Today's fast-spending youth could learn from Depresssion-era savers

Remember the phrase 'money doesn't grow on trees?' It still doesn't.

By , Columnist

The generation gap has long produced both laughs and groans as parents and children have defended their differing attitudes toward clothes, hairstyles, and music.

Now this gap has another dimension – different attitudes about money. Parents who might once have said, "You're wearing that?" now find themselves asking, incredulously, "You paid how much for that?"

Children today spend an astonishing 500 percent more than their parents did at the same age, even adjusting for inflation, according to David Walsh, author of "NO: Why Kids – of All Ages – Need to Hear It and Ways Parents Can Say It." Teenagers alone are expected to spend $160 billion next year, says Teenage Research Unlimited.

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All this big spending starts early. The list of youthful "necessities" is long and expensive: sneakers, jeans, electronic games, cellphones, iPods. Young consumers become masters of "pester power," artfully employing the "nag factor" to wear down harried parents, convincing them – again – to "just say yes."

Not that Mom and Dad are always paragons of economy themselves. A nothing-is-too-good-for-our-children attitude begins at birth. Check out the fleets of $700 strollers vying for space on sidewalks.

And consider the lavish, gift-laden birthday parties being thrown for bewildered 1-year-olds.

One of the best gifts any parent can bestow on a child is respect for money. These days, it's also one of the hardest gifts to give. In a materialistic culture, the ever-present siren song is "Buy, buy!" Or, as Saks Fifth Avenue's new advertising campaign boldly urges, "Want It!"

For every generation, money is becoming an abstraction. Credit cards, debit cards, and electronic transfers are creating a cashless society. There's always more money available, banks assure us. Just increase your line of credit or apply for another credit card. What could be simpler?

"Let the good times roll!" has been a mantra in many circles for years as the stock market has risen and the country has prospered. Now there's a chill in the October air that goes beyond the thermometer. Investors and financial analysts are holding nervous fingers to the Wall Street wind, trying to gauge whether fluctuations of the stock market represent a temporary blip or the start of a recession.

Next week marks the 78th anniversary of Black Tuesday, Oct. 29, 1929, when Wall Street crashed, marking the beginning of the Depression.

But that was long ago, and memories are short. "Depression?" a young generation asks. "Isn't that a mental problem?"

Those of us whose parents and grandparents had firsthand memories of the Depression realized, in listening to their experiences and observing their quiet example, that they knew the value of a dollar. Even decades later, when they no longer needed to scrimp and could easily splurge, many continued to be careful with money. It wasn't a question of being unnecessarily frugal, tight, or miserly. They were simply being prudent. Waste not, want not.

They taught us to turn off lights and water. They paid with cash whenever possible. They stashed carefully saved coins and dollars in the proverbial sugar bowl. And they joined the Christmas club at the bank, diligently setting aside money for the holidays. Go into debt for Christmas? Unthinkable.

These were generations that knew how to distinguish between a want and a need. A youthful request for something frivolous, unnecessary, or unaffordable might elicit a lighthearted response from a parent or grandparent: "Money doesn't grow on trees, you know." End of discussion. Pestering had less power then.

These were also generations that ceremoniously escorted even young children and grandchildren to the bank on a Saturday morning to open a savings account. They helped to give us a sense of achievement as tellers recorded each modest deposit in our passbooks.

Some of those habits and attitudes, born of necessity, remain useful in prosperous times, with or without the threat of an economic downturn.

Already there are modest signs that profligate attitudes might be changing.

As one small step, some parents are promoting efforts to scale back over-the-top birthday parties for children.

Here and there, financial experts are also promoting financial literacy classes. Jump $tart Coalition for Personal Financial Literacy, committed to the financial education of students, finds that many high school graduates can't balance a checkbook. Most also lack basic skills in managing finances involved with earning, spending, and saving.

Given Americans' abysmal savings rate, that education can't begin too soon.

Perhaps the biggest generation gap is the one that exists between Depression-era savers and all the big-spender generations that have followed them. In an age of excess consumption, these older savers could offer useful perspectives. Call their class "Lessons from a Sugar Bowl," and offer it to anyone who wants to spend less and save more.

Quick – seats are going fast.

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