Financial crisis: Teens are feeling the pinch too

When Congress first rejected the $700 billion bailout, the Dow Jones industrial average plunged 777 points. Legislators regrouped for another stab at a financial rescue package to restore confidence in the U.S. economy and tried again. This time it was passed. Good idea? That’s still being debated… even by high school students.

Let’s just quickly recap before we divulge: Mortgage giants Fannie Mae and Freddie Mac were nationalized (meaning the government took over the companies), Bear Stearns and Washington Mutual were rescued by JPMorgan Chase, Merrill Lynch was acquired by Bank of America, Lehman Brothers declared bankruptcy, the government took control of insurer American International Group and Wachovia was taken over by Citigroup. Whew! That’s a mouthful. And all this happened over a matter of a few weeks.

What are teens saying?

A recent NJ.com article revealed that schools across the Garden State have put aside their usual textbook lessons to inform students about the financial crisis and its repercussions.

"We teach students about the Great Depression and the stock market crash, but the reality of what they are seeing right now brings the textbook to life," said Chris Jennings, principal of Bloomfield High School.

Sophomores at Newark’s Science Park High submerged themselves in a serious discussions about Washington's $700 billion Wall Street bailout plan. Although reactions varied, the students all realize the significance of what’s happening in the financial capital of the world.

"I don't think we should bail them out. Its just putting money into rich people's pockets," said Janique Sanders. "Whatever happened to life, liberty and the pursuit of happiness? I think the working class should be able to thrive and live in a house and have a good life."

"Why should the taxpayers give money to the rich?" asked Jaime Reynoso. "You know, these people are so rich, it's hilarious."

"The bailout is a bad idea, but it's necessary," Brittney Barnes said. "If we don't do it, the dollar will fall down to zero and we'll have another Great Depression."

How is the crisis affecting young people?

So apparently United States is in pretty bad shape, eh? Well seeing as how the country hasn’t been in such a state since the Great Depression, it’s pretty evident that things can only turn upward from here, right? Let’s take it one step at a time. With the stock market plunging to record lows on a seemingly daily basis and the upcoming election on everyone’s minds, we’re at a bit of a standstill. Think that it doesn’t affect people your age? Think again.

The recession is on the minds of young people across the country — and can you blame them? High school students, notorious for their terrible spending habits, are becoming budgeters, and college students, who let’s face already clutch their purse strings tightly, are getting nervous. Their future in the real

In a recent Conde Nast Portfolio article, teens were asked how the pinch is hurting their pockets. Jennie Lukin, 19, of Albany, New York didn’t think twice when asked about her cut back this past summer. “Shopping. I have enough clothes. At this point it’s definitely more of a want than a need.”

Teens, who are considered “recession-proof” spenders, aren’t coming through for retailers as expected. “Teen spending is very weak,” said Adrienne Tennant a senior analyst at Friedman, Billings, and Ramsey. Teens are usually among the most resilient segment of the economy, but now there’s a shift in their priorities.

Gas prices are too high and it’s eating up their funds. Sure, parents help their kids out with allowances, and then there are those with after school jobs, but filling up a tank of gas so you can drive to school, work or to meet with friends outweighs the price of a pair of new Tory Burch flats.

Retailers across the board have been suffering. Teen-favorite Abercrombie and Fitch saw sales plummet 11% during the summer months, and American Eagle felt a similar squeeze with a 5% drop. But America’s best friend, Wal-Mart, is benefiting from the slump. The company’s sales climbed almost 6% in September with customers using their bucks for the best bargains.

Some designers, like Nicole Miller and Derek Lam, are reacting by shifting their target markets across the pond where money matters aren’t as tight (at least not yet). Europeans and Asians have the money to spend and with our dollar worth a piece of Bazooka Bubble Gum, who could blame them? They have to survive too.

The financial state is apparently maturing minds as well. Recently, 13-year old Staten Islander, Sal Borgognone, turned down a birthday shopping spree from his coed sister, saying, “Save your money. Who knows when you’ll have this much again.” He opted for more practical gifts: soccer cleats and shin guards. And, get this, he wants to go into finance!

So how can teens stay calm in all the madness? Chill out with the spending and be mindful of your money.

Here are some ideas on getting the best out of your time and money:

1. Volunteer. You won’t spend money and you’ll feel rewarded doing it. Just find your something on the DS website and check out what you can do to take action around it. Yes, it’s really that easy. You can also sign up to get custom volunteer opportunities texted directly to your mobile.
2. Try taking a “stay-cations” instead of a vacation. Veg out on school breaks, hang out with friends, read some books, or catch up some Blockbuster rentals!
3. Less Cineplex more Netflix.
4. Get an after school job.
5. Work out at home, those gym memberships are expensive.
6. Go easy on the shopping. But if you just can’t resist, be smart about it. Try bargain retailers like Target and Kohl’s which  spotlight high-end designers like Vera Wang and Proenza Schouler.

Lastly, be thankful. There are people in this world who are suffering far worse than we are here in America. Be happy with what you have and try to grow from there wisely.