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The Teenage Economy

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Caitlin Keating at a friend's home on New Year's Eve. (Photo credit: Michael Schmelling)

Allowances tend to be greater for girls, mostly because they experience more intense peer pressure about clothes and shop more. Guys tend to be the ones more interested in making money— and they have no problem borrowing from girls. “If I need money—like for lunch, a video game, whatever—sometimes I’ll just ask a chick,” says a private-school senior. “They’re usually cool about giving it out.”

Janet Bodnar, who writes a weekly column about kids and money for Kiplinger.com, argues that parents ought to enforce a strict allowance in order to teach money management. But she and others who study familial financial patterns say that fewer and fewer are heeding that advice. “A lot of parents, especially today, are inclined to just hand out $20 whenever kids need it,” Bodnar says. “And the kids don’t learn anything that way.” According to the JumpStart Coalition, a nonprofit that raises financial awareness, only 52 percent of high-school students have a working understanding of money. “For all our sophistication toward money, we enforce less and less real-life education on the topic,” says Laura Levine, the group’s executive director. “We give credit cards at younger ages, but with no explanation of what any of it means.”

Experts blame a baby-boomer mind-set, a generation that favors spending over saving, a group of adults who never really wanted to be adults. Bodnar says that a variety of factors have contributed to the emergence of a new sort of pervasive parental guilt, which, no matter the income bracket, is often appeased by cash handed out indiscriminately. “Maybe they’re not around as much—both Mom and Dad are working all the time, or going through a divorce, or dating, and they feel horrible so they’re buying their kids off with money,” she explains. “They say they’re doing it for the kids, but really, they’re doing it for themselves.”

And then there’s the changing philosophies toward work. It used to be that in most households, when kids reached a certain age—16, say—they were required to take a job, usually doing something unglamorous like busing tables, regardless of what their parents could afford to give them. Now the dominant attitude is that managing the stress of hypercompetitive schools, combined with hours at the SAT tutor, combined with the grueling schedule of after-school activities, adds up to a job in itself, and that working on top of all this is too much. Of course, plenty of families don’t have the luxury of making this choice; for these kids, a job is needed to make up for what their parents can’t afford to give them.

There are no longitudinal studies on the history of allowance in America, but Bodnar suggests that it became a component of the culture in the late forties, when the flush peacetime economy eased memories of the Depression. “It was more of a token in the beginning, not so thought-out,” she says. Back then, kids didn’t really need money, because there wasn’t much to spend it on. Then came the hamburger joints, the record shops, and eventually the omnipresent mall culture. Allowance became a necessity, and parents conceived of it as a way to help kids understand money. But somewhere along the way—as adults came to see their children as their peers, as kids started spending more and with greater savvy—allowance began to seem passé, quaint, a relic of a bygone era. The current situation is one of chaos and improvisation, parents throwing up their arms, hoping for cures to the very problems they’ve created. And the kids? When they’re not dreaming up ways to fleece their parents for a greater allowance, they’re busy working out their own solutions.

The $15,000 Credit-Card Bill Arrives in the Mail . . .
This can’t be right,” the concerned mother huffed, her brow furrowed, lips pursed. “Please tell me this isn’t right.”

Elyse closed her eyes, took a deep breath. In her hands she held her daughter Mary’s credit-card bill, which contained, in that grim little box at the bottom right-hand corner, a figure just south of the annual tuition of the private school Mary attends. (Both mother and daughter asked to be referred to by their middle names.) Elyse was aware that her daughter was a bit “vulnerable to the insane material pull of life in New York,” as she puts it, a pull that Elyse—originally from the Midwest, an Army brat educated in public schools, now a self-made designer who ended up far more successful than she’d ever imagined—finds somewhat upsetting. But this . . . this piece of paper in her hands . . . this was something else entirely. Epic. Ridiculous. Outrageous. What 17-year-old spends $15,000, in just a few weeks? And the bulk of it at clubs and restaurants with names like Marquee and PM? And then, finally, the most sour question of all spiked through Elyse’s mind: Could I really be the parent responsible for this?

“Texas” Hold ’em has become the most popular way to take an allowance and double it, triple it. or watch it disappear entirely.”

It just didn’t make sense. For one, Elyse’s other daughter was growing up to be “a total penny-pincher” who happily received about half the allowance of her friends. And, generally speaking, Elyse has always taken what she considers a reasonable approach to Mary’s finances: She wants to prevent her daughter from feeling alienated without spoiling her—a balancing act that most parents here can relate to. “Money is a constant topic, often one of contention, in our house,” says a father raising two teenage girls in what he refers to as the “nauseating 10128 Zip Code.” “You want to make your kid feel normal, but the problem is that ‘normal’ in New York is never quite normal.” Or, as another parent puts it: “On one hand you want to be strict, but at the same time you don’t want to think of your child sitting there at dinner, nursing a Coke because he can’t afford to eat where his friends want to go.”

And with the cost of New York living always on the rise, parents struggle to convey that money is more than an abstraction. “The discrepancy between my generation and my parents’ is enormous,” says a father who grew up in Stuyvesant Town in the fifties and who now raises two daughters in a middle-class Brooklyn home. “You used to be able to teach a kid the value of a dollar. Now the whole notion of teaching budgets can feel meaningless. The value of money changes so fast that it’s impossible for your kid to have a stable relationship with it.” Parents are also inclined to shield their kids from some of the harsh realities about money, creating some pressures while concealing others. “I give my 15-year-old son $10 a week,” says one mother. “He’s always saying that it’s pretty measly, but what he doesn’t know is that it’s all I can afford.” Among private-school parents, a rarely acknowledged fact is that many of them rely on their own parents to help pay the tuition. “It was quite a realization for my husband and I when we realized we were among the minority shouldering it all ourselves,” says one mother. “Kids pick up on this, too. They start to assume that getting help from mom and dad is a normal part of life.”

The anxiety surrounding the issue became especially evident when I posted a query about allowances on Echo—an Internet community favored by the city’s intelligentsia. The responses were both quick and cutting. Sample exchange:

Echo Parent 1: Our kids will get credit/debit cards only when they can pry them from our cold, dead fingers.

Echo Parent 2: honestly, i don’t see what the difference is between giving a kid cash and giving them a debit card. personally, i think i might prefer the debit card . . . there’ll be a record of the kid’s spending history, which would be useful for the kid to review at the end of the month, too, not just for parents who want to check up on them.

Echo Parent 1: I guess as a geezer, the whole idea freaks me out.

The message boards at urbanbaby.com, a cybercommunity of perfectionistic parents, are often dominated by debate over the Allowance Question as it concerns children barely out of diapers. In one amusing exchange, someone who believes a 7-year-old should get $3 a week—“one to save, one to spend, and one to charity (street musicians, people on the street asking for a handout, or the counter-tip jar at our favorite bakery)”—goes head- to-head with a fellow parent who thinks $7 is the way to go, connected to household work: “We give $7. She has seven chores, some daily, some weekly. But we don’t buy the small stuff anymore. She has to decide what she’ll spend her money on.”


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