999 is $153 billion, a large chunk of it coming during the holiday season. "This is the highest level of spending that we've seen among teenagers," explains Michael Wood, vice president of TRU. "On a per capita basis, they do have more money than prior generations."

According to TRU's study, the No. 1 ongoing money source for teenagers is parents or guardians. That comes in the form of allowance, payment for odd jobs around the house and yard, and gifts. Other significant sources of income today are payments by neighbors or relatives for occasional work, gifts from grandparents, and part-time jobs. Nearly a third of teenagers hold part-time jobs, according to TRU.

One theory to explain rising teen wealth is that their parents themselves are wealthier. "These kids are growing up at a time when the economy is strong. Their parents are doing well," says Wood. "The parents are the No. 1 source of income, so there's a trickle-down effect."

What also may be influencing this parent-to-teen largess, say Wood and other market researchers and sociologists, are parents who are so time-tapped, what with two-parent working homes and chock-full calendars, they may be using money as a substitute for time. Essentially, researchers say, guilt may be at work in helping to fatten the fanny packs of today's teens.

"We're finding that when kids ask for money today, they get it," says Irma Zandl, president of The Zandl Group, which specializes in trend research about the under-30 consumer. A new study by Merrill Lynch, Trends and Teenagers' Financial Behavior and Perceptions, suggests Zandl and others may be on to something. The survey of 500 kids aged 12 to 17 shows that 86 percent of them obtain money from their parents when they need it. In other words, if they ask, it comes. "A lot of parents are feeling sort of guilty," says Zandl. "They're working, their kids are coming home to empty houses, so they want to make up for it."

"Quality time is lessening all the time," says Dr. Dan Acuff, president of Youth Market Systems Consulting. "In the 1950s, 20 percent of mothers worked. Today, it's 70 percent. We've gone from a patriarchy to a matriarchy to a filiarchy, where [a lot of] power is ceded to the kids. It's whatever you want, Johnny."

Today's Johnny also has more needs than yesteryear's. And that, researchers say, may also be what's compelling Mom and Dad to be more generous and what's forcing kids into the part-time job market. Being a teenager today means you need a pager, an e-mail address (which means you need a computer, preferably your own), and maybe even a cell phone. "The demands of society today are higher," explains Michael A. Kamins, associate professor of marketing at the University of Southern California. "You need lots of technical, electronic stuff that we didn't need as kids. Parents," he adds, "may feel that they're cutting their kid off socially if they don't provide."

Also at play is the nature of baby boomers. As teenagers, boomers rebelled against all things authority. That's a strong quality that remains at their core even as they age. As parents, many boomers display a strong desire to be a friend to their child rather than an authority figure. The result? "The kids often get what they want," Zandl says.

And yet, most researchers agree that while we are in the era of $50-a-week allowances, we are also in an era of teenagers whose attitudes about money, spending, saving, and investing at times seem more mature and savvy than their baby-boomer parents. AllowanceNet. com is a relatively new Web site designed to allow kids and parents to develop and manage allowance. Kids essentially run their own business and, with supervision from their parents, make online purchases in the "Spend-It Spot" store. Its target audience is the 6-to-14 age range, although the lion's share of its users so far are 11 to 14. In the three weeks following its mid-September launch, AllowanceNet gained some 4,000 users, according to president and cofounder Mark Clausen.

"What we do see is a larger-than-normal desire for kids to save," says Clausen. "Which is interesting because their parents' saving is at an all-time low. We see kids having an affinity and desire to want to feel more educated about money. They want to feel smart. They want to succeed in school. They want financial security and they want to have the ability to effect that at an earlier age than previous generations."

The Merrill Lynch study and another, The Youth and Money Survey 1999, sponsored in part by the American Savings Education Council, seem to support Clausen's findings. The former shows that 82 percent of kids aged 12 to 17 say they save at least half of the money they get. The Youth and Money survey, which involved young people in the 16-to-22 age bracket, indicates that half always save a portion of their money and another 41 percent say they save some money sometimes. The survey also says that 53 percent make a monthly budget, although they may not always stick to it. And both studies suggest that millions of youngsters are regularly putting money into mutual funds and the stock market. Merrill Lynch's study shows that 11 percent of teenagers invest money in mutual funds and as many own stock; that's a slight increase from 1998, when 9 percent said they had money in mutual funds and 7 percent said they owned stock. The TRU study shows for the first time that 11 percent of young people even use debit cards.

In the first few months of its operation, Doughnet, another teen-oriented money Web site that launched in June, has also found that kids are indeed interested in saving. Doughnet is essentially an online shopping, education, and banking enterprise. With their parents' help, kids set up accounts and can click to popular youth-oriented retailers like Delia's, J.Crew, and The Gap to make purchases. And they can set up a savings account. "They're better savers than we thought they'd be," says Doughnet president Ginger Thomson. "They're saving roughly 15 percent of their money and we thought it would be 5 percent to 10 percent." Moreover, Doughnet is set up so kids can donate to nonprofits or favorite causes. "When we did our interviewing of kids and parents before we launched, the parents all said, `Why are you bothering with this nonprofit stuff?' They thought we were foolhardy," says Thomson. "But it's getting a lot of attention. [Kids are] donating somewhere between 2 percent a! nd 5 percent."

The point here is not that kids aren't spending; on the contrary, even if the kids at Doughnet are saving and donating up to 20 percent, that means they're also spending up to 80 percent. It's that kids today are more complex consumers and more educated about money than their predecessors. In large part, this is because they have had to be. Today's youngsters - weaned on television, MTV, the Web, and movie-product tie-ins - have been bombarded with marketing messages all their lives. Because everyone in the family is so busy, they've been called upon more often to go to the grocery store and make purchasing decisions they traditionally haven't had to make. Because they're often the in-house technology expert, their advice is especially important when it comes to technology equipment purchases.

"Young people are making many purchasing decisions at a much earlier point in time than in years past," says Zandl, the consumer trends analyst. "It's kind of foisted upon them...because many parents are busy doing their own thing. Parents today also see their kids as much more advanced than they were at their age." So parents don't mind giving kids decision-making power when it comes to money.

And kids are value-conscious. When 10-year-old Stephanie Thompson of Irvine, California, decided she wanted a stereo, she paged through a JC Penney catalog on her own and picked one out. She likes JC Penney, she explains, because it has good prices. "I want to spend my money wisely," says Stephanie, who gets a $10 a week allowance for keeping her room clean and can earn extra money for doing additional work around the house.

But like their boomer parents, many teens are also brand-oriented. "Certainly since the mid-'90s we've been in a trend called `resplurgent,'" explains Zandl, "where people have these desires to buy brand-name things. The number of teenagers that say something has to be a brand name has gone up. The brand-name phenomenon goes quite young, too - maybe 10 for the boys and even younger for the girls."

"Coolness" goes a long way toward determining which brands are most popular. TRU's latest study shows that Nike, Adidas, and Tommy Hilfiger continue to dominate the cool chart among teenagers. Abercrombie & Fitch and Old Navy, which specialize in stylish clothes that are economically priced, are on the rise. And this year, three automobile brands made TRU's cool chart for the first time - Chevrolet, Ford, and Honda.

What all of these manufacturers have done is appeal to kids by using smart in-store advertising and by reaching out to them in media that kids see: television, magazines, and the Web. "Tommy Hilfiger continues to be at the top of the list, doing a lot with incorporating music in their marketing mix," says TRU's Wood. "Abercrombie & Fitch, we can't say enough about them...They have written the book on what appeals to teens. Walking into their store is like being part of the coolest club in school. There are framed posters throughout of teens at play. On a camping trip. At the beach. The product," says Wood, "is casual, preppy, fun, and rebellious - all things that appeal to teens."

Zandl agrees that the "environment of some of these stores is just great. At Old Navy, everything is hip and contemporary. The sales people all wear the clothes and they wear these headsets that rock stars wear."

Indeed, one consistent theme in youth-bent advertising and product marketing is the heightened role of entertainment. This is true even with food products. Quaker Oats, for instance, has a new product called Dinosaur Eggs: pour hot water over the oatmeal and little eggs hatch into colorful dinosaurs. "It used to be that Mom went to the store, brought home what she brought home, and you ate what she served you," says consultant Acuff. "Today,72 percent of food and beverage purchases are influenced by kids."

Manufacturers and retailers that invest in the kids' market today will ensure their future customer base as the biggest and wealthiest generation in history grows up. After all, most of their purchasing decisions are ahead of them.

Today there are numerous examples of forward-thinking firms adjusting their products and marketing and advertising strategies accordingly. Ralph, a new product line from Polo Ralph Lauren Co. aimed at the 16-to-24-year-old market, debuted this fall. Turn the pages of Seventeen magazine and there's an advertisement for Heinz catsup. That's not exactly a traditional teen product, but it's a nod to the increased role teens play in direct and indirect spending on food these days.

Marketers warn that because teens are exposed to so much advertising on the Web and television so early on, they are also developing opinions about products and services like credit card companies, travel outfits, automobiles, and airlines. And they are likely to carry their impressions into adulthood. "If a manufacturer or retailer chooses to ignore today's youth," cautions Zandl, "they really risk going gray. This is a critical age group to pay attention to today, no matter who you are."

Perhaps the best object lessons for this can be learned from a couple of corporate titans, McDonald's and Disney, who 40 years ago staked their futures on the fledgling baby-boom generation. Yes, it's fair to say, it worked for them.

Today's young people are more fiscally able-minded than their counterparts of just a few years ago, say the folks at the $1-billion Stein Roe Young Investor Fund, which has catered to kids since its inception in 1994. About 85 percent of the fund's 200,000 shareholders (up from 71,000 in 1996) are 18 or younger.

Shareholders (parents are the legal custodians of the accounts) receive a jazzy quarterly newsletter that features games, puzzles, and articles on some of the companies the fund invests in - the majority of which have something to do with kid-dom. One section of the newsletter, dubbed "One for the Money," allows kids to write in about how they have augmented their income, and it is stunningly popular. "Our fund managers get stock tips from kids all the time," says Wendy Rauch, spokesperson for Stein Roe. "They'll say, `I think you should buy Fila because it's cool.' One girl wrote in and said, `I don't think you should buy McDonald's because it's not cool and nobody hangs out there anymore.' Our fund manager actually wrote a letter back saying, `Well, here's why we invest in McDonald's.'"

Stein Roe's parent company, Liberty Financial Companies, also has a Web site for kids, Visitors choose from one of six on-site guides to help them learn about money and investing, including the straight-laced Webster who "considers the daily stock tables to be compelling nonfiction," surfer dude Slice, whose "favorite publication is Batman comics," and superhero Gnaz Dax (a play on Nasdaq), who "loves to protect the weak from tyranny and oppression, but can't stop worrying about his cholesterol."

"We have some kids who are really into this stuff," Rauch says. "They visit company Web sites, they watch CNBC. It's amazing."

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