While the jury is out on how today’s teens will impact the world at large, their buying power is already making an impact.
The average teen spends $2,600 a year, up 6% since the fall and 1% over a year ago, according to a survey by investment bank and asset management firm Piper Jaffray. Researchers sought to measure teen spending habits and surveyed 8,000 U.S. teens with an average age of 16.3 years.
One finding was how gender plays a role in how teens spend. Male teens spent most of their money—23%—on food. Video games were also popular among male respondents, with male teens spending 14% of their budget on video games, up from an average of 11% in recent years.
Female teens were more likely to shop for fashion, spending a quarter of their cash on clothes. However, teenage girls spent more money on footwear and less on fashion accessories than in years past.
Not surprisingly, teens are comfortable shopping online. Half of those surveyed said Amazon was their favorite shopping web site. Other shopping sites popular with teens include Fashion Nova for females and StockX for males. Teens are also likely to use the Internet to guide their shopping decisions, as 80% say they look to social media influencers such as Kylie Jenner and James Charles for beauty tips.
One finding could spell good news for retailers. When it comes to buying beauty products, female teens buck the trend of consumers shopping online rather than brick-and-mortar stores. The study found that 90% of female teens preferred to shop for their beauty products in stores rather than online.
The survey also provided insight on the types of brands teens support.
- 83% of teens have an iPhone
- Chick-fil-A is the No 1 restaurant for teens
- Athletic brands such as Vans and lululemon remain popular with teens
- 31% favor shopping at ULTA making it the No. 1 beauty destination for teens
Teens are part of Generation Z, which ranges between the ages of 7 and 22, according to the Pew Research Center. That generation is estimated to spend $830 billion a year, according to market research firm Fung Global Retail & Technology.
Despite the increase in teen spending, there’s evidence that teens aren’t just focused on consumption. In fact, a recent survey of teens by Junior Achievement USA and Citizens Bank found that 85% of respondents had financial concerns about the future such as their ability to pay for college and their ability to head households of their own.
Teens can learn a lot about managing money—and quell some of their anxieties about the future—by having their own disposable cash and the freedom to make decisions about how they spend it. Parents can better prepare their children for adulthood by talking to them regularly about their spending decisions and helping them make wiser choices. In addition to showing teens how to comparison shop to get the most value from their money, parents can share their own money experiences so their children have some context about the importance of balancing spending with saving for other financial priorities.