I was reminded today that we are in the middle of Spring Break. Having no school-aged children and being out of school for many years, I’d kinda forgotten about it. But, as I was walking the mall with my 8-month old daughter (a regular occurrence when it is raining outside) there was no way to miss the fact. And a teachable moment came to me as I was walking around seeing all the teeny boppers hanging out in their little packs.
I’m not able to teach my daughter this lesson yet, but that doesn’t mean it isn’t an appropriate blog post.
I could go many ways with this topic. I could talk about how silly I thought all these young teenage girls looked in their ripped jeans, updos, and crop tops (those shirts that don’t come down all the way and expose the belly. I’m a guy with no fashion sense so excuse me for not knowing the correct terminology. I had to google it just to come up with crop top).
Or I could talk about the sexualization of teenagers.
I could also talk about the psychology of keeping up with all the latest trends.
But I’m not going to go any of those directions. I may have my opinions, but until I’ve had a teenage daughter, I’ll leave those topics for others.
Since this blog is about how money and finance impact our everyday lives, that is the direction I am going to go with this post as well.
Normally when I am walking in the mall, pushing my daughter in her stroller, it’s the middle of the day on a weekday. The typical crowd does not include school aged kids. Today there were lots of middle and high-school students that were walking around in groups of two, threes, and fours.
I saw very few of these teenagers with their parents. And many of these teenagers had shopping bags from one popular clothing store or another.
This led me to assume a couple things.
- Their parents must have given them money. (I doubt any of these kids had jobs. If they did, wouldn’t they be working since they had no school?)
- Their parents were pretty much ok with them buying whatever they wanted with that money.
What are Parents Teaching Their Kids About Money When They Just Hand them Cash?
And this is assuming parents are giving cash. Don’t even get me started on my thoughts regarding giving a teenager a credit card.
If a parent just hands over the cash whenever their teenager wants to go shopping, how is that going to help them in the long run? It doesn’t teach them the value of hard work and financial reward. It doesn’t teach them the value of a dollar.
It teaches them that money is something that will just magically be available to them whenever they feel like they need a new t-shirt.
It teaches them that spending $25 on a t-shirt is normal.
It teaches them to become accustomed to the latest fashions and styles, regardless of the price.
What about the Opportunity Cost?
I was curious to what a typical outfit from a major brand would cost. This example comes from American Eagle’s website. A pair of jeans costs at least $40. A typical shirt is $20. And a pair of shoes runs around $55. That means a fairly standard outfit costs around $115. And that doesn’t include all the other stuff that goes with it.
So, after seeing the cost involved with just walking into a store and picking out a few items it made me wonder. What if that $115 was invested? What could happen?
Let’s say the parent decided to forgo the $115 trip to the mall and instead decided to set it aside for their child’s retirement. I know…how boring. But bear with me for a moment.
If the teenager is 15 today, what would $115 turn into in 50 years when the kid reaches age 65?
If put into a mutual or an ETF and left along for 50 years at a 10% average interest rate $115 would become $16,717.54!
In case you’re curious, 8% would be $6195.99 and 12% would turn into a whopping $45,032.09.
Now, I can’t imagine many teenagers would choose a retirement account over a new pair of jeans and shoes. 50 years is incomprehensible to them. But what about you? Wouldn’t it be nice if YOUR parents had set aside some money when YOU were 15? Wouldn’t you be thrilled to have them call you up and say, “hey we invested some money for you when you were a teenager, it’s now worth about $100,000.” Would you get mad at them for not buying you that new jacket back when you were in high-school?
Am I Saying New Brand Name Clothing is Bad?
My point is not to say that you shouldn’t buy your kids nice clothes. My point is not that people shouldn’t buy name brand stuff.
When I was in middle school I was very self-conscious and really thought it was important to have name brand clothing so that I could fit in. Up until this point, I pretty much only had thrift store closing. The only “cool” clothes that I had were those that were given to me for Christmas or birthdays. Occasionally I could buy something with money that was given to me.
From age 14 or 15 on I was pretty much solely responsible for buying my own clothes. I had some small jobs and so I would go to the mall and buy from these stores that I thought were so cool. I don’t know that I ever bought anything except off the clearance rack but at least I was able to buy something.
But you know what? Today I could care less. Because I had to work for my money and had to spend my own money, I realized pretty quickly that it was silly to pay $25 for a shirt just because it had some name brand on it. Now, as an adult who could afford the in style stuff, I shop at Plato’s Closet, a thrift store that sells used name brand stuff.
I never spend more than $20 on a pair of jeans and never more than $10 for a shirt. I do buy expensive athletic shoes because they are better for my feet, but it has nothing to do with trying to keep up with the latest styles.
What Point am I Trying to Make?
My point is that I am concerned we are teaching our kids to fall into the same bad habits that we do ourselves. We spend our money on things that aren’t important and will not last and neglect to invest for the future.
I learned, from a very early age, what it really means to spend $25 on a t-shirt. I understood how much work and time went into it. My guess is that many of those teenagers I saw at the mall would not be wearing what they were wearing if they had to work out in the yard mowing the grass for $5 an hour.
But they don’t learn that lesson.
I learned that there were ways to get the name brand stuff without having to pay full price. I could shop the clearance rack and get stuff that might be a couple months old but no one would know whether I paid $5 or $20.
But they aren’t learning that lesson because why would they shop the clearance rack when they are just handed the money.
Someone, at some point, has to be the one to change the direction of your family. If you keep doing what you’ve always done your kids will most likely end up in the same position as you. Money and wealth work best with a long-term perspective. The longer the term, the greater the reward.
So, next time you are about to hand your kid a couple $20’s when they want to hang out with their friends, stop a moment and think. Is there something you can do differently to teach them a valuable lesson? They may not appreciate it today, but that’s ok, life lessons aren’t usually enjoyable while they are taking place.