Page last updated at 22:19 GMT, Tuesday, 4 August 2009 23:19 UK

Teenage spenders struggle to learn

By Lucy Hooker
Business reporter, BBC World Service

Teens at bank
The credit boom generation have not cut back on spending

Connor is 17 years old and in full-time education.

But, thanks to a part-time job, he still has around £50 ($82) a week to spend on travel, clothes, food and going out with his friends.

"When I get paid it all tends to go in the first week," he says.

"I like to go out with my friends. I'm a bit of a generous fool when I get paid."

Connor is fairly typical. An impromptu survey of his classmates at Oriel Highschool in Crawley, West Sussex shows they have an average of more than £35 spending money a week.

Today's teenagers enjoy a lifestyle undreamt of by previous generations.

"Having a life", in teen parlance, includes weekly trips to the cinema, bowling alley, restaurants and clubs, shopping for new clothes, buying music and mobile phones, and for many over 17, owning their own car.

And it all costs money.

Recession bites

But now, as the recession-hit bank of mum and dad withdraws financial support, pocket money is beginning to dry up.

Courtney
If there's something I want, I'll buy it
Courtney

Part-time jobs are harder to come by and plans for future careers are looking less secure.

So far it seems teenagers have not cut back on their shopping.

Teen-targeted retailers such as Primark, New Look, H&M, Asos and Hot Topic are all weathering the recession better than rivals aimed at an older demographic.

"If there's something I want, I'll buy it," says Connor's classmate, Courtney.

She admits she has a bit of a spending habit.

"Its just those little novelty items that you have to buy," she says.

"Its just impulse goods and I'm just not very good at saying no."

But as they enter adulthood, this generation will have to reform their spending habits if they want to avoid making the same mistakes as their parents, taking on unaffordable loans and running up credit card bills.

Financial crash course

Courtney and Connor's school has introduced them to some new concepts in money management as part of a financial crash course.

Connor
Connor, 17, spends around 50 a week on travel, clothes, food and going out

Because in less than a year, they and their classmates will be dropped straight into the adult financial world, eligible for bank accounts, loans and credit cards.

And the financial habits learned at their parent's knee may be hard to shake off.

"We're very, very consumerist," says Paris, another of Oriel High's lower sixth.

"We know how to spend money. If we could have a credit card, we would spend money on it."

"So its essential we're getting taught now how to manage our money because otherwise we will get into more trouble than the generation above us."

Courtney agrees.

"You see the struggle your parents go through," she says.

"You hear all the time, 'it's the credit crunch and it seems so scary', but it is manageable and the whole credit crunch has opened up the idea of managing your money to teenagers."

"You can't avoid it. That and the struggle we see our parents go through is enough to ward us off."

Connor shares their concerns.

"I'm aware a credit card is a bad idea, but I am tempted," he says.

"I've seen the hazards of borrowing money and being in debt, but at the same time I've seen how my parents have dealt with it, so it hasn't put me off borrowing."

Time to tighten belts

Most economists agree.

Teens in Crawley
Young Britons need to stop borrowing and start saving, experts say

This generation of young Britons will need to stop borrowing and start saving if the economy is to get back on an even keel.

Alison Terry, who works for the financial education charity Personal Financial Education Group, says another part of the problem is that they do not have good money habits modelled by their parents.

"One of things that's so different about this generation is that all their money transactions are invisible," she says.

"When I was young I had a mother who was putting different bits of money in tins and I could see money was being set aside for different purposes.

"Even if that sort of thing is going on in their families, it is invisible to them."

Ms Terry has been teaching these sixth formers to look a bit more closely at how they spend their money and how to budget for when they are no longer so flush with cash.

Skills for recessionary times

But if the road ahead seems rocky it is worth remembering that this generation are probably also the most bargain-savvy there has ever been.

John Marsh is a teacher, part-time fireman and father of four. His children have all proved a useful source of financial advice to the family over the years.

"They've definitely saved us money online, several hundred pounds over the last few years I would think," he says.

And Mr Marsh is not alone.

According to a survey by pollsters ICM, almost half of parents ask their teenagers for advice when it comes to minor financial decision such as which mobile phone contract to sign up for, which laptop to buy or booking a cheap holiday online.

"Whenever we buy anything like that we ask them," says Mr Marsh.

"Recently my wife bought a netbook computer, so she talked to the girls about the best one to get.

"Then they looked at price. They spent hours searching on the internet for the right value. They're very good at that kind of stuff."



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