The average teenager spends $2,600 per year. That’s 42 million teens in America spending their money on a variety of products. Teenagers are smart and they’re learning from the struggles of those that came before them. With this in mind, we can see they’re opening their financial horizons by both earning and saving earlier in their lives. However, this doesn’t mean that they’re completely frugal.
These digital natives like things fast and are sensitive to authenticity. These values make them quick to drop brands if they provide slow service or unethical practices. They love food and have a taste for higher quality products as long as they’re getting the best value. All of the intricacies in teenage spending habits make this demographic an important group to watch.
2020 is a big year for teens and we’ll be diving into how they earn and spend money in addition to their goals and fears.
What Do Teenagers Buy?
Food dominates as a top spending priority for teenagers as they continue to spend more in this category each year. Chick-fil-A overtook Starbucks as the top restaurant for teenagers. Starbucks’ drop could be attributed to their increasingly slower lines thanks to the introduction of mobile orders and the subsequent service slowdown. Teens are particularly sensitive to slow service since they’ve grown up in a completely digital landscape.
Clothing, on the other hand, has seen a decline in spending from teenagers. Streetwear brands like Supreme are declining in popularity in addition to “preppy” brands like Polo and Vineyard Vines. Teens are showing more interest in European luxury brands like Off-White.
Top Brands for Teenagers:
- Clothing Brand: Nike
- Handbag Brand: Michael Kors
- Footwear Brand: Nike
- Shopping Website: Amazon
- Beauty Destination: Ulta
- Cosmetic Brand: Tarte
Teens know what types of brands they like and what they like to buy. You can get a closer look at teenage buying preferences below.
- Food is the highest spending priority for teenage boys. (Source: Piper Jaffray)
- 80 percent of teens say they get their beauty tips from influencers. (Source: Piper Jaffray)
- Spending on video games increased the most among teenagers at 14 percent in 2019. (Source: Piper Jaffray)
- 69 percent of boys ages 9–17 are beauty product users. (Source: Mintel)
- 30 percent of teens pay for their own entertainment entirely by themselves. (Source: TD Ameritrade)
- 22 percent of teens pay for their own clothing entirely by themselves. (Source: TD Ameritrade)
- 31 percent of teens who save are saving for new tech like a cell phone or a laptop. (Source: TD Ameritrade)
- 1 in 5 teens pay for their own transportation all by themselves. (Source: TD Ameritrade)
- 50 percent of teens prefer Amazon as their top shopping website. (Source: Piper Jaffray)
Where Do Teens Get Their Money?
Teenagers earn money through a mix of gifts, allowance and jobs. Although spending power isn’t as high in comparison to other groups, teens still hold a significant amount of spending power. Studies also show that the teens of today are prepared to earn when they enter college and have multiple streams of income. This includes internships and ventures in the gig economy. Learn just exactly how teens get their money with these stats below.
- 64 percent of teens depend on gifts for spending money. (Source: Junior Achievement)
- 32 percent receive allowances for doing chores. (Source: Junior Achievement)
- 22 percent of teens earned money by working a job. (Source: Junior Achievement)
- On average, teens have their first job at age 14. (Source: TD Ameritrade)
- 50 percent of teens who work outside of the home each earn an average of $465. (Source: TD Ameritrade)
- 47 percent of teens in college or those expecting to go to college currently or plan to work in the gig economy. (Source: TD Ameritrade)
- 33 percent of teens in college or expecting to go to college currently or plan to work a paid internship all year round. (Source: TD Ameritrade)
Teenage Financial Goals and Expectations
Even at a young age, teenagers are keen on financial goals and have high expectations for the future. Many believe that they’ll reach milestones like owning a home and paying off their student loans in their 30s. In addition, many teens are already saving money for both small purchases (like cell phones) and large expenses (like college). Their parents are likely most responsible for this savviness since many teens rely on their parents for financial advice.
- 56 percent of teens have started saving money. (Source: TD Ameritrade)
- 60 percent of teens learned the basics of finance from parents/guardians. (Source: TD Ameritrade)
- Of the teens who report putting money away into their savings, 33 percent of them are saving $20 or less a month. (Source: TD Ameritrade)
- 41 percent of teens are saving for their education. (Source: TD Ameritrade)
- 35 percent of teens think they’ll have $100,000 in savings by age 30. (Source: Junior Achievement)
- 2 out of 3 teens believe they’ll own a home by age 30. (Source: Junior Achievement)
- 43 percent of teens think they’ll pay off student loans by age 30. (Source: Junior Achievement)
- 8 out of 10 teenagers describe themselves as responsible with their money. (Source: FONA)
Teenage Financial Concerns
Teens have heard the news about their millennial counterparts living at home after college, so many of their concerns include not being able to live on their own and not being able to pay for college. This is reflected in the amount of money they’re saving and how early they’re thinking about their finances.
- 45 percent of teens are concerned about not being able to live on their own. (Source: Junior Achievement)
- 47 percent of teens are concerned with paying for college. (Source: Junior Achievement)
- 40 percent of teens are concerned with finding a fulfilling, well-paying job. (Source: Junior Achievement)
Teenagers today are setting themselves up as a financially strong generation. Continued credit education is crucial for these teens as they get older and start building their credit. All of the decisions teens make at this young age make them all the more important to watch as they mature into adulthood and make bigger financial decisions. In the meantime, it’s important that these teens practice good financial hygiene like regularly reading their credit report and reviewing their bank statements for discrepancies.