NEW YORK (CNNfn) - When high school senior Ross Treyz of Brooklyn, N.Y., isn't babysitting part-time or blasting tunes on his Walkman, he dabbles in the stock market buying AT&T and pharmaceutical stocks.|
Thanks to parents who introduced him to their broker, 17-year-old Ross is saving some money on the side for the future.
"If it weren't for them, I'd be putting my money under a mattress," he said.
Ross, like most of his peers who make up Generation Y, is working harder and spending more money. And financial planners say it's not too early for parents to get them into the habit of saving more. Even though retirement seems light years away to most kids, the sooner they get started the better off they'll be down the road.
The ABCs of Gen Y
The 60 million kids who make up Generation Y are roughly between five and 20 years old, according to Visionary Resources Inc., an online publishing company that tracks consumer trends. Those at the older end of the group who remember watching the animated ThunderCats and playing Sega are now carrying cell phones and beepers, and accessing their e-mail accounts at school.
But Generation Y is more concerned about money than their older counterparts known as Generation X, said John Jackson, executive vice president at Visionary.
"They know what stock options are," Jackson said. "They work more and they're concerned about money, but not necessarily putting it away for a rainy day."
Teenagers today are working 17 hours a week on average, studies show. GenXers, by comparison, were working only eight to 10 hours a week during their teen years.
Sari Caine, a 17-year-old high school senior, holds three jobs after school and on weekends, including teaching a chess class. Budgeting the money she earns plus a small allowance is a juggling act of paying for movies, food, and clothes. Retirement planning doesn't even factor in at this stage of the game.
"I have a debit card but I leave it at home so I don't (over)use it," she said.
When not talking about the latest fashion, hot new movie star or sex,
Generation Y raps about money, but it's often in the context of not having enough.
"Usually it's: 'I have $2 in my wallet and I need $25 by Friday' " to go shopping and buy food, Caine said.
Kids today are learning about long-term saving from their parents, school, books, or TV, according to Yankelovich Market Research. Sixty-six percent of kids between nine and 17 discuss with their parents how to save money.
More startling though are the studies that show 34 percent of kids have no one teaching them long-term savings strategies.
Stephen Kaye, 42, a Watchung, N.J., certified financial planner and father of two sons, Jared, 16, and Bret, 13, says children often don't know what questions to ask. So it's up to you to lead them in the right direction.
"As a parent, I'm disappointed that I'm not seeing the kids any better educated," Kaye said. "They're not teaching any of those things at younger ages."
Many clients are interested in introducing their kids to financial planning, "but kids are still kids and I haven't seen them getting excited about it," he said.
Teach your children well
So how can you make dropping coins in the piggy bank and watching a savings account grow interesting and rewarding to your kids?
Introduce your kids to your broker. Bring your teenager along to a financial planning session to learn the financial jargon and get more comfortable talking about the market.
Gift to minors account. Kaye opened a mutual fund account for his son Jared when he turned 14 with the goal of using the money to purchase a new car in a few years. Together, they review the quarterly statements so Jared can learn about dividends, asset allocation and losses.
Encouraging his son to take an active role in long-term savings, Kaye told him: "If you don't want to get involved and don't care, and have a mediocre attitude, you'll have mediocre returns and then you'll have a mediocre car."
Matching funds. Similar to a 401(k) account, you can offer to match your child's contributions to a savings account or mutual fund plan. Kaye says this is a good incentive in preparing him for an employer-sponsored plan, which often matches 3 to 5 percent of the contribution.
Let them make mistakes. Teens just learning about the stock market have known only a bull run and astronomical returns.
"If they've been investing for only a few years and haven't been in during a recession or deflation, they have very skewed perspectives of the market," Kaye said. "Let them learn the fundamentals and make certain mistakes now when the consequences are smaller."
The 'golden' rule. Grandparents who are already in their retirement years can provide teens with incentive to save. And studies show that grandparents are often a source of money. Laura Hankin Lewin, associate director with Yankelovich, said grandparents often give kids money to save or invest in education.
Gen Ys realize that, unlike their grandparents and maybe even their parents, they probably won't be working for the same company most of their lives.
Caine, for example, plans on studying to be an actor and writer after graduating this spring, so retirement isn't on her mind. "I plan on writing into my 70s," she said.
And while her friend Treyz has a savings plan, his long-term nest egg is going toward college, which he plans to attend in the fall.
"I wouldn't use the word disillusionment for the Y group," Jackson said. "The Ys are not bitter -- but they're not saving for retirement."
-- Click here to send email about this story to Staff Writer Jennifer Karchmer.