Jane Skinner from Fox News interviewed me today to talk about how smart kids really are with money! to see video click the link Lori Mackey with Jane Skinner - Kids & Money
By Megan Hupp
Posted: Apr. 15, 2009
Parents looking for the recession's silver lining, take heart. Your kids are savvier about money than you are, according to a Northwestern Mutual Foundation poll released Wednesday.
The foundation, the charitable arm of Northwestern Mutual Life Insurance Co., surveyed 1,600 kids and adults via TheMint.org, a financial literacy Web site, between Jan. 8 and April 4. The survey found that respondents 17 and younger are more likely to save their money than adults 30 years and older. Young people are also less likely to charge credit cards with purchases they can't afford.
When asked, "If you spotted a great item at the mall that you couldn't afford right now, what would you do?" 57% of respondents 17 and younger said they would "put money aside each month until I have the full amount to buy it."
Only 6% said they would charge the item to a credit card.
Asked the same question, 42% of respondents ages 30 to 45 and 41% of respondents ages 46 to 59 said they would save for the item. Of the 30-to-45 group, 14% said they would purchase the item with a credit card while 10% of the older group said the same.
The poll is part of a series of surveys on kids and money management. When asked how it feels to borrow money or charge a credit card, 14% of kids said they feel extremely nervous about debt. Only 6% of respondents over 30 felt the same.
The data confirms historical evidence from the Great Depression and World War II that hard times breed more careful consumers.
"Kids today could become the most money-smart generation since the 1940s," said Meridee Maynard, financial literacy expert and senior vice president for Northwestern Mutual, in a statement.
During the 1940s, the personal savings rate was around 25% in the United States. But between 2005 and 2008, the rate was about 1% - and in some quarters dropped into negative numbers, meaning Americans spent more than they saved. By January of this year, the savings rate had risen to 5%.
Mark Schug, professor emeritus at the University of Wisconsin-Milwaukee, said the savings rate isn't a foolproof measure of what's in Americans' savings accounts. But kids, he said, do mimic the saving and spending habits of their parents.
"When they see their parents act in a more frugal way, that's influential," said Schug, who is also the former director for UWM's Center for Economic Education.
Adult problems like job loss or salary freezes affect the entire household, Schug said, and children are often acutely aware of their parents' financial situations. Parents should talk frankly to their kids about spending, investing, saving and charitable giving.
Historically, kids learned such lessons in school. In today's economy, parents should expect a push to bring back financial education, he said.
"Parents can talk to their school about a place in math or social studies curriculum where lessons on basic economics and personal finance could be included," Schug said.
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