Money: Teens Don't Get It

I've long been a proponent of teens living at a time in their lives when they can save vast amounts of money. Though their income may be small, they have very few expenses, seeing that their room and board and virtually all their living expenses are paid for.

Warren Buffett seems to be one of the few teens who understood "the power of early" - the vast potential of saving in the the early years so that it could multiply in the latter years. That's how he saved (in today's money, accounting for inflation) $47,000 by high school graduation.

Now you'd think that perhaps the current recession has made teens rethink their spending and begin to save toward an uncertain future. Yet, a recent survey of over 61,000 teens in over 31 countries found 15 percent or less spending less on movies and music. Less than 20% are spending less on console and computer games. I assume that means that about 80% of teens haven't changed many of their spending habits at all because of "The Great Recession."

Does this strike anyone but me as odd? I've heard that adults are spending less and saving more. Why hasn't this trickled down to our young people?

50% of Generation Y Has No Savings

The recent survey also found 18 to 34-year-olds giving themselves Cs, Ds or Fs in personal finance skills such as budgeting and effective savings. Further, they were mostly likely, among working age adults, to be putting no money toward retirement. "The survey was released by the National Foundation for Credit Counseling, which polled 1,000 adults nationwide in March."

This is such a shame! I suppose the baby boomers are partially to blame for mentoring a life of spending rather than saving. But it's a shame, because

• those early years can be times for incredible savings. As I share in my book for that age, Enjoy Your Money! How to Make It, Save It, Invest It and Give It, Warren Buffett started the habit of making and saving money before age 10, and continued these useful habits through high school so that he was able to graduate with today's equivalent (adjusted for inflation) of about $47,000.
  
• they're leaving themselves wide open for an emergency to put them into long-term debt. If you have no savings when you car dies; have no savings when you have an extended illness; then you end up borrowing and paying it off over the long-haul. These emergencies happen on average every 10 years or so, meaning we should plan for them.
  

What do you think?

A helpful angle on long-term savings versus short-term spending was well expressed in a memoir that my wife is reading:

"I had seen a shiny new Nash roadster parked at the store in Sacred Heart and had been captivated by it. I'll have one of those one day, I assured Barney. I would find a way to make a huge amount of money. Barney put on his older brother hat and asked me why I wanted a huge amount of money. I said I'd buy a Nash. Maybe even a Packard. Barney was not impressed. If you have food to eat and a warm, dry home, there's just one thing money is really useful for, Barney told me. You can use it to buy your life back. Then you don't have to waste time doing things you don't like to do just to make money. I didn't understand this theory, so he explained it. Don't look for a way to make money; find a way to make a living doing what you like to do anyway. Otherwise you're just raising funds to buy yourself out of slavery."

From "Seldom Disappointed, by Tony Hillerman: a Memoir (2001).