Double Take: Economic hardships offer great lessons for kids

Wes: We complete our series on kids and the economy as we learn that consumer confidence is at its lowest level in 16 years, the stock market dropped 358 points, and oil hit $140 a barrel.

How can we help our teens brace for rough economic seas? I encourage parents to make every transfer of money a miniature economics lesson from about age 4.

As a start, kids should work for spending money by doing chores or showing good effort in school. Oddly, many families complain that their kids don’t do chores or homework AND demand money all the time. Solve both problems at the same time by paying for the work kids do. It takes time to find the right price point, which will then change as they age, but there’s no better way to teach economics. The “secret” is to never give money away for free. Give unearned money ONLY for unusual occasions (birthday) or unusually positive behaviors – like an exceptional school effort. You can take this as far as you want as long as you start early.

I’ve seen families that only buy their kids groceries, but provide them with generous stipends for positive efforts. It’s always more effective to reimburse kids than to waste countless hours complaining about underachievement. Some call this bribing. I usually ask those folks if they consider their salary a bribe to go to work every day.

I suggest not giving large gifts like cars, cell phones or computers, nor using these as rewards for achievement. Better to contribute earned money to the teens’ savings or add gift money for special occasions so they can participate actively in the economy. Gifts should have sentimental rather than monetary value. Many parents engage in excess consumption when seeking that perfect gift for Christmas or birthday. Families can also create a credit simulation early on, where kids borrow money for something and then have to pay it back. It’s OK to charge a small interest rate to demonstrate how loans work even if you give the interest back to the teen’s savings account when the note is paid off. And don’t keep lending if payment is not forthcoming.

Finally, in stormy economic times parents must be especially ready to say “no” and to explain the reason why. Restraint is a major economics lesson. Now is the time to sit down with kids of all ages BEFORE a big funding request can emerge and explain that things in our world are changing – that the economy is no longer something “out there.” It’s a part of our everyday life, and we have to respond to it as a family by cutting back. No teen is going to stand up and salute this candor, but hopefully it will stave off hurt feelings, tantrums or general discord by helping them see that we’re all in this together. My final advice: Help your kids buy good bikes. Kids are going to need them.

Julia: Enjoying life takes money. Enjoying life during adolescence takes twice as much as before. Previously, I talked about teens becoming more independent and earning their own cash. Today I want to talk about spending that cash. I’m no stranger to the joy of having and blowing cash on fun stuff, but I think this mindset can be dangerous. It leads to blowing cash first on fun outings, then on other people and finally on whatever catches your eye. Eventually items lose their value and one goes from spending “just $20 on a shirt” to spending “only $40 on a lotion” or “just $90 on a computer game.” I’m not saying “save all your money and don’t shop so much,” because this is an age where fun takes money. I’d just like to offer up some ideas to help ease up on spending without putting your social life at stake.

One: Buy generic, secondhand, antique or via Internet. I know that today’s teen is all about the brand name, and I’m not asking anyone to change that. Simply consider where you can cut back elsewhere – shampoos, foods, basic clothing – all of these things can be bought in bulk or be generic at a heck of price reduction. The only difference (I kid you not) is packaging and labels. The ingredients and the quality are still there. It took me some getting used to, but if I can get by with my off-brand “strawberry frosted mini-spooners” for breakfast, so can you.

Two: Split costs with friends or seek out two-for-one deals. My favorite application of this concept is on Tuesdays when I get two-for-one coffee with a friend as well as a two-for-one movie. Since I get coffee and enjoy seeing movies a LOT, this offers friend time as well as free coffee every other week. Equally as good is splitting something (i.e., pizza or another large entree) with friends.

Three: Sales. Sales are fantastic. The trick is thinking ahead of what you need in the future and buy it while it’s cheap – while avoiding buying a bunch of things you won’t need just because they are cheap. If you can think one or two seasons ahead, you can get stuff before you need it and beat the jacked-up prices. This not only applies to clothing but to school supplies (which always seem twice as expensive in August … I wonder why). You can also wait for something popular to go on sale – like an iPod – rather than buying it the first day it’s on the shelf.

These are just a few thoughts to tone avid spenders down a notch. You get extra points if you can keep your money in your pocket and find entertainment that doesn’t require spending.

Next week: My b.f. wants to sleep over. How can I make it more comfortable for my mom?

– Dr. Wes Crenshaw is a board-certified family psychologist and director of the Family Therapy Institute Midwest. Julia Davidson is a Bishop Seabury Academy junior. Opinions and advice given here are not meant as a substitute for psychological evaluation or therapy services. Send your questions about adolescent issues (limited to 200 words) to doubletake@ljworld.com. All correspondence is strictly confidential.