... But They May Have to Learn Some Hard Lessons First

During an economics lesson on budgeting, opportunity cost, and decisionmaking, the high-school seniors in my class were tallying the cost of next month's Winter Fantasy Dance. The exercise said a lot about the pressure on kids to spend.

The girls said they must have a new dress and shoes. They must get their nails and hair done at a salon. The boys said they must rent tuxedos. Most said they must go to the dance in a limo. They also must come up with money for dinner, corsages, boutonnieres, and the tickets to the dance itself. While at the dance, they must have professional photographs taken. The cost can easily top $400 per couple - and this isn't even a prom.

When I was in high school, our prom was held in the high school gym, which we decorated ourselves. My mom made my prom dress, I fixed my own hair, and the photographs were taken with instamatic cameras. I wonder: After spending so much money, do today's students have any more fun than I did?

And how are they going to pay for all this? Many were depending on help from parents. Some said they were working part-time and had their own money. Others had no idea how they would pay. One student said, "I'll use my parents credit card, and they won't know until it's too late." Another said, "Parents ... shouldn't have kids unless they're willing to pay for all their activities."

Even students not attending these functions are bombarded with the pressure to spend money. Last Friday, when school let out for the winter holidays, kids came to school loaded down with packages for teachers and friends. Students spend $60 to $100 on gifts of jewelry, perfume, CDs, stuffed animals, clothing. Some spend their entire paychecks without a thought toward saving for college or the future.

Frequently, during class discussions, I hear students talking about "living on my own and owning a nice car." When I ask how they'll pay for these, the answer is, "I'll get a job." And what's a good paying job? Usually I hear "$10-$15 an hour." They have the notion that they'll instantly be making $20,000-$30,000 a year - and this will be enough to meet all their needs and their wants.

Economic lessons can help correct this kind of naivet - can help students make wise choices when faced with decisions that will affect them for the rest of their lives.

Of course, there are those who see their economic life through "working eyes." A former student came back to visit. As a senior, he couldn't wait to graduate, get a job, buy a car, and live on his own.

"So how is it out in the real world, living away from home?" He smiled and said, "I'm still living at home, Mrs. Ferron. I work full time and can't afford an apartment if I want to keep up with my car expenses. It's not as easy out there as I thought.... I decided to go to the community college part-time while I work, or I will never get a job that pays enough to have a good life...."

When I related this conversation to one of my senior classes, a conscientious girl raised her hand. "Mrs. Ferron," she said, "if you don't work, you don't know the value of money. My parents used to give me $20, and I'd spend it without thinking much about what I was buying. Now that I'm working, I value money more. That $20 represents five hours of hard work, so I look at purchases differently. I ask myself, 'Do I really need this?' "

Another former student recently told me that she had purchased a new car with cash. She also had begun saving for retirement and started her first IRA. She was attending college part-time and working full-time as a waitress.

When I told her how impressed I was, she said, "Thanks for the lessons in economics class." Perhaps future generations will learn these lessons from both classroom work and the tougher school of experience.

* Julie Ferron teaches social studies at Redondo Union High School in Redondo Beach, Calif.

What Do They Know?

Consumer Reports wanted to find out what kids know and don't know about credit, interest, and savings. It surveyed 689 12-year-olds from various economic backgrounds. Here are some of the findings:

* Only 72 percent know credit cards are a form of borrowing.

* Four in 10 don't know that banks charge interest on loans.

* Nearly all know that a bank loan is a form of borrowing. But one-third can't calculate simple interest.

* Thirty-eight percent don't know that a boom box would cost more if they paid by credit-card installments than if they paid cash.

- Consumer Reports