Even if parents try to shield their children from their money worries, widespread media coverage means that many kids and teens are aware their families are facing increasing financial pressures.
Commenting on the impact the cost of living is having on US youth, Dean Brauer, co-founder and US President of GoHenry says: “Many parents around the country are dealing with increased energy bills, food costs, and other essential items. Children are very perceptive and this research confirms that kids and teens aren’t immune to the pressures being felt by the squeeze on the economy.”
Talking to kids about the cost of living
Family discussions about expensive bills, rising food costs and cutting back on essentials are already causing concern among young people. More than seven out of ten kids and teens (71%) say they are worried about the cost of living crisis having heard about it at home. Almost two-thirds (62%) of kids are concerned about the rising price of electricity and a quarter (25%) of kids would offer their allowance to pay for the family grocery shopping.
Our research shows that nearly half of kids aged 6-18 (47%) have noticed their parents or carers are more concerned about money than usual. Many parents are now finding ways to explain to their children that there will be fewer treats like takeouts, days trips, and vacations than they are used to.
Prioritising financial education
While money issues can be a daunting subject to approach with kids, the current crisis provides a good opportunity to start conversations around money skills, budgeting, and saving.
Dean Brauer, co-founder and US President of GoHenry says: “Rather than shielding kids, get them involved with small day-to-day decisions like checking receipts after your grocery shop or shopping around for better deals. The more you can teach your kids about money and help them to understand the wider cost of living situation, the less worried—and more future-proof—they will be.”
Surprisingly, our research shows that kids’ main response to the cost of living crisis is to look for ways to help—and that includes children as young as eight:
- 25% of kids say they’d be happy to use their allowance to contribute to the family grocery shopping.
- Nearly a third (32%) say they’d be happy to go without new toys or other treats for a month to help their family afford essentials like food and electricity.
- The number of children spending in supermarkets has increased by 6% in 2022 vs the same period last year, suggesting kids are already starting to help out with the cost of household items.
- Nearly half (44%) of kids and teens surveyed either have a part-time job or are looking for one, to help their family earn extra money; with the number rising to 70% for 17-year-olds.
Finding ways to save
Families are cutting back, yet our data shows that weekly allowances have increased by 9% this year. Parents may be shelling out more each week to offset inflation and rising costs, but this doesn’t mean kids are spending more.
Most are becoming savvier shoppers, spending less on ‘non-essentials’ like toys (-13%), gaming (-15%) and food delivery (-8%). They’re also shopping more sustainably. Despite a decline in the amount of money spent on fashion generally, the average spend on Depop has risen by 124%.
As well as spending less frivolously, young people are saving more. Monthly savings have increased by 11% (from $19.54 in the first half of 2021 to $21.60 during the same period of 2022). Kids are also becoming more resourceful, finding ways to boost their allowance by doing extra, paid chores.
Building money skills
While household changes can be unsettling for kids, keeping the focus on building money skills can really help them to navigate the cost of living crisis – and set them up for a lifetime of good financial decisions.
Dean Brauer says: “As already proven during times of crisis like the pandemic, Generation Alpha and Gen-Z are again finding ways to be resilient with their finances. Giving and saving have both increased during the first half of this year and kids are shopping more sustainably. These positive changes in financial behavior will prove useful for America’s young people as the cost of living continues to rise.”
So make sure you give your kids plenty of opportunities to manage their allowance, along with any money they earn. Help them make good financial decisions around budgeting, spending, and saving. Try asking for their input in helping make your household money-efficient. You may be surprised at what they suggest!
- GoHenry internal data is based on 55,619 US GoHenry members active between 1 June 2021 and 30 June 2022.
- The research, commissioned by GoHenry, was conducted by Censuswide between September 9th-14th, 2022.
- A total of 2,002 US children and teenagers aged 6-18 years old.
- Censuswide abides by and employs members of the Market Research Society which is based on the ESOMAR principles.
- Any reference to ‘worried’ is combining the two options ‘slightly worried’ and ‘very worried’.