Where do kids get their money?

Gifts (birthdays, holidays, grandparents), allowances (often based on chores done around the house), occasional outside work (babysitting, lawn mowing, snow shoveling), part-time jobs, student loans.

Most parents willingly work hard and sacrifice for their kids. Often, however, the parents are caught between the rising costs of necessities and the increasing wants of their children: desires which are stimulated by advertising specifically targeted at kids, dependents, relying on OPM for the basics.

Money earned by their parents must go first to the costly necessities of food, clothing, housing (including electricity, gas, water, garbage), transportation (including car payments, insurance, repairs, gas), medical care, insurance, school costs, credit card debts, and taxes. Economists point out that there's a subtle shift going on today, which very few people recognize, that many people feel less secure even as their prosperity seemingly increases, a "paradox of prosperity."

Where do kids spend their money?

Most of their purchases are of consumables, with repeat demand: entertainments such as movies, videogames, music CDs, DVDs, concerts, toys, games, collectibles (baseball cards, Yu-Gi-Oh!); foods such as snacks, candy, colas, fast foods (pizza, burgers); cosmetics; fads and fashion clothes.

Most of these are cheap within a kid's purchasing power from allowances and small gifts. Phrases from earlier eras, such as "penny candy" and "nickle-grabbers" and "nickle-and-dimed" seem quaint and obsolete, now that CDs are $20, 1st run movies about $10, videogames about $40-$50, collectibles and trading cards, $7-$10 a pack.

Portable music is a good example: Apple's iPod is a miracle of technology and is relatively cheap ($200), within range of savings or a gift. But, the seemingly-low cost of adding songs one at a time (.99) can be this generation's "dollar grabbers." Most kids don't see this as a "luxury" item, a fad driven by fashion, but it is, especially to elders who can remember their own collections of 78s, 45s, 33s, 8-Tracks, cassettes, CDs, and DVDs -- now gathering dust.

IM and text messages by teenagers are another huge expense in which the cost is "hidden"-- usually paid by parents who are forced into buying higher-priced "family calling plans" or unlimited plans. "For a teenager to send thousands of text messages a month is not unusual," said John Johnson, a spokesman for Verizon Wireless. Last month the company introduced an unlimited texting plan because even its highest bundle of free text messages -- 5,000 a month -- wasn't enough.

Obviously, older teens and young adults will spend more than pre-schoolers and early schoolers simply because they have more freedom, access, and social activities.

Incoming college freshmen in 2004 spent an average of $1,200 for "school supplies" including dorm decorations, textbooks, electronics, clothing and accesories: a $25 billion market according to the National Retail Federation.

Obvious also is the great range of individual situations (by age, gender, personality, and parental wealth). But, the bottom line is that such dependents -- from tots to boomerangs -- have a lot of disposable income.

Advertisers view kids as a three-way market:

(1) their own spending money ("disposable income," "discretionary income"), most of this for immediate gratification (candy, snacks, movies, affordable toys and games)

(2) the "pester power" of kids asking their parents to buy something for them (usually more expensive games or brand name clothes); or influencing the selection of household products (foods, electronics, vacations);

(3) the long-term development of desires, brand awareness ("When I grow up I'm going to get a ...") and brand loyalty (when kids grow up, they'll know and often buy the same household products as their parents).

see: McNeal, in Kids as Customers

In Japan, for example, "Shibuya girls" -- the young trendy fashion-setters -- have a lot of money to spend: "on average the girls have as much disposable income as salarymen, the male office workers who spend much of their incomes on home and family. Often the only offspring in their families, the teens have numerous pockets to raid, not only those of their parents but also of their grandparents and aunts and uncles, who in low-birthrate Japan may well not have children of their own. As a result ... many girls as young as 11 have a monthly disposable income of as much as 30,000 yen (about $260)."

In China ,for example, a new and growing problem today is teen age anxiety about not being able to get everything they want, to get all the goods promising success and happiness. Mark Magnier reports: "Young people looking for some way to balance the materialism find little comfort from a society that defines success in dollar signs, with few nods to personal contentment, scholarship or ethical behavior. Religion, a counterweight in many other societies, is discouraged by a Communist Party wary of its potential to galvanize political opposition."

In The $100 Billion Allowance: Accessing the Global Teen Market by Elissa Moses, this advertising researcher surveyed the buying habits of teen agers worldwide. According to her, American middle-class teen agers rank 6th in individual spending (Norway is #1, Sweden #2), but, in aggregate, [America] spends the most ($27 billion). Here, India is #2 at $16 billion, Brazil #3 at $15 billion.

In poorer countries, much of this spending goes for inexpensive sweets and snacks in contrast to richer countries where more expensive games and clothes are bought. In America, most of this spending money, discretionary income, comes from allowances, birthday and holiday gifts, and from part-time minimum-wage jobs.