Tyler J Layne : Northwestern Mutual - Are Teens Breaking the Bank? : Article: Are Teens Breaking the Bank?

Are Teens Breaking the Bank?

Today's teenagers are breaking the bank. Just three items, designer athletic shoes at $160.00, a concert ticket at $45.00, and the latest computer game at $325.00, will set you back $530.00 in a heart beat.

Exactly when did spending $160.00 on a pair of tennis shoes begin to seem normal?

Give Them Another View
Parents need to help kids take a long look at making money "work" in ways other than purchasing. Instead of spending $500 on passing fancies—shoes that will wear out in a matter of months, a night's entertainment, or a video game that will be overshadowed by the next hot game—take the opportunity to teach your kids the Rule of 72.

The Cool Rule
Show your kids how they can turn $500 into $1,000. Use the Rule of 72. The rule calculates the length of time needed to double your money. You simply divide your rate of return into 72. For example, if you are earning 5% interest, divide 72 by 5. The answer tells you that your money would double in 14.4 years. At an 8% rate of return, $500 would become $1,000 in roughly 9 years. That's the power of compounding.*

Be a Financial Guide
Ask your kids what they could possibly "do without" to fund a savings plan or a bigger, more important purchase in the future. This is a concept you will have to promote. Kids are assaulted regularly by advertisers, and the pressure to have what everybody else has can be intense. Repeat your message regularly, along with the idea that sometimes you have to delay your gratification and save up for purchases.

Make Saving Fun
Your children can learn more about finance and how it applies to their lives on the Northwestern Mutual-sponsored Web site, The Mint. Learn about finances together. You will be spending quality time with your kids and teaching them a lesson needed for the rest of their lives.

Source: Smartcents, Northwestern Mutual®

*This exercise is for illustration purposes only. It does not take into consideration fees, taxes, commissions, etc. and does not represent any specific product or investment.

Before you agree to receive financial planning services, please see complete information and disclosures in The Disclosure Brochure and review the terms of the Northwestern Mutual Wealth Management Company Planning Engagement Agreement. These may be obtained from your Wealth Management Advisor.

Northwestern Mutual Financial Network is the marketing name for the sales and distribution arm of The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM), and its subsidiaries and affiliates. Tyler James Layne is a Representative of Northwestern Mutual Wealth Management Company®, Milwaukee, WI (WMC), a wholly-owned company of NM and limited purpose federal savings bank. WMC is not a broker-dealer or insurance company. All WMC products and services are offered only by properly credentialed Representatives who operate from agency offices of WMC. Representative is an Insurance Agent of NM (life insurance, annuities and disability income insurance), and Northwestern Long Term Care Insurance Company (NLTC), a subsidiary of NM (long-term care insurance), and a Registered Representative of Northwestern Mutual Investment Services, LLC (NMIS), 1111 W Jefferson St Ste 540, Boise, ID 83702-5393, 208-383-0210, a wholly-owned company of NM, registered investment adviser, broker-dealer and member FINRA (www.finra.org) and SIPC. Representative may also be an Investment Adviser Representative of NMIS. NM and The Rigenhagen Financial Group are not broker-dealers, registered investment advisers or federal savings banks. There may be instances when this agent represents insurance companies in addition to NM or its affiliates.

Investment products are not insured by the FDIC, are not deposits or other obligations of, or guaranteed by, NMWMC or its affiliates and are subject to investment risks, including possible loss of the principal amount invested.

The products and services referenced are offered and sold only by appropriately appointed and licensed entities and Network Representatives. Network Representatives and their staff might not represent all entities shown or provide all the services discussed on this Web site. Not all products and services are available in all states.

Tyler James Layne is primarily licensed in Idaho and may be licensed in other states.