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HSFPP Update # 187—Do You Know What It Costs to Raise a Teenager?

Message from Bob: I hope all of you have had a relaxing summer and are ready for a new year with the High School Financial Planning Program. This has been a very busy summer for us in revising the Kentucky HSFPP Web site to reflect the National Endowment for Financial Education’s (NEFE’s) changes in their award-winning High School Financial Planning Program.

The changes to our Web site and updates would not have been possible if not for University of Kentucky graduate students who took my summer class, for staff assistant Alex Lesueur, and Webmaster Brian Fitzpatrick. We still have more changes to make, but I’m sure you will appreciate those we have made so far, including noting which Kentucky Academic Expectations are addressed in each update.

 

Message from Jennifer Hunter, graduate student: This week’s article In the New$... deals with the “cost” of a teenager. I hope this light-hearted approach will help teens see the importance of budgeting and spending their money wisely.

 

To New Subscribers:

We design our biweekly updates so you can copy and paste each week’s article In the New$..., student activity, and questions into a word-processing file to use with teens. If you have trouble doing this from the e-mail, you can always go to our Web site. An archive of updates, including the most recent, is available at http://www.ca.uky.edu/fcs/hsfp/UPDATE.HTM. As long as proper credit is given to us and to our sources, please feel free to copy and paste material from any of these. See below for this week’s article In the New$....

Those of you who read the updates from our Web site, but are not on the listserv, might want to sign up now, as we began last February sending a biweekly video lesson for the weeks that we do not send an update. This will allow us to include Web links to news stories on video that we hope will engage students in a new way and allow us to meet KERA’s objective for incorporating technology in the classroom. Our video lessons will be sent to those on our listserv only and will not appear on our Web site; so, if you want to receive these lessons, sign up at http://www.ca.uky.edu/fcs/HSFP/response.htm.

 

Note to Educators in Kentucky:

This week’s update is in line with the following academic expectations:

Academic Expectation 2.18
Students understand economic principles and are able to make economic decisions that have consequences in daily living.
Unit 2-6

Academic Expectation 2.30
Students evaluate consumer products and services and make effective consumer decisions.
Unit 5

 

Educator Notes to Discussion Section:

The following assignments or exercises may be found in the NEFE High School Financial Planning Student Workbook or at the NEFE portal at http://hsfpp.nefe.org/students/index2.cfm?deptid=15.

1.) Help teens understand where their money goes. Challenge teens to complete the “Think Fast!” exercise on Page 8 of the student workbook. Think Fast! How much money did you spend last week? Think about it and write down your best guess of the total amount.

2.) Ask teens to complete Assignment 1-3: “My Personal Spending Log,” on Page 8 of the student workbook. To carry this idea further, you can make additional copies of the spending log to help the students track their expenses for more than one week.

3.) Discuss “Did You Know?” on Page 9 to help the teens understand how others spend their money. Ask them to list the top five things they buy with their money. What percent of their money do they spend on each item? Ask them to create a pie chart displaying their responses.

 

Web Site Pick of the Week:

Challenge teens to make a budget for all of their expenses. The Internet is a great resource for sample budgets. Begin your search at http://www.capitateyourkids.com/Budgeting_for_Teens.htm, “Budgeting Methods for Teens.”

 

In the News…Give Your Parents a Break. Do You Know What It Costs to Raise a Teenager?

by Jennifer Hunter, Ph.D. student majoring in Family Finance, Department of Family Studies, University of Kentucky

Have your parents ever said you are eating them out of house and home? When my brother and I were still living with my parents, one of my mom’s favorite statements was, “You and your brother are breaking us up.” She was referring to the cost of raising two children. Apparently my family was not alone in feeling the financial pinch of raising children. As cited in a recent MSN Money article, “Raising Your $290,000 Baby,” the U.S. Department of Agriculture conducted a survey of 5,000 households, four times a year, finding that, from birth to age 17, many families will spend $289,380 per child. This number varies based on total family income and number of children in a household, but lower-income households also spend a great deal on children.

As teens you are costing your parents the most you ever have, including when you were in diapers and eating baby food. It is estimated that, from ages 15 to 17, the cost of a child is $16,970 a year. So, where does the money go? Once again, it depends on total family income, but the figures are staggering regardless of income. For families making more than $74,900 per year, $5,540 is allocated to housing, $2,850 to food, $2,730 to transportation, $940 to clothes, $1,080 to healthcare, $2,010 to school-related expenses, and $1,820 to miscellaneous. Some of you may find these costs high, but, for others, $940 a year would not begin to pay for their clothes. That is an average clothing budget of $78 per month. How much did you spend on clothes during your last trip to the mall?

Of course your parents love you and it is part of their job as parents to get you through financially until Age 18, but there are some things you can do to help. Let’s look at each category individually for ways to cut expenses.

Housing – Many teens like to redecorate their rooms for a more “adult” feel. If you want a new look for your room, shop local consignment and vintage furniture shops; and don’t forget garage and estate sales. They provide an opportunity to get something unique at great savings. And, if you are saving your parents money, they may be more likely to let you express yourself.

Food – No doubt, teens can eat a lot. Remember that eating out adds up, even with fast food. A McDonald’s value meal for lunch five days a week would cost you nearly $30. Pack your lunch or eat at home during the week and reserve eating out for the weekend, as social outings.

Transportation – Do we even need to talk about cars? Realize that a new car for a teenager is out of the question for most families. Be realistic, find a reliable used car that will meet your needs, or, even better, ride with siblings or friends to school and social events. You can also help your parents with insurance by making good grades and taking a driver’s education course.

Clothes – Most teens consider their wardrobe important, but you can save money and still get nice clothes. Try shopping for name brands at local consignment stores and look also for savings online. You can often find new clothes at consignment shops, with the tags still on. And, once you are tired of your gently used clothes, you can resell them at the same consignment shop, giving you a little money for more clothes. Consider this part of your effort to reduce, reuse, and recycle.

Health Care – Unfortunately, teens cannot do much to reduce health care costs. Families typically pay most of their health care costs in premiums for health insurance. Still, making an effort to stay healthy—eating right, exercising, and getting enough sleep—helps reduce what your parents have to pay for doctor co-pays and prescriptions.

School – This is another category for which you will not be able to cut much of the cost. Out-of-district fees, band fees, and classroom supplies all cost money, whatever you do. You can do without name brands for supplies, but don’t miss out on extracurricular opportunities just because they cost money. Try to cut costs elsewhere.

Miscellaneous – This includes entertainment, personal-care items, books, magazines, etc.  This is where a teenager’s allowance or part-time job should come into play. Budget your own money so that it will go further and don’t ask your parents for spending money every time a new movie or video game comes out.

Remember that the idea of budgeting is to know where you are spending your money and to make every dollar count. Becoming budget conscious will help put more cash in your wallet, as well as your parents’. You might even strike a deal with your parents; every dollar you consciously save them now, they could put into your college fund. You will definitely need the money then.

Reference: “Raising Your $290,000 Baby,” MSN Money, August 10, 2007. http://articles.moneycentral.msn.com/CollegeAndFamily/RaiseKids/RaisingYour290000Baby.aspx

 

Discussion Questions:

1.) Where does your money go? Complete the “Think Fast!” exercise on Page 8 of your student workbook. Think Fast! How much money did you spend last week? Think about it and write down your best guess.

 

2.) Complete Assignment 1-3: “My Personal Spending Log,” on Page 8 of the student workbook. To track additional expenses, ask your instructor for more copies of the spending log, or copy it into your notebook.

 

3.) Discuss “Did You Know?” on Page 9 of your student workbook. List the Top 5 items you buy with your money. What percent of your money do you spend on each item? Create a pie chart displaying your responses.

 

Kentucky High School Financial Planning Program

http://www.ca.uky.edu/fcs/hsfp

The purpose of the HSFPP financial updates, video lessons, and Web site is to assist county Extension agents, credit union educators, high school teachers, and parents who home school their teenagers so that they may improve the economic well-being of our teenagers; and also to show educators how the HSFPP, updates, and video lessons meet Kentucky core concepts. The Web site, updates, and video lessons are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators. The list of core concepts and order form for free program materials including the student guide and instructors manual can be found on the Kentucky HSFPP home page.

If you are not already on our listserv:

The video lessons are available only to members of our listserv and will not be posted to the HSFPP Web site because of the timeliness of the information. If you would like to receive our video lessons, which are sent to our listserv biweekly, on alternate weeks from these updates, please sign up at the following page of our Web site: http://www.ca.uky.edu/fcs/HSFP/response.htm.