Managing the Pocketbook of the Facebook Generation: How to Talk to Your Teenager About Finance
The economic downturn has made all of us examine our budgets and spending behaviors. Notwithstanding the financial crisis, we still may ask the questions: how do we talk to our teenagers about family finances, how does teenage neurological and psychological development effect spending habits, how can we help our children resist peer spending pressure, and how do we help our teenagers think about money?
Parents and teenagers are often under pressure to purchase expensive cell phones, extravagant prom dresses, and private college tuition. When it comes to finance, parents set the most important example for their children. Through open and honest communication, positive role modeling, and appropriate spending limits our children can develop fiscal responsibility.
In 2006 teens spent $189.7 billion, and in 2011 spending is expected to increase to $208.7 billion (Marketingvox, 2007). According to Experian, 67% of teenage adults and twenty-pluses carry debt, and are statistically more likely to be late on payments, have their debt sold to collection agencies, repossessed, or seek bankruptcy than any other group in America. These statistics are alarming and if the underlying causes are left unaddressed, our children and teens will be unprepared for adult financial responsibilities. The financial habits that are developed during childhood and the teenage years lead to the financial behaviors of those in their 20's and 30's.
The Teenage Brain
During adolescence your child's brain is undergoing a dramatic restructuring, combined with a biological predisposition to engage in risky behavior, and a developmental shift emphasizing peer group relationships over familial. This is what I refer to as the teenage trifecta, and must be considered when attempting to understand and communicate with your teenager, as they do not possess the developmental sophistication of adults - in particular when it comes to finances. During the teenage years your child's prefrontal cortex (PFC), the front uppermost part of the brain, responsible for planning, personality expression, decision making and engaging in appropriate social behavior, is rapidly undergoing changes and is surging with the neurochemical dopamine. Coupled with the abundance of testosterone and estrogen produced during puberty, the production of these chemicals causes a perfect storm of chemical reactions, so to speak, impairing decision making abilities and impulse control, especially during emotional and stressful situations.
During adolescence teenagers are also more inclined to take risks as they, in accordance with the developmental model, separate from family attachment bonds and seek out peer group affiliation. In addition, as more dopamine flows into the PFC, other areas of the brain, in particular the reward system, are left barren of this chemical, causing a need for increased stimuli and risk taking.
As a result many teenagers get in trouble and take dangerous risks, making it difficult to communicate with them. Your teenager wants to find things out their own way through testing and experimentation; they may seem disinterested in what you as a parent have to say and are often more inclined to model themselves after peers, expressing their separateness and independence from parental/familial values.
Peer Pressure Gone Viral
Since birth your child has been a repository of consumer awareness and knowledge, and your teenagers are the first adopters and avid users of any new technology and product. Advertisers play upon the adolescent's developmental and neurobiological predisposition. Recent advances in neuroscience and use of a functional magnetic resonance imaging (fMRI) has guided researchers at UCLA's Ahmanson-Lovelace Brain Mapping Center to identify which parts of the brain are activated in response to specific messages such as advertising (UCLA Magazine, 2011). They have identified that successful advertisements cause a neurological downshift from the thinking part of the brain to the feeling part. This neurological downshift coupled with what we know about the teenage brain and development further blurs the distinction between reality and the prioritization of "needs" versus "wants." The message that is reaching our teenagers through advertisements in the media emphasizes that fitting-in is contingent upon what you own. Peer pressure and the need to fit-in through ownership of products has gone viral, as influence has expanded through the advent of social media and technology. According to the Kaiser Family Foundation Study (2010) young people are exposed to entertainment media an average of 7.5 hours per day. In addition, research indicates that more than one medium is used at a time, such as watching television while simultaneously using a computer, and the most popular computer activity for ages 8-18 is visiting social networking sites such as Facebook. Today there is not a company in the world that hasn't incorporated Facebook into their sales and marketing efforts.
Your Family Financial Legacy
The topic of money and finance has become as taboo as sex education once was. Most schools now provide comprehensive sex education programs; however, a fiscal education is generally not part of the school curriculum and is a topic that has been traditionally considered a private family matter. Each family has their own financial legacy and values to pass down to their children; however, parents are often unsure of how to address these issues. Given what we now know about teenage neurobiological/psychological development and the constant bombardment of media and peer influence to which they are exposed, as parents we have two choices: we can either sit back and say that we don't want our children to be influenced by these sources and attempt to shelter them; or we can find ways to address these issues. Discussing family finances openly with your teenager will help them to understand and prepare for the future. At the end of the month paying bills together as a family and working with your teenager to better understand expenses, the cost of basic necessities, and preparing for the future is vital. Helping your teen to create and adhere to a budget and manage a checking and savings account are valuable lessons. The use of negotiation within appropriate limits, rather than outright rejecting your teenager's choices, will help them to develop self-confidence as they learn from their successes and failures.
As parents we will merely be reacting and promulgating a cycle of denial and compensation if we attempt to "never do to our children what our parents did to us"; and it is equally ineffective to use an unrealistic style, telling your children stories about walking ten miles in the snow to school. You must be consistent and aware of the financial legacy that you are passing down to your children so that you can consciously choose which values you want them to have as adults. Your teenagers, although seemingly adult at times, are still children and are afraid of the future. Financial lessons may be ignored or dismissed by your teen; this is an expression of fear and should not be a deterrent to planting the seeds of fiscal responsibility. Learning to understand your teenager's feelings, listening, creating commonality, and being sensitive to them is the only way to get your teenager to listen to you.
Great Post! - ELISHA GOLDSTEIN - May 23rd 2011
What an important and great post! Thank you Jeremy...